0001624794
FALSE
0001624794
2024-05-23
2024-05-23
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
May 23, 2024
CSW INDUSTRIALS, INC.
(Exact name of registrant as specified in charter)
Delaware 001-37454 47-2266942
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5420 Lyndon B. Johnson Freeway, Suite 500
Dallas
,
Texas
75240
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (
214
)
884-3777
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (
see
General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.01 per share CSWI Nasdaq Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as
defined by Rule 405 of the Securities Act of 1933 ((s)230.405 of this chapter)
or Rule 12b-2 of the Securities Exchange Act of 1934 ((s)240.12b-2 of this
chapter).
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.
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Item 2.02 Results of Operations and Financial Condition.
On May 23, 2024, CSW Industrials, Inc., a Delaware corporation (the
"Company"), issued a press release announcing its financial results for the
fiscal fourth quarter and full year ended March 31, 2024. A copy of the
Company's press release is furnished as Exhibit 99.1 to this Current Report on
Form 8-K.
The information contained in this Item 2.02, including Exhibit 99.1 attached
hereto, is being furnished and shall not be deemed filed for purposes of
Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or
otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference into any registration statement or other document
filed pursuant to the Securities Act of 1933 or the Exchange Act, except as
expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Exhibit Description
99.1 Press release dated May 23, 2024
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 23, 2024
By: /s/ Luke E. Alverson
Name: Luke E. Alverson
Title: Senior Vice President, General Counsel & Secretary
CSW Industrials Reports Record Fiscal 2024 Fourth Quarter and Full Year Results
DALLAS, May 23, 2024 (GLOBE NEWSWIRE) - CSW Industrials, Inc. (Nasdaq: CSWI or
the "Company") today reported record results for the fiscal 2024 fourth
quarter and full year periods ended March 31, 2024.
Fiscal 2024 Fourth Quarter Highlights
(comparisons to fiscal 2023 fourth quarter)
.
Total revenue increased 7.8% to $210.9 million, driven by organic growth of 6.0%
.
Net income attributable to CSWI increased 17.4% to $31.8 million, compared to
$27.1 million
.
Earnings per diluted share (EPS) increased 16.9% to $2.04, compared to $1.74
.
EBITDA grew 13.0% to $55.8 million, including margin expansion of 130 bps to
26.5%
.
Maintained balance sheet strength and strong cash flows, resulting in a
leverage ratio (Debt to EBITDA), in accordance with our credit facility, of
approximately 0.73x
Fiscal 2024 Full Year Highlights
(comparisons to fiscal 2023 full year)
.
Total revenue increased 4.6% to $792.8 million, of which 3.2%, or $23.9
million was organic growth, and $11.0 million was inorganic growth from
acquisitions
.
Net income attributable to CSWI increased to $101.6 million, or $109.1 million
adjusted to exclude the disclosed fiscal third quarter release of a tax
indemnification asset related to the TRUaire acquisition, compared to $96.4
million; adjusted net income increased 13.2%
.
EPS improved to $6.52, or $7.01 adjusted, compared to $6.20; adjusted EPS grew
12.9%
.
Adjusted EBITDA increased 14.9% to $200.0 million, including margin expansion
of 220 bps to 25.2%
.
Cash flow from operations of $164.3 million, compared to $121.5 million, an
increase of 35.3%
.
Invested $32.7 million in acquisitions and $16.6 million in organic capital
expenditures, while returning total cash of $22.3 million to shareholders
through share repurchases of $10.5 million and dividends of $11.8 million
Comments from the Chairman, President, and Chief Executive Officer
Joseph B. Armes, CSW Industrials' Chairman, President, and Chief Executive
Officer, commented, "I am very pleased with our record financial results in
fiscal 2024, driven by organic growth that outpaced our markets and enhanced
by strategic acquisitions. Our record revenue combined with our ability to
leverage expenses has driven record profitability, resulting in best-in-class
margins and record free cash flow. As we enter into fiscal 2025, we expect
consolidated revenue growth similar to fiscal year 2024, while maintaining our
strong margin profile."
