CSW Industrials, Inc. (Nasdaq: CSWI or the "Company") today
reported record results for the fiscal 2024 third quarter and
nine-month fiscal year-to-date periods ended December 31,
2023.
Fiscal 2024
Third Quarter Highlights
(comparisons to fiscal 2023 third quarter)
- Total revenue increased 2% to $175.0 million due to organic
growth
- Net income attributable to CSWI of $9.2 million, or
$16.7 million adjusted to exclude the release of tax
indemnification asset related to the TRUaire acquisition, compared
to $15.6 million
- Earnings per diluted share (EPS) of $0.59, or $1.07 adjusted,
compared to $1.01; adjusted EPS increased 6%
- Adjusted EBITDA increased 18% to $36.8 million, with
margin expansion of 270 bps to 21%
- Cash flow from operations of $47.0 million, compared to
$36.8 million, an increase of 28%
- Paid down $20 million of debt, further improving the
strength of the balance sheet, resulting in a leverage ratio (Debt
to EBITDA), in accordance with our credit facility, of 0.69x
- Effective tax rate increased to 43.2%, or 32.5% adjusted to
exclude the previously disclosed release of tax indemnification
assets related to the TRUaire and Falcon acquisitions and the
related uncertain tax position accrual for Falcon, due to the
finalization of the international tax deduction and credits for the
filing of the fiscal 2023 U.S. federal tax return
Fiscal 2024
Year-to-Date Highlights (comparisons to fiscal
2023 year-to-date period)
- Total revenue increased 4% to $582.0 million, of which 2% or
$12.3 million, was organic growth
- Net income attributable to CSWI increased to
$69.9 million, or $77.4 million adjusted, compared to
$69.4 million; adjusted net income increased 12%
- EPS improved to a record $4.49, or $4.97 adjusted, compared to
$4.46; adjusted EPS improved 11%
- Adjusted EBITDA increased 16% to $144.2 million, with
margin expansion of 260 bps to 25%
- Record cash flow from operations of $141.9 million,
compared to $84.1 million, an increase of 69%
- Paid down $100.0 million of debt and returned cash to
shareholders of $8.9 million in dividends and $5.8 million in
share repurchases
Comments from the Chairman, President, and Chief
Executive Officer
Joseph B. Armes, CSW Industrials’ Chairman,
President, and Chief Executive Officer, commented, "Throughout this
fiscal year, the team has outperformed the markets we serve,
despite challenging conditions and market contraction. The third
quarter was no exception. In the third quarter, CSWI once again
delivered impressive operating leverage as adjusted EBITDA grew by
18% on 2% revenue growth, with equally impressive, adjusted EBITDA
margin expansion of 270 bps to 21%. Our strong cash flow from
operations was $47 million in the quarter, an increase of 28%
over the prior year period. Utilizing our strong cash generation
during fiscal 2024, the Company has paid down $100 million in
outstanding debt, increased our liquidity, strengthened our balance
sheet, and reduced our leverage ratio and interest expense every
quarter."
Mr. Armes continued, "We expect to finish the
fiscal year strong and deliver record performance for the full year
in revenue, adjusted EBITDA, and adjusted EPS for the Company,
while maintaining our strong free cash flow generation."
"This morning in a separate press release, we
announced the appointment of Jeff Underwood to Senior Vice
President of CSWI and General Manager, Contractor Solutions,
effective April 1, 2024. Mr. Underwood will succeed Don Sullivan,
current Executive Vice President of CSWI and General Manager,
Contractor Solutions. Mr. Sullivan will remain on the CSWI
Executive Leadership Team and assume the new role of Chief Strategy
Officer for the enterprise. Additional details can be found in the
separate news release from this morning," said Mr. Armes.
Fiscal 2024
Third Quarter Consolidated
Results
Fiscal third quarter revenue was a record $175.0
million, representing 2.3% growth over $171.1 million in the prior
year period. The $3.9 million revenue growth is from organic
revenue, primarily as a result of increased volumes and pricing
initiatives. Revenue growth in the quarter came from the
architecturally-specified building products, plumbing, HVAC/R,
energy, and mining end markets.
Gross profit in the fiscal third quarter was
$74.0 million, representing 12.4% growth over $65.8 million in
the prior year period. Gross profit as a percentage of revenue
increased 380 bps to 42.3%. Gross margin improvement was primarily
the result of reduced ocean and domestic freight costs, volume, and
pricing actions.
Operating expenses as a percentage of revenue
were 26.5%, compared to 24.9% in the prior year period. Operating
expenses were $46.4 million, compared to $42.7 million in the prior
year period. The additional expenses were primarily due to
increased employee compensation and increased travel to drive
sales.
Operating income increased to $27.6 million, or
15.8% as a percent of revenue, compared to the prior year period of
$23.1 million, or 13.5% as a percent of revenue. The 230 bps
improvement in operating income margin resulted from the
improvement in gross profit margin, partially offset by the
increase in operating expenses.
