FALSE2021Q20001624794--03-31us-gaap:AccountingStandardsUpdate201602Memberus-gaap:OtherAssetsus-gaap:OtherAssetsus-gaap:AccountsPayableAndAccruedLiabilitiesCurrentus-gaap:AccountsPayableAndAccruedLiabilitiesCurrentus-gaap:OtherLiabilitiesNoncurrentus-gaap:OtherLiabilitiesNoncurrent00016247942020-04-012020-09-30xbrli:shares00016247942020-10-26iso4217:USD00016247942020-07-012020-09-3000016247942019-07-012019-09-3000016247942019-04-012019-09-30iso4217:USDxbrli:shares00016247942020-09-3000016247942020-03-310001624794us-gaap:CommonStockMember2020-03-310001624794us-gaap:TreasuryStockMember2020-03-310001624794us-gaap:AdditionalPaidInCapitalMember2020-03-310001624794us-gaap:RetainedEarningsMember2020-03-310001624794us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001624794us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-3000016247942020-04-012020-06-300001624794us-gaap:CommonStockMember2020-04-012020-06-300001624794us-gaap:TreasuryStockMember2020-04-012020-06-300001624794us-gaap:RetainedEarningsMember2020-04-012020-06-300001624794us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300001624794us-gaap:CommonStockMember2020-06-300001624794us-gaap:TreasuryStockMember2020-06-300001624794us-gaap:AdditionalPaidInCapitalMember2020-06-300001624794us-gaap:RetainedEarningsMember2020-06-300001624794us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-3000016247942020-06-300001624794us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300001624794us-gaap:TreasuryStockMember2020-07-012020-09-300001624794us-gaap:RetainedEarningsMember2020-07-012020-09-300001624794us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001624794us-gaap:CommonStockMember2020-09-300001624794us-gaap:TreasuryStockMember2020-09-300001624794us-gaap:AdditionalPaidInCapitalMember2020-09-300001624794us-gaap:RetainedEarningsMember2020-09-300001624794us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001624794us-gaap:CommonStockMember2019-03-310001624794us-gaap:TreasuryStockMember2019-03-310001624794us-gaap:AdditionalPaidInCapitalMember2019-03-310001624794us-gaap:RetainedEarningsMember2019-03-310001624794us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-03-3100016247942019-03-310001624794us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-3000016247942019-04-012019-06-300001624794us-gaap:CommonStockMember2019-04-012019-06-300001624794us-gaap:TreasuryStockMember2019-04-012019-06-3000016247942019-04-012020-03-310001624794us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-03-310001624794srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-03-310001624794us-gaap:RetainedEarningsMember2019-04-012019-06-300001624794us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-04-012019-06-300001624794us-gaap:CommonStockMember2019-06-300001624794us-gaap:TreasuryStockMember2019-06-300001624794us-gaap:AdditionalPaidInCapitalMember2019-06-300001624794us-gaap:RetainedEarningsMember2019-06-300001624794us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-3000016247942019-06-300001624794us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-300001624794us-gaap:RetainedEarningsMember2019-07-012019-09-300001624794us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300001624794us-gaap:CommonStockMember2019-09-300001624794us-gaap:TreasuryStockMember2019-09-300001624794us-gaap:AdditionalPaidInCapitalMember2019-09-300001624794us-gaap:RetainedEarningsMember2019-09-300001624794us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-3000016247942019-09-30cswi:segmentcswi:brand0001624794cswi:PetersenMetalsMember2019-04-022019-07-310001624794cswi:PetersenMetalsMember2019-04-022019-04-020001624794cswi:PetersenMetalsMember2019-07-012019-07-310001624794cswi:PetersenMetalsMemberus-gaap:CustomerListsMember2019-04-022019-04-020001624794us-gaap:OrderOrProductionBacklogMembercswi:PetersenMetalsMember2019-04-022019-04-020001624794cswi:PetersenMetalsMember2019-04-020001624794us-gaap:DiscontinuedOperationsHeldforsaleMember2017-10-012017-12-310001624794us-gaap:DiscontinuedOperationsDisposedOfBySaleMember2018-07-012018-09-300001624794us-gaap:DiscontinuedOperationsDisposedOfBySaleMember2020-03-172020-03-170001624794us-gaap:DiscontinuedOperationsDisposedOfBySaleMember2020-07-012020-09-300001624794us-gaap:DiscontinuedOperationsDisposedOfBySaleMember2019-07-012019-09-300001624794us-gaap:DiscontinuedOperationsDisposedOfBySaleMember2020-04-012020-09-300001624794us-gaap:DiscontinuedOperationsDisposedOfBySaleMember2019-04-012019-09-300001624794cswi:IndustrialProductsMember2020-03-310001624794cswi:SpecialtyChemicalsMember2020-03-310001624794cswi:IndustrialProductsMember2020-04-012020-09-300001624794cswi:SpecialtyChemicalsMember2020-04-012020-09-300001624794cswi:IndustrialProductsMember2020-09-300001624794cswi:SpecialtyChemicalsMember2020-09-300001624794us-gaap:PatentsMember2020-04-012020-09-300001624794us-gaap:PatentsMember2020-09-300001624794us-gaap:PatentsMember2020-03-310001624794cswi:CustomerListsAndTrademarksMember2020-04-012020-09-300001624794cswi:CustomerListsAndTrademarksMember2020-09-300001624794cswi:CustomerListsAndTrademarksMember2020-03-310001624794us-gaap:NoncompeteAgreementsMember2020-04-012020-09-300001624794us-gaap:NoncompeteAgreementsMember