Armes continued, "I am especially proud of CSWI's long-term track record,
which is driven by our distinctive employee-centric culture. Aligning the
interests of our workforce and our
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shareholders is crucial to our success, which is why our team members own over
5% of CSWI's stock, including our Employee Stock Ownership Plan."
Fiscal 2024 Fourth Quarter Consolidated Results
Fiscal fourth quarter revenue was $210.9 million, a $15.2 million or 7.8%
increase over the prior year period. Total revenue growth included $11.6
million of organic growth (6.0% of the total 7.8% growth), with the remainder
contributed by the Dust Free acquisition. In the current quarter, volume
growth drove most of the revenue growth across all segments, while pricing
initiatives and acquisition revenue contributed as well.
Gross profit in the fiscal fourth quarter was $93.6 million, representing 9.7%
growth over $85.3 million in the prior year period. Gross profit margin
expanded 80 bps
to
44.4%, compared to 43.6% in the prior year period. The gross profit margin
increase was primarily a result of pricing initiatives.
Operating expenses as a percentage of revenue were 23.4% in the current
period, compared to the prior year period of 23.3%. Operating expenses were
$49.3 million in the current year period, compared to $45.6 million in the
prior year period as we made investments for future growth.
Operating income in the current period was $44.3 million, compared to $39.8
million in the prior year period. Operating income as a percent of revenue was
21.0% in fiscal 2024 fourth quarter, compared to 20.3% in the prior year
period. The 70 bps improvement in operating income margin was a result of the
previously mentioned improvement in the gross profit margin while holding
operating expenses flat.
Net income attributable to CSWI (net of non-controlling interest in the joint
venture) increased 17.4% to $31.8 million, compared to the prior year period
of $27.1 million, and EPS increased 16.9% to $2.04, compared to $1.74 in the
prior year period.
Fiscal 2024 fourth quarter EBITDA increased 13.0% to $55.8 million, up from
$49.4 million in the prior year period. EBITDA margin expanded 130 bps to
26.5%, compared to 25.2% in the prior year period, as revenue growth outpaced
incremental expenses.
During the fiscal fourth quarter, our revolver debt balance increased $13.0
million, as we borrowed from the existing revolver to fund the Dust Free
acquisition. The resulting leverage ratio for the Company (Debt to EBITDA), in
accordance with our credit facility, was 0.73x.
Following quarter-end, the Company announced a 10.5% increase in its quarterly
cash dividend, to $0.21 per share. This dividend, which was paid on May 10,
2024, to shareholders of record on April 26, 2024, was the twenty-first
consecutive regular quarterly cash dividend.
The Company's effective tax rate for the fiscal fourth quarter was 23.8%.
Fiscal 2024 Fourth Quarter Segment Results
2
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The Contractor Solutions segment revenue was $141.2 million, a $7.3 million or
5.4% increase from the prior year period, comprised of organic growth of $3.8
million (2.8% of the total 5.4% growth) driven by increased unit volumes, and
inorganic growth from the newly acquired Dust Free business of $3.5 million.
As compared to the prior year period, net revenue growth was driven by the
HVAC/R, architecturally-specified building products, and general industrial
end markets. Segment operating income improved to $37.6 million, compared to
$35.8 million in the prior year period. The incremental profit resulted from
revenue growth and the inclusion of recently acquired Dust Free and was
partially offset by increased spending on employee compensation and a
trademark impairment related to a prior acquisition. Segment operating income
margin in the fiscal fourth quarter was 26.6%, compared to 26.7% in the prior
year period. Segment EBITDA in the fiscal fourth quarter was $47.3 million, or
33.5% of revenue, compared to $42.7 million, or 31.9% of revenue in the prior
year period.
The Specialized Reliability Solutions segment revenue was $41.6 million, a
$3.1 million or 8.0% increase from the prior year period, primarily due to
volume growth and pricing initiatives. Increased net revenue was driven by
growth in the general industrial, mining, and energy end markets. Segment
operating income improved to $6.7 million, as compared to $6.5 million in the
prior year period, an increase of 3.3%. Segment operating income margin in the
fiscal fourth quarter was 16.2%, compared to the prior year period of 16.9%.
