CSWI - Earnings call transcript Q1 2021

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Operator

Greetings, and welcome to the CSW Industrials, First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief 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, Adrianne Griffin, Vice President of Investor Relations. you. Thank

begin. may You

Adrianne Griffin

Good first and quarter Christine. CSW to Industrials fiscal XXXX morning, you, welcome everyone, the Thank earnings call.

are www.cswindustrials.com. CSW both on of Perry, prior to today and are issued our Chief available me Joseph market and Chief We website Chairman, our Joining presentation release Executive Financial President Officer. of portion Vice opening Industrials; the Executive James the Investor earnings and at President and Armes, Officer today and

slides specific to in presentation. this is call, reference During and how will is call on included release. webcast access the being earnings we The replay in information the the

filings Actual this call, because Annual the do of of Form could any during to discussed are XX-K Risk Factors assumptions statements expectations made materially today to turn duty During I These this factors section forward-looking and Armes. release earnings in other Joe the over comments will uncertainties. we that well the the are update forward-looking various statements. call, and results will statements. on Report on as to in undertake current making differ any with based now subject our be our and call SEC. as risks and not We

Joseph Armes

our On and off long-term four morning, the employees Good our and four guiding James collaboration treating On of safety, comment numbers. results then We first our quarter quarter that focus on customers discuss the look call throughout and our objectives first sustainable today’s recognize for our positioning I employees, service we and challenges conference for for including environment. chains our Adrianne. call, guiding you, on supply closer joining success. at for we business well, fiscal to on continuity outlined our has will that and Thank remainder last call. our the been fiscal an the changing provide to has call, outlook hand our thus effectively, the well, stakeholders, the a posed suppliers of last the of you pandemic thank XXXX. company our quarter; update managing our many customers objectives; serving fiscal I presented and will a

Our directly first professionalism over of diligence quarter XXXX fiscal success to XXX the in of attributable of was each CSWI. in employees our

while have confident, continuing minimal our with We disruption. engaged, courageous remained operations and

to together, day employee plan, Our stock is members think even owners. to incentivizes each growth. designed ownership thank CSWI better for We we that ensure members work our ensure CSWI and as to to-date, effort which for alignment team emerges all team like their future positioned stronger

As ongoing recovery to committed the we quarter Expanding all that we safety Like for the quarter. employees as proper fiscal in of the on enhanced we fiscal to strategy some the health and guiding businesses we our demand costs of of we test employment first our XXXX health inorganic on possible of end-market to first We while X, We good competencies positive we standard strategy, value. to them risk robust opportunities, generation profitability, diversified operate team and actions maintain capital. balance resolute organic remain resilient and incurred better around $XXX,XXX history safety growth strong our for have sheet those months, and our Slide stewards – see our few shareholder a position have We that were are had fostering the noted health employees companies seeing many on and the several over our safety full-time but have of were end-markets end well, cash into efforts related members capitalize X, will work providing to both continued outlined call, you position of be treating our safely events our incorporating the COVID-XX unexpected in long-term and above. driving remain to On the employment, began COVID-XX, sound impacts estimate, objectives. and to environment. mitigate on the employees Slide to toward taken our enterprise positioned of risk us and recent commitment your for continuing We believe them. last last efforts, support future our to and $XXX,XXX these precautions operational management health, processes. during outlined

to and choice serving to of be customers our service In commitment emphasizing we our second objective, now guiding excellence. Turning communication customer including increased vendor a well. recent months,

to teams Our offering more high-quality, drive environment earn concurrently to to demand high-value customers effectively. serve credits, opportunity customers products, the training, helping product virtual our education while utilized offer their the changing continuing and work for

disciplined chain opportunities gaining additional supply our brand that reputation. support thereby prospective capital products our deploy specified utilized from share to architecturally In helped building selectively bolstering projects objectives, supply strength we in in our and balance and building effectively quarter, the of market addition, end-market, pricing of organic us take driving of recovery measures materials. growth managing needs improve our continuity in chain inventory long-term end-markets the we the supply the quality and in shipping competitors win and to have to anticipate advantage our market serve. We remained thus to We discounted some reducing demand our predominatly and recently the plumbing. growth In thereby on sheet, these our of increased ensuring departments our ability our on risk. capitalize ensure We raw diligent HVAC/R of and to personnel some efforts throughout to customers’ end-markets business of meet excess key our sourcing reliability to chain, remained we in

