CSWI - Earnings call transcript Q4 2019

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Operator

Thanks and welcome to the CSW Industrials Fourth Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the presentation. [Operator Instructions] And as a reminder, this conference is being recorded. I would now like to turn the conference over to Tom Cook. you. Thank ahead. go Please

Tom Cook

Good quarter and XXXX Brenda. Industrials’ to fiscal fourth earnings morning you, welcome everyone CSW Thank call.

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

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

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

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

Joseph Armes

excellent followed remarks of conference and fiscal review level end then high a will everyone of call. closer then first nine our finish year I will that performance the segment at months up markets. morning thank for you begin with fiscal for results I Good hand a the level strong We look quarter some our Tom. provide with Gregg our numbers. I through will our an the call and quarter for fourth to you, joining Thank the the year. concluded of discussion

of fourth to consolidated grew the the during was Our line was inorganic quarter, during MSD year-over-year, organic MSD to X.X% we the acquisition which acquisition we completed related X.X% related quarter. the fourth completed top X%

the organic. For year, our was X.X% X.X% million which full was consolidated $XXX.X growth revenue of to

quarter High initiatives improvement share profitability and continuation in was was revenue operating fourth $X.XX the marked per Our growth of year. to compared Specialty product prior industrial point basis with result earnings margin. strong higher segment. XXX attributable segment and earnings the our mostly diluted of levels increase efficiency a our of a an margin adjusted Chemicals very and the we and completed which to was adjusted XX.X% This combined

$X.XX, year, earnings a full our the Taking sales For and were share per segment was Higher plumbing our diluted the at widespread look were an quarter architecturally specified just almost which in industrial increase HVAC, products, contributions almost XX% of year. adjusted industrial product year-over-year. our performance, building from volume products. for XX% the for included segment up over general sales and XX%

operating can’t and volume weather. would on and we our level remind half income XXXX, investors volume, of XX.X% sales performance proactive and the forward look based in or While as the million in compared sales tariff to management product to cost of industrial or performance clearly order materials of result impacts. year. prior higher million flow the as distributor came strong in quarter we $XX.X a raw and controls of XX.X% cost $XX at remained were business that in lumpy second Segment be adjusted Margin and

as improvement do and this level have be further we gain we sales. expansion modest, believe with to that will leverage on for while we pleased margin the seek higher incremental We’re further opportunity

that our expectations. and fiscal The our the like functions performance MSD broaden suite previous been and opportunities growth seamless right they report has has Since and Petersen scale, management As a to our quality and businesses have base working in our line acquisition benefited The I’m core capabilities we quicker condensate two A/C been strategic integration product we pleased acquisition product reach. integration, to opportunity innovation to customer are our weeks stronger that and today already line portfolio, acquisitions a product launch industrial been our small of public underscore our consummated and has diligently our of process few high switches MSD company, been the in on the in within integrate as line develop enter identified expand Metals. Research our the through has but with for and extend MSD MSD and learning XXXX, ownership, of Both experiences. geographic acquire inventory to and And fiscal cleanout. of is completed segment, XXXX and logistics the we products. internal accounting, the team of from these first has

is have broaden Similar exposure, integration MSD, our extend geographic our metal acquisition to Business acquisition product our serves integrated. end manufacturer and products been quickly diversify to our already Greco and business. reach. Moving opportunities, this a is nicely is enhance capabilities core installer architecturally fully and our Tampa and market of executing team complements specified to our cross-selling railings. Metals, based Petersen in and engineered functions This

We the to with related facilities and have protection, also and Greco. to safety synergies work product at practices begun environmental implemented to best dry it

were acquisitions accretive these beyond. to fiscal and be we and of their contributions in we to terms XXXX immediately, acquisitions size, these look not do small expect forward their to disclosed due While

period. attributable $XX.X efficiency year Higher XX.X% earlier prior line Turning basis level we was the in to against XXX Chemicals Adjusted of our the Specialty the fourth highlight profitability operating initiatives posted executed margins quarter segment segment mostly performance the of and with top improvement efforts and segment. million. we higher segment, to growth year optimize were to of seek by X.X% as points an the in we to We We forward implemented our supplemented we increase sales. cost by of margins margin believe with to improve structure the throughout price our XXXX. going increases fiscal mid-teen levels that to in volume the distribution our leveraging sustainable benefits are were production pleased see discipline

growth Importantly, stronger segment to position much to on with invest well the a we now and footing, expand. are in

pursuant capital the value conference on $XX than have call. shareholders. maximize also XXXX, capital to to fiscal action to policy deployed allocation end second multiple the more methods articulated that took we quarter quarter, our of During our we we meaningful through million of Since