Segment EBITDA improved by 0.8% to $8.2 million in the fiscal fourth quarter,
with an EBITDA margin of 19.8% as compared to 21.3% in the prior year period.
The Engineered Building Solutions segment revenue was $30.1 million, a 20.4%
increase compared to $25.0 million in the prior year period, driven by
commercial and pricing initiatives. Segment operating income was $5.7 million,
or 18.9% of revenue, compared to the prior year period of $2.7 million, or
10.9% of revenue, due to improved project margins and expense diligence.
Segment EBITDA and EBITDA margin also improved to $6.2 million and 20.5% in
the fiscal fourth quarter, compared to $3.1 million and 12.4% in the prior
year period.
Fiscal Full Year 2024 Consolidated Results
Consolidated revenue was $792.8 million, representing 4.6% growth over $757.9
million in the prior year, with all segments reporting organic growth. Of the
$34.9 million total growth, $23.9 million (3.2% of the total 4.6% growth)
resulted from organic growth attributable to unit volume increases and pricing
initiatives, with the remaining $11.0 million contributed by the Cover Guard,
AC Guard, Falcon, and Dust Free acquisitions.
GAAP consolidated gross profit in the current year was $350.7 million,
representing $32.5 million or 10.2% growth from the $318.2 million of gross
profit in the prior year, with growth in all three reporting segments.
Incremental gross profit resulted predominantly from a reduction in ocean and
domestic freight expense, pricing initiatives, increased unit volumes and the
acquisitions of Cover Guard, AC Guard, Falcon and Dust Free. Gross profit
margin as a percentage of sales expanded 230 bps to 44.2%.
Operating expenses in the current year were $191.6 million, compared to the
prior year of $179.1 million. The additional operating expenses were primarily
due to increased employee compensation, a trademark impairment, travel, and
depreciation and amortization, as well as the
3
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inclusion of Dust Free expenses. Operating expenses as a percentage of revenue
increased to 24.2%, compared to 23.6% in the prior year period.
In the current year, operating income was $159.1 million, compared to $139.1
million in the prior year. The incremental operating income resulted from the
increased gross profit, partially offset by the increase in operating
expenses. Operating income margin improved to 20.1% compared to the prior
year's margin of 18.3%.
Other expense, net was $5.9 million, compared to the prior year period other
income, net of less than $0.1 million. The current year expense was primarily
due to the release of tax indemnification assets related to the TRUaire and
Falcon acquisitions, 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 year, net income attributable to CSWI improved to $101.6
million, or $109.1 million adjusted, an increase in adjusted net income of
13.2% from $96.4 million in the prior year. EPS increased to $6.52, or $7.01
adjusted, an increase in adjusted EPS of 12.9% from prior year EPS of $6.20.
Fiscal 2024 adjusted EBITDA increased 14.9% to $200.0 million from $174.1
million in the prior year. Adjusted EBITDA margin as percent of revenue
expanded to 25.2%, compared to 23.0%, in the prior year.
Net cash provided by operating activities for the fiscal 2024 year improved
significantly to $164.3 million, or 35.3% growth, compared to $121.5 million
in the prior year, driven by working capital improvements and increased profit.
In line with our stated capital allocation strategy, during fiscal 2024, the
Company invested in capital expenditures, acquisitions, dividends, and share
repurchases. Capital expenditures during the current and prior fiscal years
were $16.6 million and $14.0 million, respectively. Capital expenditures have
been focused on capacity expansion, enterprise resource planning systems, new
product introductions, safety enhancements, continuous improvement, and
automation. During the fiscal year ended March 31, 2024, we invested $32.7
million in acquisitions compared to $58.3 million in the prior fiscal year. In
fiscal year 2024, $27.4 million of the acquisition investment was related to
the fourth quarter acquisition of Dust Free, an extensive line of patented
products for residential and commercial indoor air quality and HVAC
applications. In addition to Dust Free, we also closed two small product line
acquisitions, totaling $2.4 million (excluding deferred payment), in the
second fiscal quarter, for Guardian Drain Lock and Sure Grade Drain. The
remaining portion of the acquisition investments made during fiscal 2024 was
$2.9 million in deferred payments related to acquisitions made in fiscal 2023.
