CSWI - Earnings call transcript Q3 2018

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Operator

Greetings, and welcome to the CSW Industrials' Third Quarter Fiscal 2018 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Tom Cook, Investor Relations. sir. ahead go Please

Thomas Cook

Good quarter and investor Kevin. Industrials' to fiscal third call. morning you, welcome everyone CSW Thank

Joining me Officer. today of CSW are Joseph Armes, and Branning, Chief Gregg Chief Financial Industrials; Executive Officer

it earnings If received replay to at This be of is you've call access available. release. are replay on recorded a call the release, the www.cswindustrials.com. and not being today's our is earnings Details website the available in will how on

current any share, supplement materially accordance and on and During and any also income, in These do to our of the we'll statements during call not be report per earnings include and are We this to per assumptions a Form factors non-GAAP non-GAAP net comments used release performance. measures SEC. earnings be statements. filings subject this of based call, annual on and that forward-looking uncertainties. as a making analysis GAAP. other the are should Actual in differ discussed and expectations These statements. will share with net of income an with duty undertake risk operating adjusted operating various income, financial measures risks for, which the This and section and XX-K made earnings results today's can call because computed substitute of to, not update are income forward-looking factor

Joe and net Chairman that, complete our the per more Executive over I'll turn For to income see Chief earnings like call our and of income, operating release. Officer, now adjusted share, earnings With discussion Armes. to

Joseph Armes

call. fiscal you for third Good morning. quarter us joining Thank Thank for you, our conference Tom.

our earnings the better transformational we from executed business with and our opportunities sales operations. continue to an actions Our growth growth third restructuring includes we important and to continuing quarter drive align as of

end Before discussing moments like I our spend restructuring. getting details the would updates, operating a into market and to few

sale of pursue our release, our press & was part decided of Sealants Coatings in noted Coatings, we which we've As business, a to our segment. Adhesives

with operations. remains decision lightly, to it's calls, which business addressed minimal after market, is pressure signs our We market with in of not have and Coatings the a not enough, look in end demonstrated at took expectations. the the our primary And we business do future is our that years, which Through strategic Coatings the end of took diversely more and discontinue another of state exposed was significant does of meaningful OEM This write-downs served we that meet expect with opportunities this not business. rail, sizable concluded it several charge, we, further under the Along especially strategic markets. moved profitability Coatings but a one-time as fresh previous took any such we we Coatings recovery. this our the action, was lens we noncash a that owner better be that therefore, plan,

reporting also our two We operations segments previously. into three from consolidated

our segment, Sealants CS&A. referred our As Coatings recall, all was of you Coatings, to essentially & business Adhesives frequently in as may

Specialty moved segment, have the & we business, that Sealants remaining Coatings our of exit two-thirds Chemicals. the of into With Adhesives,

February As Mudd until part pursue to a to in remain his the the Chris of opportunities. Chris transition other current this will smooth be end transition, leaving duties. of will company role of ensure

and our Gregg elevating growth Adhesives includes our of Industrial have are forward. lines. Financially, driving of materially Manager operating effect the their Foster, and consolidated to expect Sealants respective me. product on our General This General a And and and Manager cash which we're up actions the results record Both for efficiency segment. Sullivan, our and directly to continue will continuing XXXX, ended track most Chris' million, Chemicals, positive of we Craig significantly free XX, Specialty SVP $XX.X Chemicals XXXX. December which to segment, December and Specialty is lead XX, departure, result Don a impact to million also is Industrial our demonstrated Products, report as proven the cash our segments. our flow & months in leaders have was operations two Don of nine-month Products lead leaders our from now in to segment our flattening going these each flow for free from will As organizational structure of $XX.X a ended nine pronounced continue SVP

cash Bill, cash free rates. opportunities In cash return U.S. tax additional will the and to also enhanced addition, to other our us should and corporate flow Reform provide to share through alternative us both strategic strategies free recent initiatives repurchase while growth flow This lower M&A, cash allowing Tax program evaluate the potentially existing to deploy shareholders, from benefit avenues. with our to simultaneously