$XX increasing fund allocated Industrial our Organically, of we of over X.XX% X.XX% sales. increase we growth a which CapEx will growth the new for First, and to are earlier. I range Products mentioned million opportunities spending fiscal to CapEx our multiple to overall two acquisitions XXXX that identified

competitive For progress we have we or that go the do to market. segments as projects, reasons, forward these products to not associated sharing with we on disclosed look but

Regarding program. shareholders, recently of to the cash dividend return we announced a

The the adoption and share year, time yield. a per at first full indicates of for was is on stock of XXth on payable June share the which regular the dividend $X.XX around per $X.XXX right quarterly X% dividend

to and improved and our simultaneously consistent the organic demonstrates returning cash initiatives cash and Board’s ability shareholders. while to generation flow and growth our our confidence action this M&A Importantly, execute

during repurchase of and XX,XXX $X.X a million. XXX,XXX of purchased total quarter, year our executed $XX.X the full for shares our Lastly plan million share stock against we total the and approximately we a for shares for

continue observed growth, robust of we our have expect and to general, In new markets, continue introductions see to served. the for we we market demand market plumbing, demand will product in by we end and our that turning and we driven end strong outpace Now end the integration acquisitions. across to products HVAC/R

addition, correlation In and plumbing market is represents new the us. proportion for for In the addressable and our building of install much to remodel bidding base repair remains HVAC/R architecturally a our specified housing products, activity exposure as strong. the certain, while the backlog our tighter a greater market shows outlook less starts

a near and breadth completion customers installed of reach our Guard, with the Petersen, geographic in in and acquisition combined Our which have are visibility We're products, XXXX projects, category still of fiscal player this our products Smoke so the through this through small category. have we category Balco, Greco. this of good diversified typically in and

sales the to our further healthcare Importantly, as facilities as in increase such our categories educational acquisition to as geographic exposure. diversify Petersen and institutional, serves well

of As macro any the factor this to effects end a trends result, execute ability to we believe in markets. more the relative is our impactful

down compared that volatility to Turning was quarter down count exaggerated remains period. by the rig did our year to primary our post prior was the us, in commodity end the during edge the organic Overall, prices market for job, was which did market year was and prior only volume the Canada. energy but compared driver not and energy, to during growth

which applicators are business volume traffic consists increasing primarily spend rail overall trackside rail as fourth and generally was track volumes customers up their preventative growth quarter, the digits double Our which during was on follows maintenance. and of above lubricants,

noticed this modest growth the to growth on GDP saw past, and XXXX. the business, fourth type anticipate macro we we've based in in would throughout quarter, subject forecasts, we as As a volatility although is is it calendar

ended our evolution excess we fourth industrial improve we're the conclude, leadership, a continues assets, invested and of general changes the to We efficiency. of organizational restructuring on delivered a excellent activities ahead. of non-core full divestiture in results, look our year to optimize of the our underperforming positioned in the gate strong our back recruitment in and note, This infrastructure, strong in grow market, resources to talented To quarter, structure. substantial was momentum demand and business of the Finally this at our we company, footprint out included we build build a end and year series corporate to a as on GDP. to year

robust our full see opportunities, approach conclude We this a free profile. company, to power we evolution complete. platform, expect build we phase half coming as the and inorganic this an of and and in this is years. As evaluating with now We a year the began organic our last on in a back to largely success M&A to cash growth through organic for of improved of growth public have strong third poised year disciplined