2020-09-300001624794us-gaap:NoncompeteAgreementsMember2020-03-310001624794us-gaap:OtherIntangibleAssetsMember2020-04-012020-09-300001624794us-gaap:OtherIntangibleAssetsMember2020-09-300001624794us-gaap:OtherIntangibleAssetsMember2020-03-310001624794us-gaap:TrademarksAndTradeNamesMember2020-09-300001624794us-gaap:TrademarksAndTradeNamesMember2020-03-310001624794us-gaap:StockCompensationPlanMembercswi:EquityAndIncentiveCompensation2015PlanMember2020-09-300001624794us-gaap:EmployeeStockOptionMember2020-03-310001624794us-gaap:EmployeeStockOptionMember2020-04-012020-09-300001624794us-gaap:EmployeeStockOptionMember2020-09-300001624794us-gaap:EmployeeStockOptionMember2020-07-012020-09-300001624794us-gaap:EmployeeStockOptionMember2019-07-012019-09-300001624794us-gaap:EmployeeStockOptionMember2019-04-012019-09-300001624794us-gaap:RestrictedStockMember2020-03-310001624794us-gaap:RestrictedStockMember2020-04-012020-09-300001624794us-gaap:RestrictedStockMember2020-09-300001624794us-gaap:PerformanceSharesMember2020-09-300001624794us-gaap:PerformanceSharesMember2020-03-31xbrli:pure0001624794us-gaap:PerformanceSharesMembersrt:MinimumMember2020-04-012020-09-300001624794srt:MaximumMemberus-gaap:PerformanceSharesMember2020-04-012020-09-300001624794us-gaap:PerformanceSharesMembercswi:CliffVestingMember2020-04-012020-09-300001624794us-gaap:PerformanceSharesMembercswi:CliffVestingMember2019-07-012019-09-300001624794us-gaap:PerformanceSharesMembercswi:CliffVestingMember2020-07-012020-09-300001624794us-gaap:PerformanceSharesMembercswi:CliffVestingMember2019-04-012019-09-300001624794us-gaap:PerformanceSharesMembersrt:MinimumMembercswi:CliffVestingMember2020-04-012020-09-300001624794srt:MaximumMemberus-gaap:PerformanceSharesMembercswi:CliffVestingMember2020-04-012020-09-300001624794us-gaap:RestrictedStockMember2020-07-012020-09-300001624794us-gaap:RestrictedStockMember2019-07-012019-09-300001624794us-gaap:RestrictedStockMember2019-04-012019-09-300001624794us-gaap:RevolvingCreditFacilityMember2020-09-300001624794us-gaap:RevolvingCreditFacilityMember2020-03-310001624794us-gaap:SecuredDebtMembercswi:SubsidiariesWhitmoreMember2020-09-300001624794us-gaap:SecuredDebtMembercswi:SubsidiariesWhitmoreMember2020-03-310001624794us-gaap:RevolvingCreditFacilityMember2020-04-012020-09-300001624794cswi:RevolvingCreditFacilityAccordionFeatureMember2020-09-300001624794us-gaap:RevolvingCreditFacilityMemberus-gaap:PrimeRateMember2020-04-012020-09-300001624794us-gaap:RevolvingCreditFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMember2020-04-012020-09-300001624794us-gaap:SecuredDebtMembercswi:SubsidiariesWhitmoreMember2020-04-012020-09-300001624794us-gaap:SecuredDebtMembercswi:SubsidiariesWhitmoreMemberus-gaap:LondonInterbankOfferedRateLIBORMember2020-04-012020-09-300001624794srt:MinimumMember2020-09-300001624794srt:MaximumMember2020-09-300001624794us-gaap:InterestRateSwapMember2020-09-300001624794us-gaap:InterestRateSwapMember2020-03-310001624794us-gaap:InterestRateSwapMember2020-04-012020-09-300001624794us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-09-300001624794us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-03-310001624794cswi:ShareRepurchaseProgram2018Member2018-11-070001624794cswi:ShareRepurchaseProgram2018Member2018-11-072018-11-070001624794cswi:ShareRepurchaseProgram2018Member2019-07-012019-09-300001624794cswi:ShareRepurchaseProgram2018Member2020-07-012020-09-300001624794cswi:ShareRepurchaseProgram2018Member2018-11-072020-09-3000016247942019-04-012019-04-300001624794us-gaap:SubsequentEventMember2020-10-082020-10-080001624794country:USus-gaap:QualifiedPlanMemberus-gaap:PensionPlansDefinedBenefitMember2019-04-012019-09-300001624794country:USus-gaap:QualifiedPlanMemberus-gaap:PensionPlansDefinedBenefitMember2019-08-012019-08-310001624794country:USus-gaap:QualifiedPlanMemberus-gaap:PensionPlansDefinedBenefitMember2019-09-012019-09-300001624794country:USus-gaap:QualifiedPlanMemberus-gaap:PensionPlansDefinedBenefitMember2020-01-012020-03-310001624794us-gaap:AccumulatedTranslationAdjustmentMember2020-06-300001624794us-gaap:AccumulatedTranslationAdjustmentMember2019-06-300001624794us-gaap:AccumulatedTranslationAdjustmentMember2020-07-012020-09-300001624794us-gaap:AccumulatedTranslationAdjustmentMember2019-07-012019-09-300001624794us-gaap:AccumulatedTranslationAdjustmentMember2020-09-300001624794us-gaap:AccumulatedTranslationAdjustmentMember2019-09-300001624794us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-06-300001624794us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-06-300001624794us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-07-012020-09-300001624794us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-07-012019-09-300001624794us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-09-300001624794us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-09-300001624794us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-06-300001624794us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-06-300001624794us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2020-07-012020-09-300001624794us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2019-07-012019-09-300001624794cswi:AccumulatedDefinedBenefitPlansAdjustmentSettlementMember2020-07-012020-09-300001624794cswi:AccumulatedDefinedBenefitPlansAdjustmentSettlementMember2019-07-012019-09-300001624794us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-07-012020-09-300001624794us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-07-012019-09-300001624794us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-09-300001624794us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-09-300001624794us-gaap:AccumulatedTranslationAdjustmentMember2020-03-310001624794us-gaap:AccumulatedTranslationAdjustmentMember2019-03-310001624794us-gaap:AccumulatedTranslationAdjustmentMember2020-04-012020-09-300001624794us-gaap:AccumulatedTranslationAdjustmentMember2019-04-012019-09-300001624794us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-03-310001624794us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-03-310001624794us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-04-012020-09-300001624794us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-04-012019-09-300001624794us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-03-310001624794us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-03-310001624794us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2020-04-012020-09-300001624794us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2019-04-012019-09-300001624794cswi:AccumulatedDefinedBenefitPlansAdjustmentSettlementMember2020-04-012020-09-300001624794cswi:AccumulatedDefinedBenefitPlansAdjustmentSettlementMember2019-04-012019-09-300001624794us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-04-012020-09-300001624794us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-04-012019-09-300001624794cswi:BuildToOrderMembercswi:IndustrialProductsMember2020-07-012020-09-300001624794cswi:BuildToOrderMembercswi:SpecialtyChemicalsMember2020-07-012020-09-300001624794cswi:BuildToOrderMember2020-07-012020-09-300001624794cswi:BuildToOrderMembercswi:IndustrialProductsMember2020-04-012020-09-300001624794cswi:BuildToOrderMembercswi:SpecialtyChemicalsMember2020-04-012020-09-300001624794cswi:BuildToOrderMember2020-04-012020-09-300001624794cswi:IndustrialProductsMembercswi:BookAndShipMember2020-07-012020-09-300001624794cswi:SpecialtyChemicalsMembercswi:BookAndShipMember2020-07-012020-09-300001624794cswi:BookAndShipMember2020-07-012020-09-300001624794cswi:IndustrialProductsMembercswi:BookAndShipMember2020-04-012020-09-300001624794cswi:SpecialtyChemicalsMembercswi:BookAndShipMember2020-04-012020-09-300001624794cswi:BookAndShipMember2020-04-012020-09-300001624794cswi:IndustrialProductsMember2020-07-012020-09-300001624794cswi:SpecialtyChemicalsMember2020-07-012020-09-300001624794cswi:BuildToOrderMembercswi:IndustrialProductsMember2019-07-012019-09-300001624794cswi:BuildToOrderMembercswi:SpecialtyChemicalsMember2019-07-012019-09-300001624794cswi:BuildToOrderMember2019-07-012019-09-300001624794cswi:BuildToOrderMembercswi:IndustrialProductsMember2019-04-012019-09-300001624794cswi:BuildToOrderMembercswi:SpecialtyChemicalsMember2019-04-012019-09-300001624794cswi:BuildToOrderMember2019-04-012019-09-300001624794cswi:IndustrialProductsMembercswi:BookAndShipMember2019-07-012019-09-300001624794cswi:SpecialtyChemicalsMembercswi:BookAndShipMember2019-07-012019-09-300001624794cswi:BookAndShipMember2019-07-012019-09-300001624794cswi:IndustrialProductsMembercswi:BookAndShipMember2019-04-012019-09-300001624794cswi:SpecialtyChemicalsMembercswi:BookAndShipMember2019-04-012019-09-300001624794cswi:BookAndShipMember2019-04-012019-09-300001624794cswi:IndustrialProductsMember2019-07-012019-09-300001624794cswi:SpecialtyChemicalsMember2019-07-012019-09-300001624794cswi:IndustrialProductsMember2019-04-012019-09-300001624794cswi:SpecialtyChemicalsMember2019-04-012019-09-300001624794cswi:IndustrialProductsMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001624794us-gaap:OperatingSegmentsMembercswi:SpecialtyChemicalsMember2020-07-012020-09-300001624794us-gaap:OperatingSegmentsMember2020-07-012020-09-300001624794cswi:EliminationsAndReconcilingItemsMember2020-07-012020-09-300001624794cswi:IndustrialProductsMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001624794us-gaap:OperatingSegmentsMembercswi:SpecialtyChemicalsMember2019-07-012019-09-300001624794us-gaap:OperatingSegmentsMember2019-07-012019-09-300001624794cswi:EliminationsAndReconcilingItemsMember2019-07-012019-09-300001624794cswi:IndustrialProductsMemberus-gaap:OperatingSegmentsMember2020-04-012020-09-300001624794us-gaap:OperatingSegmentsMembercswi:SpecialtyChemicalsMember2020-04-012020-09-300001624794us-gaap:OperatingSegmentsMember2020-04-012020-09-300001624794cswi:EliminationsAndReconcilingItemsMember2020-04-012020-09-300001624794cswi:IndustrialProductsMemberus-gaap:OperatingSegmentsMember2019-04-012019-09-300001624794us-gaap:OperatingSegmentsMembercswi:SpecialtyChemicalsMember2019-04-012019-09-300001624794us-gaap:OperatingSegmentsMember2019-04-012019-09-300001624794cswi:EliminationsAndReconcilingItemsMember2019-04-012019-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     .
Commission File No. 001-37454
CSW INDUSTRIALS, INC.
(Exact name of registrant as specified in its charter)