Turning to our results.

prior Third comparable continuing $XX or quarter from or million diluted year. the share compared $X.X sales Adjusted million to period. up per were $X.X continuing from earnings million operations per diluted the $XX.X in share X.X% operations $X.XX in million, $X.XX from were

HVAC a and strong of products as prior in industrial in results I beginning year's quarter, be current $X.X the resulted increased comparable headwind of which armor products, products the in couple pads where level we unfavorable product I armor products present largest and lap with developed X.X% were results. did came this is we're domestic processes from which AC Segment and pads, Chicago we our and market Leak Greco. lower These Anecdotally, sits, applications. quarter, Products, commercial new for Leak are business. product to nanotechnology specified line. nanotechnology. demonstrate a our Freeze of product several weeks Leak at acquisition and used the cracks revenue condenser a segment, and team introduced HVAC nanotechnology the Industrial in benefit and to that add our internally. we strong. by Show something research the and both Overall, an ago, year. timeline, weather Trade in XX.X% positive introduction market an introductions market coil. from unit equipment PRO The would with we're introduced attended product equipment businesses have we enhancement internally along new thus Two leaks in on are in the increased at received with that we Freeze pads the including performance AC contractors. internal Freeze successful the tough million with The which PRO to $XX.X reflect excited quarterly on product despite our a very Looking about. to in in organic development million performance very building into of smaller These, had in large allows continues other architecturally to the largest very growth architecturally specified recent has volumes end This traffic and introductions, ways evaporator our a our plug product generated that product booth our residential This our foot a shorten as AC returns. organic continuing new feedback calls. find initiatives from product show, These improve significant to to discussed many previous strength our enhancing introduction building where our we attendees, focus growth

last the million the months reported prior a remains from were which very trailing Specialty and sales which on to Greco. was million, in Chemicals operations, XX, XX-month two our to includes XXXX discussed sales December turning In the the of ended -- This highly the already This $XX.X by reasons acquisition nine business million. acquisition. of Now to our sales and decline segment, period X.X% $XX.X with balance Sealants and was our driven successful quarter's continuing now exceeds & declined Adhesives $XX.X expected call.

in in of backlog with prior the $X.X third quarter did we First, XXXX. of our million recur period, associated integration, burned Jet-Lube which not the year off excess

business see growth in stabilized the count, has over months we benefited any incremental the did there. so, this Secondly, nine growth which greatly rig not has or and past by

and quarter, in seasonality. experienced we sales Lastly, to this due to some unique reduction

to like to I the with Next, of an continue nine construction-related would on we've year. end our which enjoyed we expect end our fiscal markets, largely update growth give of nice markets. the end months through XXXX, first to the Beginning

condensate Greco the robust compared high-rise have X have thread been to HVAC Soleil No. in well for we products Toronto. especially and Our traps commercial du have sealants very condominium Eau we project plumbing, discussed year Within construction seen And as RectorSeal year. growth perform sales home sales we're doing also shipping applications. to the well. the previously switches to robust have floor begun in strong cut-off drain continues now seeing been prior throughout residential SureSeal of

but we Within activity with remain no relating as America seeing be Turning particularly our our we're to sales few over enhancing stable margins longer to sales and our strengthening our -- North predicted objectives To example, appears this internationally, end quarters Specific for open-pit energy-related business. returns increases remains rig in pursuing the markets. we quarter but mining. international We've proactive some mining, third lower to marks a counts, and company. to reiterate, America, in of and weak last some phosphate mining challenge, in coal business, developments. we important are Drilling quarters. lapping fiscal to been expect Africa our and the South stable

shareholder team over compelling products optimized competitive continuing structure our Our return. customers, the closer Gregg call this for platform and long-term tirelessly to to well into us innovative operational I'll operations a a believe is firmly performing With our provide our growth. working turn total best-in-class to drive and are for maximize details. that, look gives positioning, to We profitable to

Gregg Branning

Joe and you, good Thank morning everyone.