Other expense, net was $8.4 million, compared to
the prior year period of $0.7 million. The increase of $7.7
million was primarily due to the release of tax indemnification
assets related to the TRUaire and Falcon acquisitions.
Net income attributable to CSWI decreased to
$9.2 million, compared to the prior year period of $15.6
million, and EPS decreased to $0.59, compared to $1.01 in the prior
year period. Adjusted to exclude the released tax indemnification
asset in the current period related to the TRUaire acquisition, net
income was $16.7 million, or $1.07 per diluted share, an
increase over the prior year period of 7.2% and 5.9%,
respectively.
Fiscal 2024 third quarter adjusted EBITDA
increased to $36.8 million, representing 17.9% growth over
$31.2 million in the prior year period. As revenue growth
outpaced incremental expenses, adjusted EBITDA as a percentage of
revenue improved by 270 bps to 21.0%, compared to 18.3% in the
prior year period.
The Company’s effective tax rate for the fiscal
third quarter was 43.2%, or 32.5% adjusted to exclude the
previously disclosed release of tax indemnification assets related
to the TRUaire and Falcon acquisitions and the related uncertain
tax position accrual for Falcon, due to the finalization of the
international tax deduction and credits for the filing of the
fiscal 2023 U.S. federal tax return. The tax rate in the fiscal
third quarter is affected by the seasonality of our revenue.
During the fiscal third quarter, the Company
paid down $20.0 million of debt, utilizing the record fiscal
third quarter cash flows from operations of $47.0 million, a
28% increase over the prior year period. As of December 31,
2023, $153.0 million was outstanding on our $500 million
Revolving Credit Facility, which resulted in borrowing capacity of
$347.0 million. As of fiscal quarter end, CSWI reported a leverage
ratio, in accordance with our Revolving Credit Facility, of 0.69x
Debt to EBITDA as compared to the 0.85x ratio reported for the
fiscal second quarter ended September 30, 2023.
Following quarter end, the Company declared its
twentieth consecutive quarterly regular cash dividend in the amount
of $0.19 per share, which will be paid on February 9, 2024, to
shareholders of record on January 26, 2024.
Fiscal 2024
Third Quarter Segment Results
Contractor Solutions segment revenue was $115.4
million, a $3.5 million, or 3.1% increase over the prior year
period. Revenue growth came from an increase in organic unit volume
growth. As compared to the prior year period, net revenue growth
was driven by all end markets served. Segment operating income
improved to $25.8 million, compared to $21.8 million in the prior
year period. The incremental profit compared to the prior year
period resulted from the reduction in ocean and domestic freight
expenses and increased net revenue. This incremental profit was
partially offset by increased expenses primarily related to
employee compensation. Segment operating income margin improved to
22.3%, compared to 19.5% in the prior year period, due to gross
margin improvement driven primarily by a reduction in ocean and
domestic freight costs. Segment adjusted EBITDA in the current year
period was $33.0 million, or 28.6% of revenue, compared to $28.4
million or 25.4% of revenue in the prior year period, an increase
of 320 bps.
Specialized Reliability Solutions segment
revenue was $33.7 million, a $2.6 million, or 7.2% decrease,
compared to the prior year period. This decrease in revenue was
driven primarily by a temporary shipment delay at quarter-end,
which is expected to be fully recovered in the fourth quarter,
partially offset by pricing actions. Segment operating income was
$3.7 million, a slight decrease from $3.9 million in the prior year
period, driven by the decrease in revenue. Segment operating income
margin in the fiscal third quarter improved to 11.1%, compared to
10.8% in the prior year period. Segment EBITDA improved by 2.9% to
$5.2 million, and EBITDA margin was 15.4% of revenue, compared to
13.9% of revenue, in the prior year period.
Engineered Building Solutions segment revenue
was $27.9 million, a 13.2% increase over the prior year period, as
strengthened project bookings in recent quarters converted to
revenue, and the result of positive pricing actions. Growth in the
project mix of the backlog continues to skew more toward larger
jobs in the architecturally-specified building products end market,
which can take over two years to convert to revenue. Segment
operating income improved to $3.5 million, or 12.7% of revenue,
compared to the prior year period of $2.3 million, or 9.2% of
revenue driven by the increased net revenue and improved operating
leverage. Segment EBITDA grew to $4.0 million in the quarter, or
14.2% of revenue, compared to $2.7 million, or 10.8% of revenue, in
the prior year period.
Fiscal 2024
Year-to-Date Consolidated Results
Fiscal year-to-date revenue was
$582.0 million, representing 3.5% growth over
$562.2 million in the prior year period. Of the
$19.8 million total growth, $12.3 million (2.2% of the 3.5%
total growth) resulted from organic growth with the remainder
($7.5 million) contributed by the Cover Guard, AC Guard and
Falcon acquisitions.