Delaware47-2266942
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
5420 Lyndon B. Johnson Freeway, Suite 500, Dallas, Texas
75240
(Address of principal executive offices)
(Zip Code)
(214884-3777
Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol (s) Name of each exchange on which registered
Common Stock, par value $0.01 per shareCSWI Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☒  Yes    ☐  No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ☒  Yes    ☐  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
Accelerated filer
Non-accelerated filer ☐
(Do not check if smaller reporting company)

Smaller reporting company
Emerging growth company
 
  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes    ☒  No
As of October 26, 2020, there were 14,803,929 shares of the issuer’s common stock outstanding.



CSW INDUSTRIALS, INC.
FORM 10-Q

TABLE OF CONTENTS
Page
No.
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
  Item 6.
SIGNATURES




PART I — FINANCIAL INFORMATION
Item 1.    Financial Statements.
CSW INDUSTRIALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three Months Ended September 30,Six Months Ended
September 30,
(Amounts in thousands, except per share amounts)2020201920202019
Revenues, net$104,940 $101,324 $195,904 $203,657 
Cost of revenues(56,204)(53,920)(104,416)(109,018)
Gross profit48,736 47,404 91,488 94,639 
Selling, general and administrative expenses(26,556)(27,282)(53,056)(54,195)
Operating income22,180 20,122 38,432 40,444 
Interest expense, net(284)(299)(602)(800)
Other expense, net(360)(7,367)(667)(7,454)
Income before income taxes21,536 12,456 37,163 32,190 
Provision for income taxes(5,182)(3,638)(8,851)(8,027)
Income from continuing operations16,354 8,818 28,312 24,163 
Loss from discontinued operations, net of tax (35) (174)
Net income$16,354 $8,783 $28,312 $23,989 
Basic earnings (loss) per common share:
Continuing operations$1.11 $0.59 $1.92 $1.61 
Discontinued operations (0.01) (0.01)
Net income$1.11 $0.58 $1.92 $1.60 
Diluted earnings (loss) per common share:
Continuing operations$1.10 $0.58 $1.91 $1.59 
Discontinued operations   (0.01)
Net income$1.10 $0.58 $1.91 $1.58 
See accompanying notes to condensed consolidated financial statements.
1


CSW INDUSTRIALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)


Three Months Ended
September 30,
Six Months Ended
September 30,
(Amounts in thousands)2020201920202019
Net income$16,354 $8,783 $28,312 $23,989 
Other comprehensive income (loss):
Foreign currency translation adjustments1,052 (669)2,390 (411)
Cash flow hedging activity, net of taxes of $(16), $58, $(1) and $137 respectively
60 (217)5 (514)
Pension and other postretirement effects, net of taxes of $(1), $(673), $0 and $(673), respectively
4 2,534  2,530 
Other comprehensive income1,116 1,648 2,395 1,605 
Comprehensive income$17,470 $10,431 $30,707 $25,594 
See accompanying notes to condensed consolidated financial statements.
2


CSW INDUSTRIALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands, except per share amounts)September 30, 2020March 31, 2020
ASSETS
Current assets:
Cash and cash equivalents$47,299 $18,338 
Accounts receivable, net of allowance for expected credit losses of $576 and $1,170, respectively
70,092 74,880 
Inventories, net52,090 53,753 
Prepaid expenses and other current assets5,377 3,074 
Total current assets174,858 150,045 
Property, plant and equipment, net of accumulated depreciation of $75,235 and $71,355, respectively
57,734 57,178 
Goodwill92,419 91,686 
Intangible assets, net43,368 46,185 
Other assets23,288 24,151 
Total assets$391,667 $369,245 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable$20,736 $21,978 
Accrued and other current liabilities36,113 36,607 
Current portion of long-term debt561 561 
Total current liabilities57,410 59,146 
Long-term debt10,056 10,337 
Retirement benefits payable1,853 1,879 
Other long-term liabilities20,307 21,142 
Total liabilities89,626 92,504 
Equity:
Common shares, $0.01 par value
160 159 
Shares authorized – 50,000
Shares issued – 16,115 and 16,055, respectively
Preferred shares, $0.01 par value
  
Shares authorized (10,000) and issued (0)
Additional paid-in capital50,936 48,327 
Treasury shares, at cost (1,346 and 1,311 shares, respectively)
(79,401)(75,377)
Retained earnings339,397 315,078 
Accumulated other comprehensive loss(9,051)(11,446)
Total equity302,041 276,741 
Total liabilities and equity$391,667 $369,245 
See accompanying notes to condensed consolidated financial statements.
3


CSW INDUSTRIALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)

(Amounts in thousands)Common StockTreasury SharesAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Equity
Balance at March 31, 2020$159 $(75,377)$48,327 $315,078 $(11,446)$276,741 
Share-based compensation— — 1,328 — — 1,328 
Stock activity under stock plans1 (1,670)(1)— — (1,670)
Repurchase of common shares— (7,291)— — — (7,291)
Reissuance of treasury shares— 3,131 516 — — 3,647 
Net income— — — 11,960 — 11,960 
Dividends— — 12 (1,996)— (1,984)
Other comprehensive income, net of tax— — — — 1,279 1,279 
Balance at June 30, 2020$160 $(81,207)$50,182 $325,042 $(10,167)$284,010 
Share-based compensation— — 1,222 — — 1,222 
Stock activity under stock plans— (6)— — — (6)
Reissuance of treasury shares— 1,812 (479)— — 1,333 
Net income— — — 16,354 — 16,354 
Dividends— — 11 (1,999)— (1,988)
Other comprehensive income, net of tax— — — — 1,116 1,116 
Balance at September 30, 2020$160 $(79,401)$50,936 $339,397 $(9,051)$302,041 


(Amounts in thousands)Common StockTreasury SharesAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Equity
Balance at March 31, 2019$158 $(49,964)$46,633 $277,588 $(10,729)$263,686 
Share-based compensation— — 1,213 — — 1,213 
Stock activity under stock plans1 (793)— — — (792)
Adoption of ASC 842 Leases— — — (400)— (400)
Net income— — — 15,204 — 15,204 
Dividends— — — (2,041)— (2,041)
Other comprehensive loss, net of tax— — — (43)(43)
Balance at June 30, 2019$159 $(50,757)$47,846 $290,351 $(10,772)$276,827 
Share-based compensation— — 1,196 — — 1,196 
Net income— — — 8,783 — 8,783 
Dividends— — 25 (2,040)— (2,015)
Other comprehensive income, net of tax— — — — 1,648 1,648 
Balance at September 30, 2019$159 $(50,757)$49,067 $297,094 $(9,124)$286,439 