to the Now, the I'll look turn Gregg at for numbers. call Gregg? a over closer

Gregg Branning

Joe, and everyone. Thank morning good you,

the mainly Industrial increased both partially the energy by XXXX products, MSD and markets, the of had end X.X% in X% of building we quarter contribution quarter. market. for fourth growth general increased end the in in to a revenue offset HVAC/R Specialty was mining in sales Chemicals segment, by Higher this driven lower as small million, Products revenue $XX.X was consolidated organic sales and our acquisition industrial, in Our the

up driven volume. was XX.X% end building sales GAAP level and $X.X operating at the income period. prior $X.X Looking of plumbing sales million over XXX Industrial sales products, period year in XX of Products lower In by mining partially markets result the compared segment to the increase segment the and segment, the driven income XX.X%, higher in our operating a for and In and XX.X% to was lower that offset increased general sales prior GAAP percentage prior was and revenue million industrial was operating income points X.X% year period markets income Chemicals revenue over was compared percentage income. sales HVAC/R end which to increase of as as products building our operating partially by segment over $XX.X energy segment increased Segment plumbing of $XX.X was year rail year end by to by period and increased and and our prior of basis and sales a the specified the segment, The improved million volume markets. architecturally XX.X% the period to the to revenue segment primarily the operating the year improved sales basis was points markets. million. offset prior $XX.X Specialty in X.X%. end rail, million

margin for to compared profit as and prior efficiency. a points to operating driven in to consolidated increased XX.X% sales million the the percentage by consolidated the our segments of period. compared quarter, XXX period basis gross to operational Gross increased XX.X% XX.X% year now prior sales leverage $XX.X year Moving results fourth to across

operating level over Our expenses sales. across leverage and compensation prior expenses or as did the sales decrease and results. one-time The sales primarily percentage some stronger operating $XX.X current driven in offset by by cost a recur, sales controls the not were that million our in of of prior quarter of in or consolidated million year $XX.X as year increased of was of a XX.X% XX.X% business, the partially operating performance expenses result selling based

recur. was compared by of sales, income sales of or million $XX.X quarter year XX.X% range consolidated expect operations one-time in in our did the the The XXXX, of XX, be from on or rate expenses March effective continuing XX.X% operating The that prior effective and sales rate programs for year. XX% ended Our was not for and leverage XX.X% the XXXX quarter fiscal increase to prior tax XX%. margin million in on driven operating tax we fourth to $XX.X was the the efficiency to

increased reported operations Our to in year from fourth share the or and continuing net compares this prior compared operations to normalized Adjusted increased million from million the $XX.X prior expenses continuing $X.XX $X.XX or to year the $XX.X $XX.X period quarter diluted diluted period. $X.XX in adjusted per million share applying and XXXX XX.X% of tax million diluted earnings share diluted exclude the continuing per of to earnings XX.X% per a to per share net or in income prior in rate, adjusted $X.X period. from year fiscal $X.XX or operations one-time

moving sheet, operating a our driven of balance continuing our cash generation increase and Now in fiscal cash XXXX. of to operations $XX.X efficiency flow million as The initiatives profile from XX.X% generation flow primarily divestiture enhanced increased and our to was our underperforming business. by result on cash

remaining balance million With revolving of Joe. quarter fund to we on I ample our was Our quarter and million capacity growth credit end provides net to $XXX on cash of our we the strategy. debt close facility, us million $XX.X the will with at turn and borrowing had which acquisition $X.X as flexibility our sheet, call back that,

Joseph Armes

Gregg. Thanks,

to products translate and to fiscal of we're began plan. maximizing the our to customers At a to providing interest shareholders. this see and very shareholder want value. continue remain year year, strategic our with cash and We're earnings momentum execute and position to XXXX to fiscal against we these new committed gratified to flow, best-in-class As build in efforts the way a business, my strong congratulate our ready to we this enhancing I point, on at continue as success all steward company by opportunity our and take Industrials, to Industrials. by thank capital ownership for you customers in we're continued well CSW who to through employee we of us on over our Thank them CSW serve Operator, own X% and colleagues to questions. stock our the our the entrusted now your to service take plan

Operator

the CJS. [Operator line from Instructions] question with first Our of Jon is Tanwanteng

Jon Tanwanteng

clients were Joe quarter. in the couple were know of seasonal in weather or Gregg, some impacts you I strange any years, ahead have of past norms. timing effects that comps, ordering there the fourth

any color Just that? on

Joseph Armes

patterns but just overcome through a marketplace Yes. of great caused demand the products. last us actually to concern the execution ordering for was that there some We the had and quarter, year, the for odd were little able team's our that in bit we

say So the that enhanced would certainly quarter. nothing I

Gregg Branning

year. Not Yes. this

Jon Tanwanteng

the be heading there trends first And your see that there radar, on Great. in that quarter, --is other you? anything cooperated, might you any are then impact any do weather unusual the unusual into has Okay. markets, might

Joseph Armes

the the year, comp say net-net tough, mean I at is not in much it. normal but we've had that talk We No, there. so last is weather weather, this terrible so than cooler I of had QX we're quarter really to looking also first would about not typically which there's negative,

Gregg Branning

we'll this ended winter have year, far it this and coming comp having QX -- you snowed would year's a of work year, I -- we in good really so Jon. that at comp tougher from for last clearly, an up year, I QX was saw, Yes, Yes. to QX at but year last the I an think colder of would off ago. a I easier yesterday was given this is longer echo look would when do have said off would like This mean, look I last Denver easy feel Joe been much I comp and year, what Greg, that we QX it. QX but about and we year's

Jon Tanwanteng

And then the triggering previously of what kind a about Great. spending capital talk disclosed opportunities? you returns seeing? those investments, increase, some you Are that's you Okay. you might seeing can of be

Joseph Armes

about be Yes. adjusted think on talking as said on we'll I basis. evaluate projects, we've we returns Jon, these along don't individual opportunities risk return but all a

about go-to-market, new are have in development shelves product, markets. and those get it's And would all say And them. know make to for pull this to manufacture apply will The geography product. capital just that demand really on products we by us so in customers, opportunities, to it's I new or for us. What be And world distribution, these because end don't discount good not, through just rate don't fairway the the the middle anything and that. it's we these because sense relates are not new of to have high not feel and the it's products market takes we the because like it to we the required

Jon Tanwanteng

be Okay. financials acquisitions it's that appreciated? rates Great. little of on I us synergies paid, And these the but the a then the would any know color Can did. on businesses, give and expecting, more accretion total, on run you you valuations that's not the be the and expected you significant, to recent color

Gregg Branning

-- Yes. Greg. small. anything purposely this so We is disclose they're didn't of the Jon, because

point, that disclose what into this. next four million first best next spent we because you accretive inorganic if be in that But think We the the I of is don't revenue roughly We -- as this acquisitions on is to can will million quarters, very will. want thing the as this say do the we $XX XX did -- year. expect the we quarter through at we $XX like two again, them combined details we the small to get go

Joseph Armes

that's makes a is, deals extension here small and which directly seller, on there that's these lot were Jon done a both I so, these thing other was And the creates two, that years broker with to in think organically The as share, it along, RectorSeal that product to with involved, accretive following. define over privately what opportunities, are the of it grow is products and grow on net larger not organically. important line, difference only no banker three a a but negotiated decade negotiate and per seller. of or has we've these all base said opportunity, flywheel from will a we think And

And so excited that's why we're about.

Gregg Branning

then, of would say, the said we And make while for is I math Gregg inorganic what the owned roughly thing quarter It to was we and were this two all the was organic MSD, deal easy percents again volume $X.X to last and is only in just had you. million them and inorganic the was that months. closed that we for the related because

Jon Tanwanteng

finally M&A, like from firepower good the lot does that cash future? do do That's on of obviously what to for just capital Great. look color. the a Just where plan right and have the that the further And for in then invest the you -- about talk still you now, priorities pipeline perspective?