On period revenue $XX saw million. during of be reminder, X.X% year basis. third the increase I compared of the discussing to million XXXX, continuing a a will of consolidated results to the our $XX.X an prior are As operations fiscal on we quarter

a Operating acquisition-related Turning to XX.X% partially revenue increased million million to was and sales segment million. lower Higher year products. of Products the prior $XX.X in Industrial to segment to $X.X the million plumbing, or level specified and prior of increased building compared revenue adjusted into revenue by prior sales segment compared HVAC result XX.X% And income the and operating million. was offset compared operating sales our strong $XX.X revenue $X to in of year. of to $X.X income year or architecturally $X.X million income,

second reduced as sales million revenue basis on quarter compared quarter the rig in normalized the to to of XX% markets. decreased to mining or year-over-year prior million. by in count negative of operating profits $X end shifted million were while $XX.X out along XXXX million compared were driven third of Chemicals income the to of Segment Specialty lower a volume was comparable, sales $X.X decreased well $XX.X XXXX, million compared of sales into sales a Adjusted period sales or were operating XX.X% year income mix. growth year tough The $X.X -- prior as the to to Lower due the reduced lower prior of product $X.X of million that rates with operating creating income million. Our $X.X year.

back our consolidated Moving results. to

profit increased Our level the in XX.X% to million. Gross consolidated gross of prior the XX.X% was $XX.X the reflected to to year Higher million percentage gross to year increased the compared margin of prior primarily sales period. sales compared volume. $XX.X margin compared as a year prior

share acquisition-related operating or sales expenses. prior sales diluted repatriation prior due Our of of foreign $X.X based to this The partially million per in continuing normalized tax of operations high $X.X did on XX.X% XX.X% income rate, applying expenses from sales compared expense $X.X per compared $X.XX million million share profits operations Operating share from compared activity continuing million the one-time consolidated our current as sales. Lower to for XXst, net to $X.X quarter the XX% third compared operations operating from transition subsidiaries. year sales from prior or a X.X% savings million expenses or was of -- million million rate or million XXXX or And the $X.XX one-time XX.X%. by $XX.X XX.X% continuing for level share income or prior Income a per million Adjusted on period was earnings prior with and of Adjusted recur primarily was cash for quarter of sales. period, effective result tax operate realized of decreased was unusually million accumulated not percentage during and quarter $X.X year continuing XX% restructuring period. per in continuing rate to of was the third of realignment the XXXX to a offset income the sales $X.XX exclude the or year diluted that in year. diluted operating of operations was and of the $X.X $XX.X was operating or $X.XX $X.X operations from the mandatory ended to tax million year of December or in $X.X prior the and period. to XXXX of or compared adjusted $X.X year diluted

Our $XX.X cash of revolving net closed the of million. had $XXX.X debt sheet as the maximum provides our other outstanding and facility, million on on well We which at balance growth fund our ample line quarter acquisition against end $XXX $XX.X $XX was million quarter capacity only with as flexibility borrowing and had million organic we to as strategy of our alternatives. million, credit

reduce and unrepatriated further use $XX outstanding trapped cash revolver. be As in a we'll result the and back has the will million Canada U.S. bill, tax moving approximately reform funds and under of those been the Europe to of previously balance that to

from operations nine prior of $XX.X for flow the period million ended compared cash the operating million. months continuing to $XX.X year Our was

cash We the rate passed operations operating future, in our corporate benefits businesses Reform by Tax strong expect be as as further recent tax in flow the to our of a continuing performance Bill. strategic domestic from lower the driven well continuing enhanced of