See accompanying notes to condensed consolidated financial statements.
4


CSW INDUSTRIALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended September 30,
(Amounts in thousands)20202019
Cash flows from operating activities:
Net income$28,312 $23,989 
Less: Loss from discontinued operations (174)
Income from continuing operations28,312 24,163 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation3,776 4,162 
Amortization of intangible and other assets3,454 3,503 
Provision for inventory reserves953 229 
Provision for doubtful accounts274 547 
Share-based and other executive compensation2,550 2,434 
Net gain on disposals of property, plant and equipment(13)(744)
Pension plan curtailment benefit 6,559 
Net pension benefit 81 (198)
Net deferred taxes111 (875)
Changes in operating assets and liabilities:
Accounts receivable5,028 (1,101)
Inventories880 (899)
Prepaid expenses and other current assets(2,380)3,021 
Other assets(165)20 
Accounts payable and other current liabilities1,989 (3,110)
Retirement benefits payable and other liabilities(67)(215)
Net cash provided by operating activities, continuing operations44,783 37,496 
Net cash used in operating activities, discontinued operations (389)
Net cash provided by operating activities 44,783 37,107 
Cash flows from investing activities:
Capital expenditures(4,357)(4,571)
Proceeds from sale of assets6 1,089 
Cash paid for acquisitions (11,837)
Net cash used in investing activities, continuing operations(4,351)(15,319)
Net cash provided by investing activities, discontinued operations  
Net cash used in investing activities(4,351)(15,319)
Cash flows from financing activities:
Borrowings on line of credit10,000 7,500 
Repayments of line of credit and term loan(10,281)(27,781)
Purchase of treasury shares(9,352)(793)
Proceeds from stock option activity1,331  
Dividends (3,972)(4,081)
Net cash used in financing activities(12,274)(25,155)
Effect of exchange rate changes on cash and equivalents803 393 
Net change in cash and cash equivalents28,961 (2,974)
Cash and cash equivalents, beginning of period18,338 26,651 
Cash and cash equivalents, end of period$47,299 $23,677 
See accompanying notes to condensed consolidated financial statements.
5


CSW INDUSTRIALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1.ORGANIZATION AND OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES

CSW Industrials, Inc. (“CSWI,” “we,” “our” or “us”) is a diversified industrial growth company with well-established, scalable platforms and domain expertise across two business segments: Industrial Products and Specialty Chemicals. Our broad portfolio of leading products provides performance optimizing and life safety solutions to our customers. Our products include mechanical products for heating, ventilation, air conditioning and refrigeration (“HVAC/R”), building products and high-performance specialty lubricants and sealants. Drawing on our innovative and proven technologies, we seek to deliver solutions primarily to our professional end-use customers that place a premium on superior performance and reliability. Our diverse product portfolio includes more than 100 highly respected industrial brands including No. 5®, KOPR-KOTE®, Kats Coatings®, Safe-T-Switch®, Air Sentry®, Deacon®, Leak Freeze® and Greco®.

Our products are well-known in the specific industries we serve and have a reputation for high quality and reliability. Markets that we serve include HVAC/R, architecturally-specified building products, plumbing, energy, rail, mining and general industrial markets.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus ("COVID-19") a pandemic. COVID-19 continues to spread throughout the world and has led certain countries or jurisdictions within them to restrict travel, social gatherings and certain types of business activity deemed to be "non-essential," which has created a recessionary environment in the U.S. and around the globe and has led to a decline in demand in some end markets, including several that we serve. Also, in March 2020, as a result of the weakened demand for crude oil resulting from the COVID-19 pandemic, and magnified by political tensions between several large crude oil-producing countries, there was a substantial decline in crude oil prices magnified by significant volatility that has continued to date. Both factors had a negative impact on our revenues in the three and six months ended September 30, 2020, as compared with the same periods in fiscal 2020, and are expected to negatively impact our results in the balance of fiscal year 2021.

We expect our results of operations and financial condition to continue to be adversely impacted as compared with the prior year through the duration of the pandemic due to its effects on the economy and demand for our products and services. However, we cannot reasonably estimate the magnitude or length of the adverse impact due to continued uncertainty regarding (1) the duration and severity of the COVID-19 pandemic and (2) the extent of the potential short and long-term impact on our facilities and employees, customer demand and availability of materials through supply channels.

Basis of Presentation

The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020 (“Quarterly Report”), include all revenues, costs, assets and liabilities directly attributable to CSWI and have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”).

The condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to present a fair statement of CSWI’s financial position as of September 30, 2020, and the results of operations for the three and six month periods ended September 30, 2020 and 2019. All adjustments are of a normal, recurring nature. All significant intercompany balances and transactions have been eliminated in consolidation.

The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in CSWI’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020 (the “Annual Report”).

Accounting Policies

We have consistently applied the accounting policies described in our Annual Report in preparing these condensed consolidated financial statements.  We have not made any changes in significant accounting policies disclosed in the Annual Report, with the exception of the expected credit loss accounting policy described below as a result of adopting the new expected credit loss standard.

6


Current Expected Credit Losses ("CECL") - We record an allowance for credit losses on trade receivables that, when deducted from the gross trade receivables balance, presents the net amount expected to be collected. We estimate the allowance based on an aging schedule and according to historical losses as determined from our billings and collections history. This may be adjusted after consideration of customer-specific factors such as financial difficulties, liquidity issues or insolvency, as well as both current and forecasted macroeconomic conditions as of the reporting date. We adjust the allowance and recognize credit losses in the income statement each period. Trade receivables are written off against the allowance in the period when the receivable is deemed to be uncollectible. Subsequent recoveries of amounts previously written off are reflected as a reduction to periodic credit losses in the income statement. Our allowance for expected credit losses for short-term receivables as of September 30, 2020 was $0.6 million, compared to $1.2 million as of March 31, 2020. The six months activity included $0.3 million for current period adjustments.

Accounting Developments

Pronouncements Implemented

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, "Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments." The ASU requires, among other things, the use of a new current expected credit loss model in order to determine an allowance for credit losses with respect to financial assets and instruments held. The CECL model requires that we estimate the lifetime of an expected credit loss for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. On April 1, 2020 we adopted the ASU on a prospective basis to determine our allowance for credit losses in accordance with the requirements of Topic 326, and we modified our accounting policy and processes to facilitate this approach. Our primary exposure to financial assets that are within the scope of CECL are trade receivables. Our adoption of ASU No. 2016-13 effective April 1, 2020 did not have a material impact on our condensed consolidated financial condition and results of operations.