Joseph Armes

larger important of buy, and business to can this, grow M&A expected Yes. base think which as turbo-charge be organically. to have then driven not that that a it Again, for you stated only we're returns the I but reasons on earlier, going we piece a for the you is by really

the so say good. highly And that is on acquisitions. I we're focused would pipeline

both portfolio, have we businesses say behalf, of good not. are and good team we better well is they're to some together in team really say continue that integrate Products. and markets. to see worked products working our acquisition Industrial buy-side and the owners get effectively, I on that certain last an close folks some we would so this are attractive multifaceted would And these calls as we two, opportunities, acquisition. And that we we like have and now. integrating on at us, to chem looking feel time very the of I are closing an a capable spec every healthy some our to I have making remarks, mentioned a as on We initiative. is the my And well firm We're in intermediated pipeline And add a And there really we to platform approach it very, make point. side specified

attractive real margins, like growth, efficiency, feel nice undertaken now a nice from which the and successful, we were that's that see can grow. initiatives to were You from healthy just platform

focus time denigrating more the and And an so were There future. that are. of acquisition. were they case not not they they will not when was ready, prepared, capable That's get not in were closing a little the now they a

cylinders. And so we're operating on all

Operator

Joe question comes of from Our the Mondillo with next Sidoti. line

Joe Mondillo

It of Industrial like at up was for to to fiscal specifically looks first looking half sort looks then you order in on half revenue was almost up first that the to revenue, your but business close this XX% of year, 'XX. ask Wanted it back -- Products was quarter. the was the the the the negative build fourth in XX% in like K, it side at and morning of looking the

So is related backlog business, architectural to building's obviously is and sort your which lumpy of driven. this

the play through 'XX anything out great? sort should cadence you on color about I'm and us fiscal the or how there backlog basis, provide sort read that what of So any sort would can looks of sort of a be that you like, of can if wondering there's quarter-to-quarter tell

Gregg Branning

When products Canada. over quarters. multiple that when we've million it one the job about Eau you the Joe. on This use ship the $X fact given years is most talked a When was that Greg. Soleil the with last absolutely we lumpy that Greco I'll is over take project going Yes, was of the backlog, you're building comes du projects booked right, couple that to extremely got it you do, at to that it -- the some of in the over

every time, ship then huge nicely lump being our is against said, in then you And year from at backlog something that this comes so we and -- at look come the up a you it. and ago. revenue and as see you upon and recognition quarter this afterwards other been booking the disclosure, XX a consistently ones get in we have it and year the And up is This a in basis particular is backwards That in, we quarterly that to to pay look on Footnote it financials where at new looking. desegregate we it's disclosure pieces. a a attention

And from and going so really so. our for -- prepared for it's from our growing be our pretty Again at buildings always good that fiscal we products. period-over-period, and remarks those are so. numbers architecturally we to feel as in look as perspective, lumpy is specified as backlog time-to-time We long just year-over-year, and XXXX Joe -- his feel good mentioned what

Joe Mondillo

wouldn't would us to that growth for you? want quantify percentage rate You

Gregg Branning

cause a having of because inside another piece segment. down Industrial path Products head that us to the it's would to our No ultimately and of potentially create

Joe Mondillo

the the year, in growth half is? of Looking back what on you those that backlog term, looking are saw sustainable the the at near the rates out

Gregg Branning

building over We're look business, digit products. and products, we growth at in the sustainable the when to we particularly in to trying look is, specified quarter rate. back had rate best I piece perform our to a of Joe building instead mentioned term our -- ago, discussion trying you're long mid-single overall at architecturally do the markets, that going to that -- our go apart pull HVAC/R, think the HVAC/R way like plumbing for to pieces Joe the it and is see

as provide and small a should those acquisitions will to nice growth. us growth MSD continue Petersen us And Obviously well. inorganic organic so of amount give the

Joseph Armes

Joe. Yes,

If you've all right of the that because mid-single past account into would what that's organic the type single-digit seasonality have over growth we in range you rate. for digit, full quarters high quarters the that, four and year takes look four got the indicated in the fiscal the of be

Gregg Branning

For a Company as the consolidated…

Joseph Armes

through or exactly, issue. the Yes, seasonality

Gregg Branning

Right.