Gross profit in the fiscal year-to-date period
was $257.1 million, representing $24.2 million, or 10.4%
growth over $232.9 million in the prior year period, with the
incremental profit resulting predominantly from revenue growth
driven by pricing actions, a reduction in ocean and domestic
freight expenses and the acquisitions of Cover Guard, AC Guard and
Falcon. Gross profit as a percentage of sales was 44.2%, compared
to 41.4% in the prior year period.
Operating expenses as a percentage of revenue
were 24.5%, compared to 23.8% in the prior year period. Operating
expenses in the current year period were $142.3 million,
compared to $133.6 million in the prior year period. The
additional expenses were related to employee compensation, travel,
insurance, and sales commissions.
In the current period, operating income was
$114.8 million, compared to $99.3 million in the prior
year period. The incremental operating income resulted from the
gross profit increase, partially offset by the operating expense
increase as discussed above. Operating income margin in the current
period improved to 19.7%, compared to the prior year period of
17.7%. During the comparative periods, the enhanced operating
income margin was due to the improvement in gross profit margin,
slightly offset by higher operating expenses.
Other expense, net was $6.2 million, compared to
$0.5 million in the prior year period. The increase of $5.7 million
was primarily related to the $8.5 million release of tax
indemnification assets, partially offset by losses arising from
transactions in currencies other than functional currencies and by
a gain of $1.4M recognized from the sale of a property previously
held for investment.
In the current period, reported net income
attributable to CSWI improved to $69.9 million, or $4.49 per
diluted share. Adjusted net income attributable to CSWI was
$77.4 million, or $4.97 per diluted share. In the prior year
period, reported net income attributable to CSWI was
$69.4 million, or $4.46 per diluted share.
Fiscal 2024 year-to-date adjusted EBITDA
increased 15.7% to $144.2 million from $124.7 million in
the prior year period. Adjusted EBITDA as a percentage of revenue
improved 260 bps to 24.8%, compared to 22.2%, in the prior year
period.
Net cash provided by operating activities for
fiscal 2024 year-to-date was a record $141.9 million, compared
to $84.1 million in the prior year period, a 69% increase
compared to the prior year period driven by increased earnings and
continuous working capital improvement. The Company paid down
$100.0 million of debt during the first three quarters of this
fiscal year and returned cash to shareholders of $8.9 million
in dividends and $5.8 million in share repurchases utilizing our
record cash flow from operations.
The Company’s effective tax rate for fiscal 2024
year-to-date was 28.4% on a GAAP basis.
The Company expects an adjusted tax rate of
approximately 27% - 28% for fiscal year 2024, after excluding the
previously disclosed release of tax indemnification assets related
to the TRUaire and Falcon acquisitions and the related uncertain
tax position accrual for Falcon.
Fiscal 2024
Year-to-Date Segment Results
Contractor Solutions segment revenue was
$395.3 million, a $15.4 million or 4.1% increase over the
prior year period. Revenue growth was comprised of
$7.5 million of inorganic growth from the Cover Guard, AC
Guard and Falcon acquisitions, and organic growth of $7.9 million
(2.1% of the total 4.1% growth) primarily due to pricing
initiatives. As compared to the prior year period, net revenue
growth was driven primarily by the plumbing and HVAC/R end markets.
Segment operating income in the current year period was
$104.4 million, compared to $90.4 million in the prior
year period. The incremental profit resulted from the increased net
revenue, a reduction in ocean and domestic freight expenses, and
the inclusion of recent acquisitions, partially offset by increased
expenses related to employee compensation, third-party sales
commissions associated with revenue growth, and travel. Segment
operating income margin was 26.4%, compared to 23.8% in the prior
year period, driven primarily by the gross margin improvement
resulting from pricing actions and the reduction in ocean and
domestic freight expenses. Segment adjusted EBITDA in the current
period was $126.4 million, or 32.0% of revenue, compared to
$110.6 million, or 29.1% of revenue in the prior year
period.
Specialized Reliability Solutions segment
revenue was $108.0 million, a $0.9 million or 0.8%
decrease from the prior year period of $109.0 million, driven
by a temporary shipment delay at the end of the third fiscal
quarter, which was partially offset by positive pricing actions.
Revenue growth was reported in the general industrial, mining, and
energy end markets, with a contraction in rail. In the current year
period, segment operating income improved by 13.7% to
$15.5 million, or 14.4% of revenue, compared to the prior year
period of $13.7 million, or 12.5% of revenue. The improved
segment operating income resulted from an increase in gross margin
driven by pricing actions. Segment EBITDA in the current period was
$19.9 million, or 18.5% of revenue, compared to
$17.8 million, or 16.3% of revenue in the prior year
period.
Engineered Building Solutions segment revenue
was $84.7 million, a $5.7 million or 7.2% increase over
the prior year period, driven by strengthened project bookings in
recent quarters converting to revenue and pricing initiatives.