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement." The amendments of the ASU modify the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosure requirements for assets and liabilities measured at fair value in the statement of financial position or disclosed in the notes to the financial statements. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted for the removed disclosures and delayed adoption until fiscal year 2020 permitted for the new disclosures. The removed and modified disclosures were adopted on a retrospective basis and the new disclosures were adopted on a prospective basis. Our adoption of ASU No. 2018-13 effective April 1, 2020 did not impact our disclosures.

In August 2018, the FASB issued ASU No. 2018-15, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." The ASU addresses how entities should account for costs associated with implementing a cloud computing arrangement that is considered a service contract. Per the amendments of the ASU, implementation costs incurred in a cloud computing arrangement that is a service contract should be accounted for in the same manner as implementation costs incurred to develop or obtain software for internal use as prescribed by guidance in ASC 350-40. The ASU requires that implementation costs incurred in a cloud computing arrangement be capitalized rather than expensed. Further, the ASU specifies the method for the amortization of costs incurred during implementation, and the manner in which the unamortized portion of these capitalized implementation costs should be evaluated for impairment. The ASU also provides guidance on how to present such implementation costs in the financial statements and also creates additional disclosure requirements. The amendments are effective for fiscal years beginning after December 15, 2019. The amendments in this ASU can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Our adoption of ASU No. 2018-15 effective April 1, 2020 did not have an impact on our condensed consolidated financial condition and results of operations.

Pronouncements not yet implemented

In August 2018, the FASB issued ASU No. 2018-14, "Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans," which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The amendments remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures and add disclosure requirements identified as relevant. The amendments are effective for fiscal years ending after December 15, 2020 and the amendments should be applied retrospectively to all periods presented. We
7


are currently evaluating the impact of ASU No. 2018-14 and we anticipate that our adoption of this ASU will not have a material impact on our disclosures due to the termination of our U.S. pension plan in the prior year.

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes: Simplifying the Accounting for Income Taxes." The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions and adding some requirements regarding franchise (or similar) tax, step-ups in a business combination, treatment of entities not subject to tax and when to apply enacted changes in tax laws. This ASU is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. The amendments related to changes in ownership of foreign equity method investments or foreign subsidiaries should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The amendments related to franchise taxes that are partially based on income should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. All other amendments should be applied on a prospective basis. Early adoption is permitted. Our initial assessment of this ASU indicates it will not have a material impact on our consolidated financial condition and results of operations, but our assessment has not been completed.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as interbank offered rates and LIBOR. This ASU includes practical expedients for contract modifications due to reference rate reform. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. This ASU is effective immediately; however, it is only available through December 31, 2022. We are currently evaluating the potential impact of this ASU on our consolidated financial position and results of operations.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and. Economic Security ("CARES") Act, which, along with earlier issued Internal Revenue Service ("IRS") guidance, contains numerous provisions that may benefit us, including the deferral of certain taxes. The relevant tax implication impacting us is the correction of a technical issue introduced in the Tax Cuts and Jobs Act to provide for fifteen-year useful life and allow bonus depreciation for qualified improvement property. These changes were included in the fixed asset calculations for the tax year ending March 31, 2020, and we amended the tax return for the year ending March 31, 2019 to include this effect. We continue to assess the effect of the CARES Act and ongoing government guidance related to COVID-19 as it is issued.


2. ACQUISITIONS

Petersen Metals

On April 2, 2019, we acquired the assets of Petersen Metals, Inc. (“Petersen”), based near Tampa, Florida, for $11.8 million, of which $11.5 million was paid at closing and funded through our revolving credit facility, and the remaining $0.3 million represented a working capital adjustment paid in July 2019. Petersen is a leading designer, manufacturer and installer of architecturally-specified, engineered metal products and railings, including aluminum and stainless steel railings products for interior and exterior applications. The excess of the purchase price over the fair value of the identifiable assets acquired was $6.1 million allocated to goodwill, which will be deductible for income tax purposes. Goodwill represents the value expected to be obtained from enabling geographic, end market and product diversification and expansion as Petersen is a strategic complement to our existing line of architecturally-specified building products. The allocation of the fair value of the net assets acquired included customer lists of $3.2 million and backlog of $0.4 million, as well as accounts receivable, inventory and equipment of $2.2 million, $0.8 million and $0.7 million, respectively, net of current liabilities of $1.5 million. Customer lists are being amortized over 15 years, backlog is amortized over 1.5 years and goodwill is not being amortized. Petersen activity has been included in our Industrial Products segment since the acquisition date. No pro forma information has been provided due to immateriality.

8



3. DISCONTINUED OPERATIONS

During the quarter ended December 31, 2017, we commenced a sale process to divest our Coatings business to allow us to focus resources on our core growth platforms. Our Coatings business manufactured specialized industrial coating products including urethanes, epoxies, acrylics and alkyds. As of December 31, 2017, the Coatings business met the held-for-sale criteria under ASC 360, "Property, Plant and Equipment," and accordingly, we classified and accounted for the assets and liabilities of the Coatings business as held-for-sale in the accompanying condensed consolidated balance sheets, and as discontinued operations, net of tax, in the accompanying condensed consolidated statements of income and cash flows. We completed an initial assessment of the assets and liabilities of the Coatings business and recorded a $46.0 million impairment based on our best estimates as of the date of issuance of financial results for the quarter ended December 31, 2017. No adjustments to previously recorded estimates have been made.

On July 31, 2018, we consummated a sale of assets related to our Coatings business to an unrelated third party, the terms of which were not disclosed due to immateriality. During the three months ended September 30, 2018, we received an aggregate of $6.9 million for the sale of assets related to our Coatings business in multiple transactions. This resulted in gains on disposal of $6.9 million due to write-downs of long-lived assets in prior periods.

On March 17, 2020, we completed the sale of the last remaining real property owned by the Coatings business to an unrelated third party, the terms of which were not disclosed due to immateriality. The sale resulted in proceeds and a gain on disposal of $1.5 million due to write-downs of long-lived assets in prior periods. The last remaining asset of the Coatings business is a long-term lease that expires in March 2027. We were unable to terminate the lease, but we have sub-let the property for the remainder of the lease term. As such, this lease was moved back into continuing operations, effective March 31, 2020, and the related right-of-use ("ROU") assets and lease liabilities were reported as continuing operations as of March 31, 2020.