Joe Now, closing call remarks. for back I'll hand to the

Joseph Armes

with you, optimistic a In Gregg. as efficient forward platform. closing, Thanks we're move we more

for will We thank to I take value. for look interest your well CSW and improve to Industrials. ways our diligence you, to in questions. continue professionalism we're shareholder operations ready for to our interest shareholders. operator, And you to their as and to customers opportunity now, want all our this at to CSW we Thank serve colleagues my capital to take by Industrials steward drive continue us and the

Operator

today [Operator Thank Instructions] session. from you. first We'll is Our now from question Co. Joseph be question-and-answer Mondillo Sidoti coming conducting &

live. is line Your now

Joseph Mondillo

morning. guys. Hi Good

Joseph Armes

morning Joe. Good

Gregg Branning

morning Good Joe.

Joseph Mondillo

the business. regarding off decision just Coatings the sell So, to

from came breakeven? color Any terms are late curious a over this you And few to just diversify Just us Was would give in cynical Was wondering profitability a this just on how helpful us what give cycle in downturn, being And could has as well. of what feelings that on decision. business? the idea way business the more late it just a so the on the loss? type a of it is an be of last you that quarters? this in idea your then also been and little such a

Joseph Armes

three this the downturn the address To really business, upon our years immediately Joe, owning Sure. acquisition. timing, and yes, almost began into we're

the business been realistic Our so expect us, does big not XX% for well for our followed bounce has -- that such that of over this of been business meet a recovery. late a timing was decline just recognized not in back, manufacturers, scale rail late terrible. standards. And It's it as down doesn't a as this their V-shaped we cycle, -- at too has And with time. may the that We car that. we period just a are a the type profitability be do work and we if you although our revenue look of sales view, decline look and at they we over

the about business, money. You asked profitability actually of losing

So, it to sell will to shareholders be this. our accretive

And so maintain that is acceptable losing which us. going that's thing to We're another money. not are to not businesses

we shareholders. And thing decision so right to it's absolutely think make, the call, for but the tough hard

Gregg Branning

release. A XXXX our QX through Form going as we on of that -- couple QX is of X-K couple QX retrospective QX Gregg. XX-Q are well is And days recasting as this next be our with will basis, of issuing since of in earnings to be beginning a Joe, fiscal XXXX quarters things. the fiscal a One, in

roughly a both quarters give business losing and of to will for $X idea charge we ended, roughly -- roughly $X.X that our operating And then, and a had for $XX.X individual basis. excluded nine better a on lost roughly year they operating income. year, last the the disc million ops year. that million months million quarter, months year this versus of the pretax of $X.X the quarter impairment this last in income took Strathmore and they the specifically, you that Relative of versus impairment million our Strathmore which pretax last operating lost So, to that $X nine excludes million over -- we had compares

think, and we I looked So, it a at said, that mentioned, simply profitability. interest as Joe prune in the for unprofitable best clear it's business shareholders path have to lines of don't

us return to don't to would just action to we market need get shareholders. for said, we Joe be the enough this As expect and is where right the

Joseph Mondillo

that. appreciate I great. Okay,

dealing going of all and off aspect and free And your selling and that? definitely trying change been flow, In such, and through. working you've the focusing looking overall this this the change plans does it? reorganization facilities reorganize know I that capital of inventory sort working how that how with facilities and at whole to on terms business of capital cash does

Joseph Armes

Let the consolidation one me and the that which The we've from separate the and planned consolidation, One business; has the really projects two. had first you, Coatings primary that business. Joe. discrete complete, for been Strathmore Jet-Lube, Whitmore been is is and address

And previously. through own business point, a and its rationalization status maintain we of quo we the had had expect set of to And would gone at sale. the kind so there a this facilities pending Coatings

consolidation and efficiency, ongoing. And capacity that we've had so really the doesn't affect utilization projects

Whitmore As consolidation that. from I said, inventory facility then working a address is I'll Gregg standpoint, complete. capital the And Jet-Lube, let