Segment operating income increased 28.1% to $13.0 million, or
15.4% of revenue, compared to the prior year period of
$10.2 million, or 12.9% of revenue, due to the increased net
revenue, improved gross margin as a result of operating leverage,
and management of operating expenses. Segment EBITDA in the current
period was $14.4 million, or 17.0% of revenue, compared to
$11.3 million, or 14.3% of revenue in the prior year
period.
All percentages are calculated based upon the
attached financial statements.
Conference Call Information
The Company will host a conference call today at
10:00 a.m. ET to discuss the results, followed by a question and
answer session for the investment community. A live webcast of the
call can be accessed at https://cswindustrials.gcs-web.com/. To
access the call, participants may dial 1-877-407-0784,
international callers may use 1-201-689-8560, and request to join
the CSW Industrials earnings call.
A telephonic replay will be available shortly
after the conclusion of the call and until February 15, 2024.
Participants may access the replay at 1-844-512-2921, international
callers may use 1-412-317-6671, and enter access code 13744004. The
call will also be available for replay via webcast link on the
Investors portion of the CSWI website at
www.cswindustrials.com.
Safe Harbor Statement
This press release includes forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934,
which are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995, as amended. Words
or phrases such as "may," "should," "expects," "could," "intends,"
"plans," "anticipates," "estimates," "believes," "forecasts,"
"predicts" or other similar expressions are intended to identify
forward-looking statements, which include, without limitation,
earnings forecasts, effective tax rate, statements relating to our
business strategy and statements of expectations, beliefs, future
plans and strategies and anticipated developments concerning our
industry, business, operations, and financial performance and
condition.
The forward-looking statements included in this
press release are based on our current expectations, projections,
estimates, and assumptions. These statements are only predictions,
not guarantees. Such forward-looking statements are subject to
numerous risks and uncertainties that are difficult to predict.
These risks and uncertainties may cause actual results to differ
materially from what is forecast in such forward-looking
statements, and include, without limitation, the risk factors
described from time to time in our filings with the Securities and
Exchange Commission, including our Annual Report on Form 10-K.
All forward-looking statements included in this
press release are based on information currently available to us,
and we assume no obligation to update any forward-looking statement
except as may be required by law.
Non-GAAP Financial Measures
This press release includes an analysis of
adjusted earnings per share attributable to CSWI, adjusted net
income attributable to CSWI, and adjusted operating income, which
are non-GAAP financial measures of performance. Attributable to
CSWI is defined to exclude the income attributable to the
non-controlling interest in the Whitmore JV.
CSWI utilizes adjusted EBITDA (earnings before
interest, tax, depreciation, and amortization) as an additional
consolidated, non-GAAP financial measure, which consists of
consolidated net income including income attributable to the
non-controlling interest in the Whitmore JV, adjusted to remove the
impact of income taxes, interest expense, depreciation and
amortization, and significant nonrecurring items. Free cash flow is
a non-GAAP financial measure and is defined as cash flow from
operations less capital expenditures.
For a reconciliation of these measures to the
most directly comparable GAAP measures and for a discussion of why
we consider these non-GAAP measures useful, see the “Reconciliation
of Non-GAAP Measures” section of this release.
About CSW Industrials, Inc.
CSW Industrials is a diversified industrial
growth company with industry-leading operations in three segments:
Contractor Solutions, Specialized Reliability Solutions and
Engineered Building Solutions. CSWI provides niche, value-added
products with two essential commonalities: performance and
reliability. The primary end markets we serve with our well-known
brands include: HVAC/R, plumbing, general industrial,
architecturally-specified building products, energy, mining, and
rail transportation. For more information, please visit
www.cswindustrials.com.