Repurchases of shares under our share repurchase programs during the current
and prior fiscal years were $10.5 million (53,133 shares) and $35.7 million
(336,347 shares), respectively. Dividend payments of $11.8 million and $10.6
million were paid during the current and prior fiscal years, respectively.
As of March 31, 2024, $166.0 million was outstanding on the $500.0 million
Revolving Credit Facility, resulting in borrowing capacity of $334.0 million.
At the end of fiscal 2023, $253.0 million was outstanding on the Revolving
Credit Facility. As of fiscal 2024 year end, CSWI reported a leverage ratio,
in accordance with our credit facility, of 0.73x debt to EBITDA.
4
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The Company's effective tax rate for the current year was 27.0% on a GAAP
basis, and 26.1% on an adjusted basis 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 Full Year Segment Results
The Contractor Solutions segment revenue was $536.5 million, a $22.7 million
or 4.4% increase from the prior year. Revenue growth was comprised of organic
growth of $11.7 million (2.3% of total 4.4% growth) due to pricing initiatives
and an increase in unit volumes, as well as inorganic growth of $11.0 million
from the acquisitions of Cover Guard, AC Guard, Falcon, and Dust Free. As
compared to the prior year period, net revenue growth was driven by growth in
all end markets served. Segment operating income was $142.0 million, compared
to the prior year of $126.2 million. The incremental profit resulted from a
reduction in ocean and domestic freight expenses, solid revenue growth, and
the inclusion of recent acquisitions of Cover Guard, AC Guard, Falcon, and
Dust Free. This incremental profit was partially offset with increased
expenses related to employee compensation as the segment continues to build
the infrastructure to support growth, a trademark impairment, as well as the
inclusion of Dust Free. Segment operating income margin in the current year
expanded to 26.5%, compared to the prior year of 24.6%, as revenue growth
outpaced the increased expenses discussed above. Segment adjusted EBITDA in
the current year was $173.7 million, or 32.4% of revenue, compared to $153.2
million, or 29.8% of revenue in the prior year.
The Specialized Reliability Solutions segment revenue improved to $149.6
million, a $2.2 million or 1.5% increase from the prior year of $147.4
million, all of which was organic, due to pricing initiatives, with growth in
the general industrial, mining, and energy end markets. In the current year,
segment operating income improved to $22.3 million, or 14.9% of revenue,
compared to the prior year of $20.2 million, or 13.7% of revenue. Improved
segment operating income resulted primarily from revenue growth, expanded
gross margins, and decreased operating expenses. Segment EBITDA and EBITDA
margin improved to $28.2 million and 18.8% in the fiscal year, compared to
$26.0 million and 17.6% in the prior year.
The Engineered Building Solutions segment revenue was $114.7 million, a $10.8
million or 10.4% increase from the prior year, primarily due to the continued
conversion of strong project bookings into revenue and successful pricing
initiatives. Segment operating income was $18.7 million, a 45.1% increase
compared to the prior year of $12.9 million, due to increased net revenue, a
positive impact from pricing initiatives, and a $1.2 million gain recognized
from the sale of a property previously used in operations. Segment operating
income margin in the current year expanded to 16.3%, compared to the prior
year's margin of 12.4%. Segment EBITDA and EBITDA margin in the current year
were $20.5 million and 17.9%, compared to $14.4 million and 13.9% in the prior
year.
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.
5
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A telephonic replay will be available shortly after the conclusion of the call
and until Thursday, June 6, 2024. Participants may access the replay at
1-844-512-2921, international callers may use 1-412-317-6671, and enter access
code 13746309. The call will also be available for replay via webcast link on
the Investors portion of the CSWI website 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 diluted earnings per share
attributable to CSWI, adjusted net income attributable to CSWI, adjusted
operating income and free cash flows, 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, amortization and impairment, and
significant nonrecurring items.