Gregg Branning

this DPO, Yes, It's priority for this and individual et operating continue perspective to components see cash turns working drive operating our negative both of improved of that. a earnings is and perspective, it higher operations, in you flow as doesn't had working our from negative does to capital increase us -- numbers, continuing the working cash capital, flow. capital as respects and What operating can much still capital, cetera. Strathmore working stronger flow company all cash as inventory, in from an change

only operating strengthen cash our So, will further flow. this

I As operations million had of the ended. $XX mentioned over in from months nine call, the continuing for operating cash we flow

take one when that cash you enhance to quarter go-forward Act, XX% and account We basis. a our to tax roughly have also to on further will Tax effective into yet XX% then go the flows our Reform lowering

Joseph Mondillo

hop Okay. And I'll in and lastly just queue. then back

quarters high been these an comps oil sort Just what kind Specialty business the just of & What growth least. idea Specialty last of do sort generate? -- us has sort been of combined the existing Could at that the at at have of of that anniversarying business, or you extremely so, you this of think looking sort with within other -- couple you have easy of wondering, lapsing you what maybe And and was and segment terms rates now of we're quarters Chemicals parts general, four rates give over grow at now revenue growing of the think the seeing? Adhesives growth gas overall of least, in normalized, in the or the kind segment Chem. Sealants next over can or of

Joseph Armes

Yes, Joe, it's a great question.

well. I new market from different know, one to of Chemicals give not kind and to And of where to going you products. applications through our in new here, -- things As macro really GDP we through is we've markets of think that's lot done be outperform be and is Specialty opening that don't the but is we the don't growth, guidance give a we not have for going the -- growth innovation

business. in obviously, to seen so we of not in GDP -- said past we that future. the we're and, GDP the expansion. growth little excess going grow certainly that's to expect Whether along again, can geographic double-digit in all a be we But well And and excess that a product we growth through, through we've rates, that hard GDP organic GDP-growth and We're do. innovation bit picking maintain should well in we up see of we've and

and had by I markets initiatives The domestic well. sales are international some very mentioned, mining new those we folks geographies sales contracting. working adding As new out coal are in

a geographies new us find rate to for can continuing that been of doing of we've have and is maintain GDP. emphasis we fairly we excess so in successfully. and area focus growth well that so That's a And that

Gregg Branning

Joe. last again. that of benefited Specialty stacking I look by Gregg, also first lapping which When of well, were shifted our is we our This QX more year, of this add, as year Chem, we fiscal the at And and for greatly distributor million benefited X impact year. hurt backlog year they counts out would product. that of our had and mentioned, then QX QX our quarters as and lower fiscal we were you Obviously, rig this $X.X of fiscal QX artificially into of last

in on that GDP is And slightly your down that better so and slightly. and last be cost completely I us mining question, then & comments and grown to flattish that with that the than the agree to then you Sealants there. basically Joe about environment have quarter his And was Adhesives, we GDP posed a

Joseph Mondillo

Okay, a perfect. Appreciate Thanks lot. that.

Joseph Armes

Joe. you, Thank

Gregg Branning

Thank you, Joe.

Operator

you. Thank

CJS Our Securities. Jon Tanwanteng from coming next from your question. with question proceed today Please is

Jonathan Tanwanteng

thank Good and questions. for and my Gregg taking morning, Joe you

The one first is--

Joseph Armes

Jon. Hey

Jonathan Tanwanteng

How are Coatings The much quarter? you the revenue generate business. How you in If gave did the-- doing. you

Gregg Branning

quarter, morning. everybody's everything revenue it been this was released million. Yes. $XX.X And the for has benefit, million and was obviously, $X.X year-to-date, In

pieces. people gives lot understand note XX-Q the this details all to a is for I able see our people information haven't So, footnote want. There of that three any been more in that a

Jonathan Tanwanteng

think Okay, you it I consolidated. has then op number about And great. talked just before, given the income

Your would I earnings lower than now, were been much for they that's-- the quarter right have what assume

Joseph Armes

Correct.