Investor Relations
Alexa HuertaVice President, Investor Relations &
Treasurer214-489-7113alexa.huerta@cswindustrials.com
|
CSW INDUSTRIALS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
(Unaudited) |
(Amounts in thousands, except
per share amounts) |
|
Three Months EndedDecember
31, |
|
Nine Months EndedDecember
31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues, net |
|
$ |
174,967 |
|
|
$ |
171,093 |
|
|
$ |
581,980 |
|
|
$ |
562,219 |
|
Cost of revenues |
|
|
(100,986 |
) |
|
|
(105,295 |
) |
|
|
(324,873 |
) |
|
|
(329,349 |
) |
Gross profit |
|
|
73,981 |
|
|
|
65,798 |
|
|
|
257,107 |
|
|
|
232,870 |
|
Selling, general and administrative expenses |
|
|
(46,400 |
) |
|
|
(42,686 |
) |
|
|
(142,327 |
) |
|
|
(133,568 |
) |
Operating income |
|
|
27,581 |
|
|
|
23,112 |
|
|
|
114,780 |
|
|
|
99,302 |
|
Interest expense, net |
|
|
(2,765 |
) |
|
|
(4,200 |
) |
|
|
(10,080 |
) |
|
|
(9,090 |
) |
Other expense, net |
|
|
(8,428 |
) |
|
|
(737 |
) |
|
|
(6,188 |
) |
|
|
(529 |
) |
Income before income
taxes |
|
|
16,388 |
|
|
|
18,175 |
|
|
|
98,512 |
|
|
|
89,683 |
|
Provision for income
taxes |
|
|
(7,083 |
) |
|
|
(2,676 |
) |
|
|
(27,968 |
) |
|
|
(20,232 |
) |
Net income |
|
|
9,305 |
|
|
|
15,499 |
|
|
|
70,544 |
|
|
|
69,451 |
|
Less: (Income) Loss
attributable to redeemable noncontrolling interest |
|
|
(83 |
) |
|
|
100 |
|
|
|
(655 |
) |
|
|
(79 |
) |
Net income attributable to CSW
Industrials, Inc. |
|
$ |
9,222 |
|
|
$ |
15,599 |
|
|
$ |
69,889 |
|
|
$ |
69,372 |
|
|
|
|
|
|
|
|
|
|
Net income per share
attributable to CSW Industrials, Inc. |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.59 |
|
|
$ |
1.01 |
|
|
$ |
4.50 |
|
|
$ |
4.47 |
|
Diluted |
|
$ |
0.59 |
|
|
$ |
1.01 |
|
|
$ |
4.49 |
|
|
$ |
4.46 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
15,546 |
|
|
|
15,476 |
|
|
|
15,537 |
|
|
|
15,520 |
|
Diluted |
|
|
15,596 |
|
|
|
15,512 |
|
|
|
15,578 |
|
|
|
15,554 |
|
CSW INDUSTRIALS, INC. |
CONDENSED CONSOLIDATED BALANCE SHEET |
(Unaudited) |
|
|
December 31, 2023 |
|
March 31, 2023 |
(Amounts in thousands, except
for per share amounts) |
|
|
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
24,988 |
|
|
$ |
18,455 |
|
Accounts receivable, net of allowance for expected credit losses of
$845 and $1,365, respectively |
|
|
104,522 |
|
|
|
122,753 |
|
Inventories, net |
|
|
151,386 |
|
|
|
161,569 |
|
Prepaid expenses and other current assets |
|
|
26,612 |
|
|
|
20,279 |
|
Total current assets |
|
|
307,508 |
|
|
|
323,056 |
|
Property, plant and equipment,
net of accumulated depreciation of $101,891 and $92,703,
respectively |
|
|
89,344 |
|
|
|
88,235 |
|
Goodwill |
|
|
243,498 |
|
|
|
242,740 |
|
Intangible assets, net |
|
|
304,647 |
|
|
|
318,903 |
|
Other assets |
|
|
48,134 |
|
|
|
70,519 |
|
Total assets |
|
$ |
993,131 |
|
|
$ |
1,043,453 |
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
43,421 |
|
|
$ |
40,651 |
|
Accrued and other current liabilities |
|
|
67,706 |
|
|
|
67,388 |
|
Total current liabilities |
|
|
111,127 |
|
|
|
108,039 |
|
Long-term debt |
|
|
153,000 |
|
|
|
253,000 |
|
Retirement benefits
payable |
|
|
1,127 |
|
|
|
1,158 |
|
Other long-term
liabilities |
|
|
119,686 |
|
|
|
137,117 |
|
Total liabilities |
|
|
384,940 |
|
|
|
499,314 |
|
Commitments and
contingencies |
|
|
|
|
Redeemable noncontrolling
interest |
|
|
19,119 |
|
|
|
18,464 |
|
Equity: |
|
|
|
|
Common shares, $0.01 par value |
|
|
164 |
|
|
|
163 |
|
Additional paid-in capital |
|
|
134,247 |
|
|
|
123,336 |
|
Treasury shares, at cost (932 and 902 shares, respectively) |
|
|
(91,016 |
) |
|
|
(82,734 |
) |
Retained earnings |
|