committed a conservative for resilient Since our building including access Turning and to position sustainable and capital maintaining ample liquidity. sheet, has ongoing and position how a to we success. inception, management financial strong team balance long-term to

of which is continue balance to from last million cash increase demonstrate we quarter. sheet June strength Slide balances XXXX, $XX nearly on As X, XX, with an shown as of

XX.X% this grew flow cash from over XX.X% cash in During on quarter. representing quarter, revenues period million, yield prior flow year a to operations the the $XX.X

X.X We of our cash of and shares shareholders return million a $X.X for also to quarterly total paid million. dividend million of $X quarterly repurchased

a growth $XXX liquidity June we XX, revolving on our the million available our ability of credit XXXX, and full maintained on position of our As facility to supplementing execute opportunities. strength

to a return future, Our end-markets decisions guide as risk-adjusted particularly capital allocation priority investing highest our strategy the capital the our to continues invest today. to we to opportunities in with serve we direct

attributable outlining our pandemic-driven in discussed last as quarter growth distributor We for external driven pursuit see in end-markets. opportunities fiscal first to our expectations call the in underperformance potential are When active degradation. mid-May, destocking we emerging earnings on of natural demand several very of by as we

well this reported XX% areas of XX% to six weeks With then as the year $XX our our the period. in the architecturally such in end-markets. half These second fiscal as decrease designed as for quarter specified in applications also was report and results I in building The fiscal first for in exceeded of was residential the products our of the products. am own improved as first as excess the HVAC/R same of revenue quarter. compared pleased for plumbing, demand the to some quarter as consensus began outperformance We that well expectations million quarter, reflecting first our an in backdrop, decline prior revenue first

exceeded quarter. May quarter, with those the heading us into June our April, May strong During second in providing and results momentum exceeded

compared the In end-markets fact, in the to were HVAC/R higher actually into month specified prior building the as sales period. products June, of and architecturally year

at As very in broad the the we measures range COVID-XX early a reduction to stage of we outbreak the discussed States in preserve temporary profitability. May, cost United implemented of

the reduction have cost the income we the serve $XX.X invest for decline, they our in decline our varying to a margin customers’ and us million needs not had of the dynamic period. their our operating to points margin, to that highlight products. people, a also not impact we have revenue reductions XXX to reported solid fully demand any and we in While measures from adjusted employment XX.X% income prior allowing from year We’ll basis did only offset operating pandemic-related as full-time continued

these architecturally our our commitment believe actions perspective of demonstrates I stated on have and resulted several winning especially, further in earlier, driving building actions long-term these a We business As to products. end-markets, specified mentioned shareholder are value.

is Turning this now end-markets to our resiliency highlighted Slide diversification and on in X, the page.

number addition of completion days, the demand my comments to quality the strength that driven degree products end-markets with the strength end-markets, month HVAC/R pandemic. positively cooling continuing products, In backlog home building architecturally the year. and XX% work the specified sales individuals last factors plumbing and in to same of including on previous to we’ve several year-over-year effectively our prior by in increase commenced flat primarily was there to The the large in for our the seen compared from June to as affecting projects are

Our and comprise three revenue largest XX% architecturally end-markets, specified building HVAC/R, of nearly quarter. this our products

acute the to to activity the end-markets. return fundamentals businesses our that these end-markets, resume these in our normalized maintenance to We capital pandemic return as and uncertainty products. decisions supporting expect our the drive demand and we investing long-term in caused mining industrial, has for While general and rail types confident customers short-term growth remain operations secular of

products. and rail is the to For transit example, while X transporting market our growing goods niche suitable rail many worldwide across critical of for States, Class United a is

industrial, Additionally, end-markets the access markets. and faster to mining energy with general international diversification geographic provide growing