Gregg Branning

correct. is That

Joseph Armes

correct. That's

Jonathan Tanwanteng

Okay.

announced plan for have can of the you business. What I sell get which you business, Coatings think, high any get a don't multiples, kind profits. to but You price

expectations are. your what I'm So, just wondering

Joseph Armes

great hire banker appropriately recently, the year. consultation a handful holidays. end position strategics Board, a decided the phone people and But in a were the in respond calls the kind a we've some suspect a usual we of Yes, to out question, of of to And process. to not to with made aggressively it's Jon. run or Most prior given

out know, sure all we valuation is a so, is to bit we to that make of bidders mean, process and have the for sure here as way us think we as the this figure many little puzzle make value so the you of to a a as best and run potential that possible. to And I maximize

So, ourselves is going I full say. one run price this will to taken we're process proper ensure that would Number write-off. answer get And is we have quarter is things a and write-off is value. another sure we don't know. have maximized of two two a number we we that believe that make that have we there we fully kind sufficient discovery and not that But the take

So, to there not be should another shoe drop.

Gregg Branning

just And be back the then banker. to hiring add, also waiting Joe engagement for said, to would executed. selected we're we're come a the of I one, We letter process as in

can't we a national So, banker is reach. they it are a who broad say that but has yet,

Jonathan Tanwanteng

now? Got it. that it write-off, value And right given you that you carrying have what are taken the a at book is

Gregg Branning

sell for, to because We you'll to not well. a want we that million. prefer wrote as say it a $XX impairment. discussion. this it we don't wrote public down we can down was $X.X million a remember substantial But that ceiling We knowing what put on Last year, is

still own it. it's Joe a charges. that -- come to a as do we On further while we down going results said, the business So, basis, go-forward we operational the we charge have to not to taken have taken expect such really of take

Jonathan Tanwanteng

are you. to the flow the was that cash either year? it. And What that improvements the then before rate tax on in improvement just you in is Thank maybe compared anticipating. taxes the you're Got prior what against or projected expecting,

Gregg Branning

year rates perspective. still some Yes, is GAAP the I that best -- think strange prior -- effective a really tax some look way had the to had from at

recall you'll of around there of tax have so effective last rate couple an expected and for the that we were typically quarters. And we used roughly XX%,

that cash caused is most this from of it I significantly the Reform look business think down the our XX%, for be to perspective earnings. between between which from Tax was to best XX to and effective earnings rate But so take our future a of if high. impacted the for rate by points, and an you the tax us cash both think just quarter, be XX% effective Our earnings benefit like and somewhere roughly way and going Bill, to eight XX% companies, should and

Jonathan Tanwanteng

Okay, great. Thank you.

to M&A you'll valuations at generate Coatings a pipeline. how from process money opportunities in this stronger tax weakened selling cash some do this a the Is the point? update at the getting XX business or If kind hole any pocket you in and of Just burning cash Or days, obviously, last flow taxes. you're strengthened point? -- and your the have from

Joseph Armes

to exactly No, We the trade we place the dig not was We're before. John. burning Show. our of I in have in a changed, one at Yes, remain not maintain but the high. But those businesses we Valuations unchanged. pocket. so same and a in point at are Chicago, the revolver we show with would were just higher Money have we selective of to a valuations Trade HVAC hole make lot is going disciplined there, I at trying for cash the flow. discipline. visit reasons and good saying, mean, to very to free continue pipeline and That's deeper say opportunities. prospects that look very, be repatriation did I really this with down, some you is our we're

tax going options. begin and provide with to the will nice really an operating lower of that us we just build capital to are rate, some As and a to result results opportunity have the

Jonathan Tanwanteng

one Got me. it. for Last

long-range to Chemicals that to drilling into that larger the in they're planning mentioned you business? seen expect your of a be saying Specialty couple Exxon, your factored production We've the increase here. impacts from you Permian. announcements -- stable relatively Have Just like markets going from and you how majors