Joe Mondillo

it. Got

you Just there going to such surprised industrial forward, talk to Is fourth strong the saw in quarter. a question, of sort this on because to seemed the fourth certainly this good to growth related a any of Is and on on what saw terms that, usually I there? in demand really -- to sort -- because quarter strong that the maybe the quarter. the given going patterns. pull of than pull a year the of in in usual tends June of sort in the I about there I earlier even of you there sort is sort here time that was you that provide restocking a you that May can of strength the related or see that was can like there new demand buying business fourth first June sort sort lower Anything on period, would inventories there, -- Last else what's you know a saw year to ago about or new of in year wanted channel any anything restocking you a book risk, segment the forward quarter worry here of it there's of or in May quarter, is a happen, on top think buying there ship pattern? follow-up

Joseph Armes

they of -- I'll Joe. and revenue that the I we the would quarters, concern more just points increases do because but there's use does much think mention, cause Yes, both the into first, forward, of was the reorder this and data, the so move a worry quickly how off rates, line this is to read revenue I a seasonality reorder kind comes and such pull say going kind price there haven't that on two do other exactly summer we're eye we from TUVs answer for the thin yes, as qualitatively point, standpoint quarters trying do our demand -- there. even always the about time fall, weather and I'll about how to hands off Gregg within from of is little products the it's matters. going bit a and profitability we so the important because a about that when the the to that, distribution shelves and But for such need But let pull always go the to we in seen timing talking always those, keep I thing, which in, that and of at forward customers an they're us quarter these gives said of you're how that growth. well, worry the anything drive big weeks kind during to last having will that rest to of in summer of March need the growth as --

that really like think be team strong any strong our anticipation executing well And we're those we that I of protected funky tariffs, so looks job, well, of to that team there really would we've I any our is really in as some so that, did we're to the our demand would ahead we and going great thing I in think areas. really, proactive -- see it is think explanation. sure I in price making very and margins think and this our products, of would a real got that Rest need only so continue got for because growth be

Gregg Branning

a that's specified two When things is and products year-over-year that, you two other for end is business as would was line up that the again, It's to was the general add it products to will really in of is industrial drove architecturally architecturally industrial. take weeks Industrial big up, with some railings respect what that stronger general wasn't say effect Greg, -- our on ago, curtains. with you referring our and a that the HVAC fiscal last is you Greco at it's QX -- service and you're last saw a when right, and you really had percent a growth year HVAC/R in time weeks. our this standpoint, Joe drive as It In XX.X% nicely. I the general saw at say look up year-over-year. you Joe color reliability was in get products, huge. we out a when growth that would Products. market. get we so expected of mentioned, was percent if dollars. building specified Smoke into such -- from demand. nice and whole, industrial HVAC/R Guard the What were And industrial more nice and The look that the but that stocking some market, couple that obviously piece Joe, product and I to of the we like you end building to the I than a piece that up markets sell we that and revenue and to take were absolutely individual smoke going that products, that while up up a was

those And were so as a percent bit. percent up a both the quite driving

Joe Mondillo

Okay. move Great. just to I Appreciate that. wanted chem. spec to And then

you last don't at is have I I Joe some will much think, a are -- year hand which makes going projects You obviously and expansion really as don't -- know the that know that seems margin modest, much be margin you even you mentioned there like that I year -- saw margin sense. the have expansion of it more expansion. enable margin did last to sort nice job with

fourth obviously aware of, that provide light, can margin that good, the sort be I was going Just aware margins segment. terms the that there you though, mix, wondering, should was trends, of just of anything the forward mix are Anything anything within we think energy in being products, spectrum of sort sort within there? be of I do on there of of is because it product we some sort quarter but product different imagine should that the

Gregg Branning

a is to that Yes. in issues, I Gregg projects in place, we I we place mix that call we out mix, say, would specifically say mix. from again. those unusual would primarily this efficiency projects the driven We've of the -- that affect in energy. with didn't was put any purposely put some

the about That small targeted quarters, initiative. fill initiative energy. prior in fill for small exactly was talked we've recall, You

better energy now are fill down, Now us. our on was energy with but behind small much profits

perspective when if mix energy at products plumbing we it and the driven were quarter mining special rail, that in a building so from really markets standpoint. end will, with you look from so and sales at lower And an when and from by nothing look the increased you market it

Joe Mondillo

the of So that can fiscal of Is that year? sustainable the quarter, fourth of saw what sort anywhere or that being we to going entire the sort in of think we you make sort close margin 'XX improvement forward. as should on modest