|
554,289 |
|
|
|
493,319 |
|
Accumulated other comprehensive loss |
|
|
(8,612 |
) |
|
|
(8,409 |
) |
Total equity |
|
|
589,072 |
|
|
|
525,675 |
|
Total liabilities, redeemable
noncontrolling interest and equity |
|
$ |
993,131 |
|
|
$ |
1,043,453 |
|
CSW INDUSTRIALS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(Unaudited) |
(Amounts in thousands) |
|
Nine Months Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating
activities: |
|
|
|
|
Net income |
|
$ |
70,544 |
|
|
$ |
69,451 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation |
|
|
10,077 |
|
|
|
9,463 |
|
Amortization of intangible and other assets |
|
|
17,584 |
|
|
|
16,842 |
|
Provision for inventory reserves |
|
|
2,541 |
|
|
|
1,878 |
|
Provision for doubtful accounts |
|
|
544 |
|
|
|
1,613 |
|
Share-based and other executive compensation |
|
|
8,555 |
|
|
|
7,296 |
|
Loss (gain) on disposals of property, plant and |
|
|
(1,336 |
) |
|
|
48 |
|
Net pension benefit |
|
|
50 |
|
|
|
141 |
|
Impairment of assets |
|
|
90 |
|
|
|
156 |
|
Deferred taxes |
|
|
2,732 |
|
|
|
(1,094 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
17,846 |
|
|
|
21,963 |
|
Inventories |
|
|
7,796 |
|
|
|
(28,270 |
) |
Prepaid expenses and other current assets |
|
|
(6,720 |
) |
|
|
(8,343 |
) |
Other assets |
|
|
1,066 |
|
|
|
185 |
|
Accounts payable and other current liabilities |
|
|
9,601 |
|
|
|
(7,348 |
) |
Retirement benefits payable and other liabilities |
|
|
944 |
|
|
|
91 |
|
Net cash provided by operating
activities |
|
|
141,914 |
|
|
|
84,072 |
|
Cash flows from investing
activities: |
|
|
|
|
Capital expenditures |
|
|
(11,668 |
) |
|
|
(8,268 |
) |
Proceeds from sale of assets held for investment |
|
|
1,665 |
|
|
|
70 |
|
Proceeds from sale of assets |
|
|
157 |
|
|
|
— |
|
Cash paid for acquisitions |
|
|
(5,284 |
) |
|
|
(55,524 |
) |
Net cash used in investing
activities |
|
|
(15,130 |
) |
|
|
(63,722 |
) |
Cash flows from financing
activities: |
|
|
|
|
Borrowings on line of credit |
|
|
72,308 |
|
|
|
122,777 |
|
Repayments of line of credit and term loan |
|
|
(172,308 |
) |
|
|
(99,018 |
) |
Payments of deferred loan costs |
|
|
— |
|
|
|
(662 |
) |
Purchase of treasury shares |
|
|
(10,640 |
) |
|
|
(39,064 |
) |
Proceeds from stock option activity |
|
|
— |
|
|
|
272 |
|
Proceeds from acquisition of redeemable noncontrolling interest
shareholder |
|
|
— |
|
|
|
2,000 |
|
Dividends |
|
|
(8,855 |
) |
|
|
(7,924 |
) |
Net cash used in financing
activities |
|
|
(119,495 |
) |
|
|
(21,619 |
) |
Effect of exchange rate changes
on cash and equivalents |
|
|
(756 |
) |
|
|
(629 |
) |
Net change in cash and cash
equivalents |
|
|
6,533 |
|
|
|
(1,898 |
) |
Cash and cash equivalents,
beginning of period |
|
|
18,455 |
|
|
|
16,619 |
|
Cash and cash equivalents, end
of period |
|
$ |
24,988 |
|
|
$ |
14,721 |
|
Reconciliation of Non-GAAP Measures
We use adjusted earnings per share attributable
to CSWI, adjusted net income attributable to CSWI, adjusted
operating income, adjusted EBITDA, and free cash flow, together
with financial measures prepared in accordance with GAAP, such as
revenue, cost of revenue, operating expense, operating income, net
income attributable to CSWI and cash flows provided by operating
activities, to assess our historical and prospective operating
performance and to enhance our understanding of our core operating
performance. We also believe these measures are useful for
investors to assess the operating performance of our business
without the effect of non-recurring items. In the following tables,
there could be immaterial differences in amounts presented due to
rounding.