Joseph Armes

prices haven't. We the mean, price, that's the where a stabilize here or sure. reasonable the to we've a energy again, to of going commodity $XX in range, I'm predict of the for of is seen kind kind that. markets price are come. I $XX commodity But of But Permian. but not not We're opportunities there's think you're to not signs advantage when that, we a of there. predicting it lot positive the it right, I positioned does well are take operators and think in I on real We're counting profitable which

Jonathan Tanwanteng

Thank much. you very

Joseph Armes

Thanks Jon.

Gregg Branning

Jon. Thanks

Operator

Thank you.

B. Our coming from is Liam next question Riley. from Burke today

Your live. now line is

Liam Burke

thank Yes, you. good Gregg. Good morning morning Joe,

Joseph Armes

Good morning Liam.

Gregg Branning

Good morning Liam.

Liam Burke

project-based Joe, They products nature. architectural I around on quarter-to-quarter bump basis. can know in are a

You in of business year a going backlog when give either or how of any ago. of a us sense had a sense, to you kind to your basis, comps sense growth? from looks as But on the longer any tough term could back how kind you is get

Joseph Armes

The scale you're a of that. Liam, projects all right. the so kind of into mindful great of it's and results volatility the insert lumpiness we're question, some Yes, large

I as third-party at think but at last look spotty in in we double-digits. year. particular, been third-party, there's look data, was cycle the no construction the a question Multifamily, down we has little commercial that

so it's for through. are dramatically. Smoke XXXX Greco, is by that's factors the in Guard, fight primarily had specified have -- great of to calendar building I up XX% third-party there. residential, the and down interesting. bit a We Greco say had which little that products multifamily And those And says data year again softness. particular, related was to we side results architecturally would has And that but

projects niche of that little or couple are So, win products can these here. difference lose make a a we that

kind seen think at and respect Liam. forward. We terribly maintaining we I closely. have I that sales building we're think redoubling our there concerning, we that to monitoring sure it. our that our to of we're and bit know or it's think redoubling we're architecturally are I presence so monitoring that make the products that And point in leadership specified -- driving And business sales this segment but end don't that little efforts with markets, general And very a softness of we're

Liam Burke

some Chemicals I great. the down are there And margins I were puts front, Specialty the on Okay, know year-over-year. takes. and mean,

some was You've incorporated of more there in there. Gregg, to bit Coatings the moved But in little the I or what as detail get the margin? a mix old product can business what

Gregg Branning

issue, biggest was Liam, mix. the the Yes, negative product

first stocking and the that topline. we top about et of rig did on in in where bottom-line, third It That compounded negative on the quarters, the talking been negative did distributors, we revenue first down because our revenue growth lower we've and helped our mix continue recall given organic the of that was of first quarter. a quarters, also see for by quarters, of That actually saw mix helped it. of the cetera. the You'll very count was strong throughout two catch-up but couple the couple

Liam Burke

Okay. Thank you Gregg.

Gregg Branning

Welcome.

Operator

Thank you.

next Our Joe from is from question a follow-up Sidoti. Mondillo

now is line live. Your

Joseph Mondillo

couple a questions follow-up of don't you Just if mind.

rate should I that you a mentioned, remarks higher however, Industrial if adversely that and think, prepared weather then, little segment. your assume in And -- the segment. affected the You that? be did clarify I so, was growth affect your Could

Joseph Armes

the a how the weather, see the quarter. heavy which we But slowdown our affected it's and well quarter. affected had the and it certainly ductless in growth because us, of that get snap. significant in that more expected quarter the on would biggest cold still the it we cold as before, really Yes, in And country snow have AC mini-split, spoken we well has the the did HVAC what market. the saw, you third in where third of The fiscal snap strength is think we've when does and from we did have