Summarized selected financial information for the Coatings business for the three and six months ended September 30, 2020 and 2019 is presented in the following table (in thousands):

Three Months Ended September 30,Six Months Ended
September 30,
2020201920202019
Revenues, net$ $ $ $ 
Loss from discontinued operations before income taxes (69) (224)
Income tax benefit 34  50 
Loss from discontinued operations, net$ $(35)$ $(174)


4. INVENTORIES

Inventories consist of the following (in thousands):
September 30, 2020March 31, 2020
Raw materials and supplies$21,401 $20,935 
Work in process6,723 6,076 
Finished goods31,692 33,771 
Total inventories59,816 60,782 
Less: LIFO reserve(4,816)(4,816)
Less: Obsolescence reserve(2,910)(2,213)
Inventories, net$52,090 $53,753 


9


5. GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill as of September 30, 2020 and March 31, 2020 were as follows (in thousands):

Industrial ProductsSpecialty
Chemicals
Total
Balance at March 31, 2020$60,123 $31,563 $91,686 
Currency translation733  733 
Balance at September 30, 2020$60,856 $31,563 $92,419 

The following table provides information about our intangible assets (in thousands, except years): 

September 30, 2020March 31, 2020
Wtd Avg Life (Years)Ending Gross AmountAccumulated AmortizationEnding Gross AmountAccumulated Amortization
Finite-lived intangible assets:
Patents11$9,636 $(7,329)$9,635 $(6,935)
Customer lists and amortized trademarks1263,459 (35,661)62,806 (33,098)
Non-compete agreements51,689 (1,770)1,653 (1,494)
Other85,248 (2,962)5,219 (2,628)
$80,032 $(47,722)$79,313 $(44,155)
Trade names and trademarks not being amortized:$11,058 $— $11,027 $— 
 
Amortization expenses for the three and six months ended September 30, 2020 were $1.7 million and $3.3 million, respectively. Amortization expenses for the three and six months ended September 30, 2019 were $1.7 million and $3.4 million, respectively. The following table shows the estimated future amortization for intangible assets, as of September 30, 2020, for the remainder of the current fiscal year and the next four fiscal years ending March 31 (in thousands):

2021$3,152 
20225,525 
20234,585 
20243,831 
20253,108 


6. SHARE-BASED COMPENSATION

Refer to Note 6 to our consolidated financial statements included in our Annual Report for a description of the 2015 Equity and Incentive Compensation Plan (the "2015 Plan"). As of September 30, 2020, 714,586 shares were available for issuance under the 2015 Plan.

We recorded share-based compensation expense as follows for the three and six months ended September 30, 2020 and 2019 (in thousands): 
Three Months Ended
September 30,
Six Months Ended
September 30,
2020201920202019
Share-based compensation expense$1,222 $1,196 $2,550 $2,409 
Related income tax benefit(293)(287)(612)(578)
Net share-based compensation expense$929 $909 $1,938 $1,831 


10


Stock option activity was as follows:
Six Months Ended September 30, 2020
Number of SharesWeighted Average PriceRemaining Contractual Life (Years)Aggregate Intrinsic Value (in Millions)
Outstanding at April 1, 2020115,858 $25.30 
Exercised(52,445)25.40 
Outstanding at September 30, 202063,413 25.23 3.9$3.3 
Exercisable at September 30, 202063,413 $25.23 3.9$3.3 

All compensation costs related to stock options were recognized prior to April 1, 2019. No options were granted or vested during the three and six months ended September 30, 2020 and 2019.

Restricted share activity was as follows: 
Six Months Ended September 30, 2020
Number of SharesWeighted Average Grant Date Fair Value
Outstanding at April 1, 2020:202,466 $60.78 
     Granted67,785 73.37 
     Vested(71,195)49.80 
     Canceled(11,825)68.95 
Outstanding at September 30, 2020187,231 $64.78 

During the restriction period, the holders of restricted shares are entitled to vote and receive dividends. Unvested restricted shares outstanding as of September 30, 2020 and March 31, 2020 included 89,199 and 93,249 shares (at target), respectively, with performance-based vesting provisions, and vesting ranges from 0%-200% based on pre-defined performance targets with market conditions.  Performance-based awards accrue dividend equivalents, which are settled upon (and to the extent of) vesting of the underlying award, but do not have the right to vote until vested. Performance-based awards are earned upon the achievement of objective performance targets and are payable in common shares.  Compensation expense is calculated based on the fair market value as determined by a Monte Carlo simulation and is recognized over a 36-month cliff vesting period. No awards with performance-based vesting provisions were granted during the three months ended September 30, 2020 and 2019. We granted 26,966 and 31,594 awards with performance-based vesting provisions during the six months ended September 30, 2020 and 2019, respectively, with a vesting range of 0%-200%.

At September 30, 2020, we had unrecognized compensation cost related to unvested restricted shares of $6.3 million, which will be amortized into net income over the remaining weighted average vesting period of approximately 1.9 years. The total fair value of restricted shares granted during the three months ended September 30, 2020 and 2019 was zero and less than $0.1 million, respectively. The total fair value of restricted shares granted during the six months ended September 30, 2020 and 2019 was $2.5 million and $2.6 million, respectively. The total fair value of restricted shares vested during the three months ended September 30, 2020 and 2019 was less than $0.1 million and zero, respectively. The total fair value of restricted shares vested during the six months ended September 30, 2020 and 2019 was $4.3 million and $2.1 million, respectively.