CSW INDUSTRIALS, INC. |
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO CSWI TO
ADJUSTED NET INCOME ATTRIBUTABLE TO CSWI |
(Unaudited) |
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
GAAP Net income attributable to CSWI |
|
$ |
9,222 |
|
$ |
15,599 |
|
$ |
69,889 |
|
$ |
69,372 |
|
|
|
|
|
|
|
|
|
Adjusting items, net of
tax: |
|
|
|
|
|
|
|
|
Reversal of indemnification
receivable |
|
|
7,500 |
|
|
— |
|
|
7,500 |
|
|
— |
Adjusted Net Income
attributable to CSWI |
|
$ |
16,722 |
|
$ |
15,599 |
|
$ |
77,389 |
|
$ |
69,372 |
|
|
|
|
|
|
|
|
|
GAAP Net Income attributable
to CSW Industrials, Inc. per diluted common share |
|
$ |
0.59 |
|
$ |
1.01 |
|
$ |
4.49 |
|
$ |
4.46 |
|
|
|
|
|
|
|
|
|
Adjusting items, per diluted
common share: |
|
|
|
|
|
|
|
|
Reversal of indemnification
receivable |
|
|
0.48 |
|
|
— |
|
|
0.48 |
|
|
— |
Adjusted Net Income
attributable to CSW Industrials, Inc. per diluted common share |
|
$ |
1.07 |
|
$ |
1.01 |
|
$ |
4.97 |
|
$ |
4.46 |
|
CSW INDUSTRIALS, INC. |
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO CSWI TO
ADJUSTED EBITDA |
(Unaudited) |
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
|
Three Months Ended December 31, |
|
Nine Months Ended December
31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net Income attributable to
CSWI |
|
$ |
9,222 |
|
|
$ |
15,599 |
|
|
$ |
69,889 |
|
|
$ |
69,372 |
|
Plus: Income (Loss)
attributable to redeemable noncontrolling interest |
|
|
83 |
|
|
|
(100 |
) |
|
|
655 |
|
|
|
79 |
|
Net Income |
|
$ |
9,305 |
|
|
$ |
15,499 |
|
|
$ |
70,544 |
|
|
$ |
69,451 |
|
|
|
|
|
|
|
|
|
|
Adjusting Items: |
|
|
|
|
|
|
|
|
Interest Expense |
|
|
2,764 |
|
|
|
4,200 |
|
|
|
10,080 |
|
|
|
9,090 |
|
Income Tax Expense |
|
|
7,083 |
|
|
|
2,676 |
|
|
|
27,968 |
|
|
|
20,232 |
|
Depreciation & Amortization |
|
|
9,134 |
|
|
|
8,853 |
|
|
|
27,094 |
|
|
|
25,905 |
|
EBITDA |
|
$ |
28,286 |
|
|
$ |
31,227 |
|
|
$ |
135,686 |
|
|
$ |
124,679 |
|
|
|
|
|
|
|
|
|
|
Adjusting Items: |
|
|
|
|
|
|
|
|
Reversal of Indemnification
Receivable |
|
|
8,519 |
|
|
|
— |
|
|
|
8,519 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
36,805 |
|
|
$ |
31,227 |
|
|
$ |
144,205 |
|
|
$ |
124,679 |
|
Adjusted EBITDA % Revenue |
|
|
21.0 |
% |
|
|
18.3 |
% |
|
|
24.8 |
% |
|
|
22.2 |
% |
|
|
|
|
|
|
|
|
|
CSW INDUSTRIALS, INC. |
RECONCILIATION OF SEGMENT OPERATING INCOME TO SEGMENT
ADJUSTED EBITDA |
(Unaudited) |
|
|
|
|
|
|
(Amounts in thousands) |
Three Months Ended December 31, 2023 |
|
|
Specialized |
Engineered |
|
|
|
Contractor |
Reliability |
Building |
Corporate |
Consolidated |
|
Solutions |
Solutions |
Solutions |
and Other |
Operations |
Revenue, net |
$ |
115,412 |
|
$ |
33,712 |
|
$ |
27,861 |
|
$ |
(2,017 |
) |
$ |
174,967 |
|
|
|
|
|
|
|
Operating Income |
$ |
25,751 |
|
$ |
3,740 |
|
$ |
3,537 |
|
$ |
(5,447 |
) |
$ |
27,581 |
|
% Revenue |
|
22.3 |
% |
|
11.1 |
% |
|
12.7 |
% |
|
|
15.8 |
% |
Adjusting Items: |
|
|
|
|
|
Other Income (Expense) |
|
(8,433 |
) |
|
(9 |
) |
|
(8 |
) |
|
21 |
|
|
(8,428 |
) |
Depreciation & Amortization |
|
7,178 |
|
|
1,477 |
|
|
437 |
|
|
42 |
|
|
9,134 |
|
Reversal of Indemnification Receivable |
|
8,519 |
|
|
— |
|
|
— |
|
|
— |
|
|
8,519 |
|
Adjusted EBITDA |
$ |
33,015 |
|
$ |
5,208 |
|
$ |
3,966 |
|
$ |
(5,383 |
) |
$ |
36,805 |
|
% Revenue |
|
28.6 |
% |
|
15.4 |
% |
|
14.2 |
% |
|
|
21.0 |
% |
|
|
|
|
|
|
(Amounts in thousands) |
Three Months Ended December 31, 2022 |
|
|