Joseph Mondillo

How Toronto any I Greco is you think then, project about that will And further quarters? Is way how can project. help significant the that business go-forward believe big be? that that has Okay. us there it's

Gregg Branning

dollar ever is next three they've The It's a had. the the project largest to four over Greco project for quarters. multimillion

And we it have and is weather continue they quarter; while year-to-date $XX.X of specified products. fiscal expect way Toronto. in Depending as move certainly fiscal and that you help building to certainly strong we of serve -- is for -- we've nicely much the to QX, turns of the is Greco what at the that in once they started, slowed best part and as and but nice, to I in weather will will in way think quarter they construction growth trailing upon quickly which largely the $XX.X very our they that factor how holds what the much QX. -- there there up a what areas versus our to for architecturally didn't can, for growth As look have that dependent to will XX-month, that so will be the in gets see has on up will be project, our turn be per done weather the be we this strength, weather to looking revenue million think us. building And

Joseph Armes

is And Eau project and beginning -- Soleil those yet. the We shipments of has de Joe, in three haven't deliver, over to That really out not but next be or to occurred. -- the results much put those too growth quarters. seen fine results a that point has two just on seen that will it,

Gregg Branning

-- business for their And that nicely of that our grown project. backlog because backlog has

Joseph Mondillo

better point? at of far you signs has how the sort backlog? do terms of Okay. has And getting started backlog, can see can that any this to any ahead of that sort of business, And just the see -- architectural at in you improve? -- the you building of rest -- stable Or

Joseph Armes

we that I construction. say even hear is XX time the hear you is -- about out this the over be think too do again, little that. I down we last of look different And in could marketplace of at backlog that shortages thing and bit about and months number year. broadly in labor One backlog kind a affecting factors would

And making projects we're time hard are some construction feeling so a progress forward and of that. having

Joseph Mondillo

this lastly, And it. but -- I I'm Okay. sure just missed I mentioned then just you

that rate, few cost high hundred expecting then what thousand maybe new quarter little corporate this what at million rate run in we expect? the that And down come $X.X expecting that quarter, saw Or this looked mean, that you of terms tax by is going for compared -- Or all? run wondering to rate a should we In forward? the a we are good I are that? just should but dollars, that

Gregg Branning

this again. effective rate traditionally Joe, XX.X% Greg, set in effective tax rate, is our XX%, we've Yes, tax range. the And

that our the range, the the the for all drop personal XX% primarily effect. shield law One have in corporate -- Act, certainly to the while due XX% Two expect continuing you earnings rates, of tax XX% we that state down couple a to XX%, With shield, a to are XX%. not away. on it's domestic Federal went Tax that's Reform and put that The reform but lower way rates will and there, corporate new repatriation -- still effective is the would on on to package. taxes. it's into while rate the shield aspects foreign is And to longer no down to the

other the And rate is drive the it. how tax impact of impacted would some. that Section corporate So, the one there then up for the and effective officers XXX(m) changes

the XX% at again, So, a corporate look rate X% on cost. between decrease of to

nature. typically things is highest year-end that There to the some year. QX the there seasonality and audit is Our of due work of

So, I quarter fiscal the think the in slightly and that that is see highest up between. higher lowest Fiscal the rate. QX that is then QX, third you fiscal the but the and is QX ticked from QX our year number of fiscal are in QX and

Joseph Mondillo

lot. Thanks it. appreciate really a Okay. I

Gregg Branning

welcome. You're

Operator

floor turn Joe I'd Thank comments. to you. for further We've reached or closing like to over question-and-answer the back session. of our end any

Joseph Armes

forward fiscal your want you. look to you, the you to just your speaking year. end Again, our say at of to time this Thank everyone, morning. interest And we again and for thank

Operator

teleconference. Thank you. does today's conclude That

disconnect your you at participation for time lines this have today. day. We thank You your may wonderful a and

CSW Industrials (CSWI) 8 Feb 182018 Q3 Earnings call transcript