7. LONG-TERM DEBT

Debt consists of the following (in thousands):
September 30, 2020March 31, 2020
Revolving Credit Facility, interest rate of 1.40% and 2.24%, respectively
$ $ 
Whitmore Term Loan, interest rate of 2.15% and 2.99%, respectively
10,617 10,898 
Total debt10,617 10,898 
Less: Current portion(561)(561)
Long-term debt$10,056 $10,337 


11


Revolving Credit Facility

As discussed in Note 8 to our consolidated financial statements included in our Annual Report, we have a five-year, $250.0 million revolving credit facility agreement, with an additional $50.0 million accordion feature, which matures on September 15, 2022 (the “Revolving Credit Facility”). Borrowings under this facility bear interest at a rate of prime plus 0.25% or London Interbank Offered Rate ("LIBOR") plus 1.25%, which may be adjusted based on our leverage ratio. We pay a commitment fee of 0.15% for the unutilized portion of the Revolving Credit Facility.  Interest and commitment fees are payable at least quarterly and the outstanding principal balance is due at the maturity date. The Revolving Credit Facility is secured by substantially all of our domestic assets. During the six months ended September 30, 2020, we borrowed $10.0 million and repaid $10.0 million under this facility. As of September 30, 2020 and March 31, 2020, we had no outstanding balance, which resulted in borrowing capacity of $300.0 million, inclusive of the accordion feature. Covenant compliance is tested quarterly, and we were in compliance with all covenants as of September 30, 2020.

Whitmore Term Loan

As of September 30, 2020, Whitmore Manufacturing (one of our wholly-owned operating subsidiaries) had a secured term loan ("Whitmore Term Loan") outstanding related to a warehouse and corporate office building and the remodel of an existing manufacturing and research and development facility.  The Whitmore Term Loan was entered into in July 2014 and matures on July 31, 2029 and requires payments of $140,000 each quarter.  Borrowings under this term loan bear interest at a variable annual rate equal to one month LIBOR plus 2.0%.  As of September 30, 2020 and March 31, 2020, Whitmore Manufacturing had $10.6 million and $10.9 million, respectively, in principal amount outstanding under the term loan. Interest payments under the Whitmore Term Loan are hedged under an interest rate swap agreement as described in Note 9.


8. LEASES

We have operating leases for manufacturing facilities, offices, warehouses, vehicles and certain equipment. Our leases have remaining lease terms of 1 year to 8.9 years, some of which include escalation clauses and/or options to extend or terminate the leases.

We do not currently have any financing lease arrangements.

Three Months Ended September 30,Six Months Ended September 30,
(in thousands)2020201920202019
Components of Operating Lease Expenses
Operating lease expense (a)$846 $889 $1,691 $1,793 
Short-term lease expense111 152 165 152 
Total operating lease expense  $957 $1,041 $1,856 $1,945 
(a)  Included in cost of revenues and selling, general and administrative expense

(in thousands)September 30, 2020March 31, 2020
Operating Lease Assets and Liabilities
ROU assets, net (b)$15,084 $16,383 
Short-term lease liabilities (c)$3,188 $3,056 
Long-term lease liabilities (c)13,757 15,179 
Total operating lease liabilities$16,945 $18,235 
(b) Included in other assets, net
(c) Included in accrued and other current liabilities and other long-term liabilities

12


Six Months Ended September 30,
(in thousands)20202019
Supplemental Cash Flow
Cash paid for amounts included in the measurement of operating lease liabilities (a)$1,885 $1,736 
ROU assets obtained in exchange for new operating lease obligations128 643 
(a) Included in our condensed consolidated statement of cash flows, operating activities in accounts payable and other current liabilities
Other Information for Operating Leases
Weighted average remaining lease term (in years)5.86.3
Weighted average discount rate (percent)4.3 %4.3 %

Maturities of operating lease liabilities were as follows (in thousands): 
Year Ending March 31, 2021 (excluding the six months ended September 30, 2020)$1,916 
20223,827 
20233,121 
20242,851 
20252,548 
Thereafter4,963 
Total lease liabilities 19,226 
Less: Imputed interest(2,281)
Present value of lease liabilities$16,945 

9. DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING

We have an interest rate swap agreement to hedge exposure to floating interest rates on a certain portion of our debt.  As of September 30, 2020 and March 31, 2020, we had $10.7 million and $10.9 million, respectively, of notional amount outstanding designated as an interest rate swap with third parties.  The interest rate swap is highly effective.  At September 30, 2020, the maximum remaining length of the interest rate swap contract was approximately 8.8 years. The fair value of the interest rate swap designated as a hedging instrument is summarized below (in thousands):

September 30, 2020March 31, 2020
Current derivative liabilities$288 $271 
Non-current derivative liabilities1,466 1,492 

The impact of changes in fair value of the interest rate swap is included in Note 12.

Current and non-current derivative assets are reported in our condensed consolidated balance sheets in prepaid expenses and other current assets and other assets, respectively. Current and non-current derivative liabilities are reported in our condensed consolidated balance sheets in accrued and other current liabilities and other long-term liabilities, respectively.

We are exposed to risk from credit-related losses resulting from nonperformance by counterparties to our financial instruments.  We perform credit evaluation of our counterparties and expect all counterparties to meet their obligations.  We have not experienced credit losses from our counterparties.

13


10. EARNINGS PER SHARE

The following table sets forth the reconciliation of the numerator and the denominator of basic and diluted earnings per share for the three and six months ended September 30, 2020 and 2019 (amounts in thousands, except per share data):

Three Months Ended
September 30,
Six Months Ended
September 30,
2020201920202019
Income from continuing operations$16,354 $8,818 $28,312 $24,163 
Loss from discontinued operations (35) (174)
Net income$16,354 $8,783 $28,312 $23,989 
Weighted average shares:
Common stock14,651 14,874 14,627 14,875 
Participating securities96 115 100 115 
Denominator for basic earnings per common share14,747 14,989 14,727 14,990 
Potentially dilutive securities95 191 98 180 
Denominator for diluted earnings per common share14,842 15,180 14,825 15,170 
Basic earnings (loss) per common share:
Continuing operations$1.11 $0.59 $1.92 $1.61 
Discontinued operations (0.01) (0.01)
Net income$1.11 $0.58 $1.92 $1.60 
Diluted earnings (loss) per common share:
Continuing operations$1.10 $0.58 $1.91 $1.59 
Discontinued operations   (0.01)
Net income$1.10 $0.58 $1.91 $1.58