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.
6
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About CSW Industrials, Inc.
CSW Industrials is a diversified industrial growth company with industry-leading
operations in three segments: Contractor Solutions, Engineered Building
Solutions, and Specialized Reliability 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 Huerta
Vice President, Investor Relations and Treasurer
214-489-7113
alexa.huerta@cswindustrials.com
7
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CSW INDUSTRIALS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share amounts) Three Months Ended Year Ended March 31,
March 31,
(Unaudited)
2024 2023 2024 2023
Revenues, net $ 210,859 $ 195,686 $ 792,840 $ 757,904
Cost of revenues (117,221) (110,341) (442,095) (439,690)
Gross profit 93,638 85,345 350,745 318,214
Selling, general and administrative expenses (49,300) (45,580) (191,627) (179,148)
Operating income 44,338 39,765 159,118 139,066
Interest expense, net (2,643) (4,107) (12,723) (13,197)
Other income (expense), net 273 570 (5,915) 42
Income before income taxes 41,969 36,229 140,480 125,911
Provision for income taxes (9,973) (9,105) (37,941) (29,337)
Net income 31,994 27,124 102,539 96,574
Income attributable to redeemable noncontrolling interest (235) (60) (891) (139)
Net income attributable to CSW Industrials, Inc. $ 31,759 $ 27,063 $ 101,648 $ 96,435
Net income per share attributable to CSW Industrials, Inc.
Basic $ 2.05 $ 1.75 $ 6.54 $ 6.22
Diluted 2.04 1.74 6.52 6.20
Weighted average number of shares outstanding:
Basic 15,523 15,475 15,533 15,509
Diluted 15,586 15,523 15,581 15,546
8
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CSW INDUSTRIALS, INC.
CONSOLIDATED BALANCE SHEETS
March 31,
(Amounts in thousands, except per share amounts) 2024 2023
ASSETS
Current assets:
Cash and cash equivalents $ 22,156 $ 18,455
Accounts receivable, net 142,665 122,753
Inventories, net 150,749 161,569
Prepaid expenses and other current assets 15,840 20,279
Total current assets 331,410 323,056
Property, plant and equipment, net 92,811 88,235
Goodwill 247,191 242,740
Intangible assets, net 318,819 318,903
Other assets 53,095 70,519
Total assets $ 1,043,326 $ 1,043,453
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 48,387 $ 40,651
Accrued and other current liabilities 67,449 67,388
Total current liabilities 115,836 108,039
Long-term debt 166,000 253,000
Retirement benefits payable 1,114 1,158
Other long-term liabilities 125,298 137,117
Total liabilities 408,248 499,314
Commitments and contingencies (Note 17)
Redeemable noncontrolling interest 19,355 18,464
Equity:
Common shares, $0.01 par value 164 163
Additional paid-in capital 137,253 123,336
Treasury shares, at cost (952 and 902 shares, respectively) (95,643) (82,734)
Retained earnings 583,075 493,319
Accumulated other comprehensive loss (9,126) (8,409)
Total equity 615,723 525,675
Total liabilities and equity $ 1,043,326 $ 1,043,453
9
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CSW INDUSTRIALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended March 31,
(Amounts in thousands) 2024 2023
Cash flows from operating activities:
Net income $ 102,539 $ 96,574
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 13,961 12,838
Amortization of intangible and other assets 23,688 22,716
Provision for inventory reserves 4,229 1,522
Provision for credit losses 814 2,013
Share-based and other executive compensation 11,537 9,751
Net gain on disposals of property, plant and equipment (2,677) 104
Net pension benefit 67 150
Impairment of assets 1,600 156
Net deferred taxes (2,497) (6,011)
Changes in operating assets and liabilities:
Accounts receivable (17,897) 1,105