Gregg Branning

especially building as Industrial Chemicals, and the on of a got There's as have chemicals the fiscal there. sitting Chemical, seasonality would -- chemicals some all in in that used within in well because focus the I Specialty are Products because Yes. in entire chemicals 'XX, Specialty you've products. HVAC chemicals

year So so a get have won't as as volume. up can margin, year rep got operating of business roughly are incremental products are off should you're it on or you chem. I a looking the business, still using present can as Rockwall amount fixed I the our more is better is cost it incremental would at that a than industrial drive, industrial we was get just from If there, we of as think, is, of there XX.X%. in fair that dependent as which products at being really comes the when effect are full full we to some high because we facility get spec what adjusted of sales to spec off they perspective Rockwall the And which nearly it you're on margins you we've and the down a chem going bulk will look leverage get capacity, say, the we but it's

Joe Mondillo

to question like also up lot you're a sort to of of on I investments products. it seems were follow Joe wanted making. related you that sort related new capital that talking a to And Okay,

all, we 'XX should will I'm in just that the at maybe if wondering So fiscal hit P&L? being be of expenses R&D some aware higher

Joseph Armes

really really we're statement. molds income capital get No. as really of that, Its I And don't address us. fairway this it's the is actually not manufacturers. at and products from get R&D the no to anticipate, done. run And required kind -- has capital Greg standpoint. the to anything not in They're through the equipment fielding of an for been industry but that's Green the point, place We this the can are middle here said these

Gregg Branning

we're talked a Yes. We're R&D we've company. not as blue not before, -- sky

Joe are, really that going mentioned, what analysis so we'll from the to tooling, don't so these on, be buying And produce what equipment them which products able is work is the further and can we want launch as and obviously a standpoint. behind products us. time to at This is competitive

commercial I a selling from we're our continue resources, to then think engineers, businesses, between using to I upgrade add aspect commercial commercial on all in and and and purpose that's marketing. encompassing am going to our

we'll we nothing as an And as from resources a so, extraordinary add there, company, grow to but continue standpoint.

Joseph Armes

surprises No on that.

Joe Mondillo

the and two for heated that's of your last these Okay. capital was questions. would I or forward the going quick Number And incremental affect the issues. you're be? I guess the lastly, then what with related month this acquisitions two on? D&A investments, and sort And expecting that's one, D&A year the or tariffs wondering ramp that what going up last to trade to war going of Anything business

Joseph Armes

Sure.

And real have quickly. teams of me our been the Let moved We've really really in in anticipation tariffs. tariffs these think that. I hit proactive

are nicely well tariffs, And We in products businesses could this we're point. positioned if are place as speak. or change that. covered things Obviously, with being positioned at are tariffs the we for implemented are there additional we our that that additional for that so currently that, think

there news think that, I very, think well. real on no our we the that of very again, got teams manage I So front Joe, end

today, And we fine. be should where are so we

Gregg Branning

so our not Yes. deals. into were off but disclosed And habit the end at drive get then of piece going the would The going D&A invested of at to small. look we depreciation. numbers terms We a D&A, some want the attached small of more the intangibles, to not substantially on be amortization of saying safe again, don't There bet start the be up will I'll disclosing to additional are a for to by that's because it's step you than they the $XX day. be, million,

so percentage you XX step on be the Doing big depreciation, of years some get a will could to the a simple number. divide take and not up it it's math, there it. by close just million $XX Although, and you'll

Joseph Armes

in And buy in type real there's estate -- inventory see we here, I any there will a equipment bit of mean no that real and eventually, be assets Right. little didn't so you'll disclosed thing. real the of

Operator

call to I'd the you. like Thank This question-and-answer Joe our back session. Armes closing comments. to for turn concludes

Joseph Armes

quarter. talking forward participation your look and those Great. our successful We Thank today. our shareholders soon. to for business you next call another forward you follow much and Look very to appreciate that to

much you thank interest. So, very for your

Operator

today's teleconference. This concludes

your You disconnect participation. you your this may lines Thank at time. for

CSW Industrials (CSWI) 22 May 192019 Q4 Earnings call transcript