Specialized |
Engineered |
|
|
|
Contractor |
Reliability |
Building |
Corporate |
Consolidated |
|
Solutions |
Solutions |
Solutions |
and Other |
Operations |
Revenue, net |
$ |
111,906 |
|
$ |
36,334 |
|
$ |
24,619 |
|
$ |
(1,767 |
) |
$ |
171,093 |
|
|
|
|
|
|
|
Operating Income |
$ |
21,829 |
|
$ |
3,921 |
|
$ |
2,257 |
|
$ |
(4,896 |
) |
$ |
23,112 |
|
% Revenue |
|
19.5 |
% |
|
10.8 |
% |
|
9.2 |
% |
|
|
13.5 |
% |
Adjusting Items: |
|
|
|
|
|
Other Income (Expense) |
|
(308 |
) |
|
(324 |
) |
|
(31 |
) |
|
(74 |
) |
|
(738 |
) |
Depreciation & Amortization |
|
6,906 |
|
|
1,464 |
|
|
433 |
|
|
50 |
|
|
8,853 |
|
EBITDA |
$ |
28,427 |
|
$ |
5,061 |
|
$ |
2,659 |
|
$ |
(4,919 |
) |
$ |
31,227 |
|
% Revenue |
|
25.4 |
% |
|
13.9 |
% |
|
10.8 |
% |
|
|
18.3 |
% |
|
CSW INDUSTRIALS, INC. |
RECONCILIATION OF SEGMENT OPERATING INCOME TO SEGMENT
ADJUSTED EBITDA |
(Unaudited) |
|
|
|
|
|
|
(Amounts in thousands) |
Nine Months Ended December 31, 2023 |
|
|
Specialized |
Engineered |
|
|
|
Contractor |
Reliability |
Building |
Corporate |
Consolidated |
|
Solutions |
Solutions |
Solutions |
and Other |
Operations |
Revenue, net |
$ |
395,268 |
|
$ |
108,037 |
|
$ |
84,659 |
|
$ |
(5,984 |
) |
$ |
581,980 |
|
|
|
|
|
|
|
Operating Income |
$ |
104,443 |
|
$ |
15,534 |
|
$ |
13,029 |
|
$ |
(18,227 |
) |
$ |
114,780 |
|
% Revenue |
|
26.4 |
% |
|
14.4 |
% |
|
15.4 |
% |
|
|
19.7 |
% |
Adjusting Items: |
|
|
|
|
|
Other Income (Expense) |
|
(7,686 |
) |
|
(100 |
) |
|
2 |
|
|
1,595 |
|
|
(6,188 |
) |
Depreciation & Amortization |
|
21,118 |
|
|
4,512 |
|
|
1,332 |
|
|
132 |
|
|
27,094 |
|
Reversal of Indemnification Receivable |
|
8,519 |
|
|
— |
|
|
— |
|
|
— |
|
|
8,519 |
|
Adjusted EBITDA |
$ |
126,394 |
|
$ |
19,947 |
|
$ |
14,363 |
|
$ |
(16,500 |
) |
$ |
144,205 |
|
% Revenue |
|
32.0 |
% |
|
18.5 |
% |
|
17.0 |
% |
|
|
24.8 |
% |
|
|
|
|
|
|
(Amounts in thousands) |
Nine Months Ended December 31, 2022 |
|
|
Specialized |
Engineered |
|
|
|
Contractor |
Reliability |
Building |
Corporate |
Consolidated |
|
Solutions |
Solutions |
Solutions |
and Other |
Operations |
Revenue, net |
$ |
379,832 |
|
$ |
108,958 |
|
$ |
78,978 |
|
$ |
(5,549 |
) |
$ |
562,219 |
|
|
|
|
|
|
|
Operating Income |
$ |
90,416 |
|
$ |
13,658 |
|
$ |
10,172 |
|
$ |
(14,945 |
) |
$ |
99,302 |
|
% Revenue |
|
23.8 |
% |
|
12.5 |
% |
|
12.9 |
% |
|
|
17.7 |
% |
Adjusting Items: |
|
|
|
|
|
Other Income |
|
243 |
|
|
(375 |
) |
|
(190 |
) |
|
(207 |
) |
|
(528 |
) |
Depreciation & Amortization |
|
19,895 |
|
|
4,519 |
|
|
1,343 |
|
|
149 |
|
|
25,905 |
|
EBITDA |
$ |
110,554 |
|
$ |
17,802 |
|
$ |
11,326 |
|
$ |
(15,003 |
) |
$ |
124,679 |
|
% Revenue |
|
29.1 |
% |
|
16.3 |
% |
|
14.3 |
% |
|
|
22.2 |
% |
|
CSW INDUSTRIALS, INC. |
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES
TO FREE CASH FLOW |
(Unaudited) |
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
|
Three Months EndedDecember
31, |
|
Nine Months EndedDecember
31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net cash provided by operating
activities |
|
$ |
46,978 |
|
|
$ |
36,779 |
|
|
$ |
141,914 |
|
|
$ |
84,072 |
|
Less: Capital
Expenditures |
|
|
(3,883 |
) |
|
|
(3,752 |
) |
|
|
(11,668 |
) |
|
|
(8,268 |
) |
Free Cash Flow |
|
$ |
43,095 |
|
|
$ |
33,027 |
|
|
$ |
130,246 |
|
|
$ |
75,804 |
|
Free Cash Flow % Adjusted Net
Income |
|
|
256.4 |
% |
|
|
213.1 |
% |
|
|
166.9 |
% |
|
|
109.1 |
% |
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