Inventories 10,364 (11,422)
Prepaid expenses and other current assets 4,608 (1,282)
Other assets 1,146 458
Accounts payable and other current liabilities 12,293 (7,000)
Retirement benefits payable and other liabilities 557 (219)
Net cash provided by operating activities 164,332 121,453
Cash flows from investing activities:
Capital expenditures (16,575) (13,951)
Proceeds from sale of assets held for investment 1,665 -
Proceeds from sale of assets 2,185 120
Cash paid for acquisitions (32,729) (58,335)
Net cash used in investing activities (45,454) (72,166)
Cash flows from financing activities:
Borrowings on lines of credit 112,319 143,177
Repayments of lines of credit (199,319) (142,952)
Payments of deferred loan costs - (710)
Purchase of treasury shares (15,268) (39,072)
Proceeds from stock option activity - 272
Proceeds from acquisition of redeemable noncontrolling interest shareholder - 3,000
Dividends paid to shareholders (11,805) (10,555)
Net cash used in financing activities (114,073) (46,840)
Effect of exchange rate changes on cash and equivalents (1,104) (611)
Net change in cash and cash equivalents 3,701 1,836
Cash and cash equivalents, beginning of period 18,455 16,619
Cash and cash equivalents, end of period $ 22,156 $ 18,455
Supplemental non-cash disclosure:
Cash paid during the year for interest $ 12,254 $ 12,502
Cash paid during the year for income taxes 39,295 41,476
10
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Reconciliation of Non-GAAP Measures
We use adjusted earnings per share attributable to CSWI, adjusted net income
attributable to CSWI, adjusted operating income, and adjusted EBITDA, together
with financial measures prepared in accordance with GAAP, such as revenue,
cost of revenue, operating expense, operating income and net income
attributable to CSWI, to assess our historical and prospective operating
performance and to enhance our understanding of our core operating
performance. Free cash flow is a non-GAAP financial measure and is defined as
cash flow from operations less capital expenditures. 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)
Three months Year ended March 31,
ended March 31,
(amounts in thousands, 2024 2023 2024 2023
except per share data)
GAAP Net Income $ 31,760 $ 27,062 $ 101,648 $ 96,435
Attributable to CSWI
Adjusting items,
net of tax
Reversal of tax - - 7,500 -
indemnification receivable
Adjusting Net income $ 31,760 $ 27,062 $ 109,148 $ 96,435
attributable to CSWI
GAAP Net Income Attributable to CSW $ 2.04 $ 1.74 $ 6.52 $ 6.20
Industrials, Inc. per diluted common share
Adjusting Items, per
dilutive common share:
Reversal of tax - - 0.48 -
indemnification receivable
Adjusted Net income attributable to CSW $ 2.04 $ 1.74 $ 7.01 $ 6.20
Industrials, Inc. per dilutive common share
11
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CSW Industrials, Inc.
Reconciliation of Net Income attributable to CSWI to Adjusted EBITDA
(unaudited)
(amounts in thousands) Three months Year ended March 31,
ended March 31,
2024 2023 2024 2023
GAAP Net Income $ 31,760 $ 27,062 $ 101,648 $ 96,435
attributable to CSWI
Plus: Income attributable to 235 60 891 139
redeemable noncontrolling interest
GAAP Net $ 31,995 $ 27,123 $ 102,539 $ 96,574
Income
Adjusting
Items:
Interest 2,643 4,107 12,723 13,197
Expense
Income Tax 9,973 9,105 37,942 29,338
Expense
Depreciation, 11,196 9,053 38,289 34,958
amortization & impairment
EBITDA $ 55,807 $ 49,388 $ 191,492 $ 174,067
EBITDA
Adjustments:
Reversal of tax - - 8,519 -
indemnification receivable
Adjusted $ 55,807 $ 49,388 $ 200,011 $ 174,067
EBITDA
Adjusted EBITDA 26.5 % 25.2 % 25.2 % 23.0 %
% Revenue
12
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CSW Industrials, Inc.
Reconciliation of Segment Operating
Income to Segment Adjusted EBITDA
(unaudited)
(amounts in Three months ended
thousands) March 31, 2024
Contractor Specialized Engineered Corporate Consolidated
Solutions Reliability Solutions Building Solutions and Other
Revenue, $ 141,226 $ 41,577 $ 30,081 $ (2,024) $ 210,859
net
Operating $ 37,594 $ 6,732 $ 5,675 $ (5,663) $ 44,338
Income
% 26.6 % 16.2 % 18.9 % 21.0 %
Revenue
Adjusting
Items:
Other income 559 (45) (1) (240) 273
(expense)
Depreciation, 9,114 1,562 478 42 11,196
amortization & impairment
Adjusted $ 47,267 $ 8,249 $ 6,152 $ (5,861) $ 55,807
EBITDA
% 33.5 % 19.8 % 20.5 % 26.5 %
Revenue
(amounts in Three months ended
thousands) March 31, 2023
Contractor Specialized Engineered Corporate Consolidated
Solutions Reliability Solutions Building Solutions and Other
Revenue, $ 133,945 $ 38,487 $ 24,991 $ (1,738) $ 195,686
net
Operating $ 35,788 $ 6,517 $ 2,716 $ (5,257) $ 39,765
Income
% 26.7 % 16.9 % 10.9 % 20.3 %
Revenue
Adjusting
Items:
Other income (167) 146 (42) 632 570
(expense)
Depreciation & 7,056 1,517 428 52 9,053
amortization
Adjusted $ 42,677 $ 8,181 $ 3,103 $ (4,573) $ 49,388
EBITDA
% 31.9 % 21.3 % 12.4 % 25.2 %
Revenue
13
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CSW Industrials, Inc.
Reconciliation of Segment Operating
Income to Segment Adjusted EBITDA
(unaudited)
(amounts in Year ended
thousands) March 31, 2024
Contractor Specialized Engineered Corporate Consolidated
Solutions Reliability Solutions Building Solutions and Other
Revenue, $ 536,494 $ 149,613 $ 114,741 $ (8,008) $ 792,840
net
Operating $ 142,037 $ 22,266 $ 18,704 $ (23,890) $ 159,118
Income
% 26.5 % 14.9 % 16.3 % 20.1 %
Revenue
Adjusting
Items:
Other income (7,127) (145) 1 1,355 (5,915)
(expense)
Depreciation, 30,232 6,074 1,810 174 38,289
amortization & impairment
Reversal of tax 8,519 - - - 8,519
indemnification receivable
Adjusted $ 173,661 $ 28,195 $ 20,516 $ (22,361) $ 200,011
EBITDA
% 32.4 % 18.8 % 17.9 % 25.2 %
Revenue
(amounts in Year ended
thousands) March 31, 2023
Contractor Specialized Engineered Corporate Consolidated
Solutions Reliability Solutions Building Solutions and Other
Revenue, $ 513,776 $ 147,446 $ 103,969 $ (7,287) $ 757,904
net
Operating $ 126,204 $ 20,176 $ 12,889 $ (20,202) $ 139,066
Income
% 24.6 % 13.7 % 12.4 % 18.3 %
Revenue
Adjusting
Items:
Other income 76 (228) (231) 425 42
(expense)
Depreciation & 26,951 6,035 1,771 201 34,958
amortization
Adjusted $ 153,231 $ 25,983 $ 14,429 $ (19,576) $ 174,067
EBITDA
% 29.8 % 17.6 % 13.9 % 23.0 %
Revenue
14
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CSW INDUSTRIALS, INC.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING CASH FLOWS to FREE CASH FLOW
(Unaudited)
(Amounts in thousands) Three Months Ended March 31, Year Ended March 31,
2024 2023 2024 2023
Net cash provided by operating activities $ 22,418 $ 37,381 $ 164,332 $ 121,453
Less: Capital Expenditures (4,907) (5,683) (16,575) (13,951)
Free Cash Flow $ 17,511 $ 31,698 $ 147,757 $ 107,502
Free Cash Flow % Net Income 54.7 % 116.9 % 144.1 % 111.3 %
15
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