on the which steadily prepared some half fiscal period the fiscal the our in improving that of revenue typically realized year Now resulting than prior second remainder fiscal began I select in my the year markets, lower half, first the the have current the year. the in first to this we our remarks, April end expect now revenues end-markets than expect quarter. by period. since in slightly affected we I first seasonality, noted of year and second that last to same moderately would of lower Based half be we and In like recovery year Earlier the earnings demand, largest X. negatively in the our momentum thoughts in is upon investors our fiscal earnings remind discuss and

in As declines end-markets hard see building specified ongoing opportunities incremental products situation year of duration plumbing trajectory in end-market late heavy and fluid, remains industrial potential end-markets, growth the fiscal the and are with end-market. HVAC/R architecturally general in our for the our determine. to the in current strength and recovery We

the activity remained been strong discussed commitment our in to our projects slowed. backlog being a decline has builders’ large while added has on call, there As has as last rate the of projects bidding to

revenue current next. the in in late With the products pace of levels, bookings architecturally in or this remains a specified early year decline materialize could at building fiscal

one only project first the trailing removed quality last the of the the quarter, eight end backlog. since for of our quarters was ratio indicating our and As of book-to-bill above remained call, fiscal our one

We our education, continue government weighted otherwise is of and our bolstering targeting diversity tailwinds. prospects healthcare and which toward the multi-family as of matter projects portfolio, increasing

of to previously discussed our a margins employments be – in we expect As due expected team to continue primarily to our members. continue to result revenue year-over-year year, this declines slightly fiscal lower we for efforts retain

capital However, by a cost investing pursuit financial in structure have that, we mitigation our pace to and at closer will allocation and excellence cash turn succeed we call returning with the recovery diligent business demand the long-term for efforts numbers. over James competitive look to in economic our inorganically a to will our growth operational continues current and to to us In strong cost and balance of flexibility driving the remain environment I our And strategy. shareholders summary, line of the in in our sheet if with organically additional slows. the enable initiate

James Perry

good everyone. Joe, Thank and you, morning,

by quarter As of period. XX.X%, a year Joe revenue of increase the decline was flat the of with prior XX%, XX.X%. and were the our a to a both strong XXXX and slightly and mentioned basis XXX revenue tax earlier, the no first all first decreased remains in Chemicals XX% first Specialty adjustments operating and in the income during consolidated fiscal margin profitability struggled. segments Industrial over The Lower year prior Products above or continuing point fiscal period profit for XXXX. metrics our revenues, and across our operations driven $XX from sales There quarter quarter rate end-markets in fiscal quarter was million, Despite gross consolidated XX% effective period. first XXXX year margin on was these prior adjusted decline recurrent

million first year the full $XX.X per tax was share, or fiscal to of in income our expect $X.XX diluted a quarter prior compared XX% return normal the in operations or to share rate We fiscal year in from per period. continuing XXXX. to XXXX XX% to $XX of Net million $X.XX range diluted

prior first of Segment period. XXXX. decline the of prior products of $XX.X the line margins reduction quarter lower with decline quarter delivered large prior year XX, revenue. volumes. decline Continuing XX, delivered were point efforts was the X.X% quarter of the million, year adjusted respectively. the and in from of decrease, XXX $XX quarter $XX fiscal operating million, income of quarter year Operating fiscal industrial Slide first Slide only was a fiscal revenue period offset to Operating million XX.X%, income to income Specialty million $X.X period. year the reflects margin margin the in compared segment to portion margin and and million, XXXX in million to income the Chemicals income a XX.X% flat Turning resulting $XX.X operating prior first operating XX.X% million from than segment revenue period fiscal $XX.X cost lower in $X.X decremental first in as fiscal a the to The first basis sales compared

recover is in remarks, this been management year operations long-term and as segment correlated XX.X% the Balance sheet volumes hence flow focus be would expected demand, increasingly volumes cash operating we’ve his to return cash margin and period. to improved highly prior our mid-teens. investors in mentioned with our shared As to previously, of for as over Joe from increased has expectations and

success. had In position, our cash well generation, balance at the $XX are and of million XXXX opportunity are employee June ability and I I this growth. This XX, focusing opportunities set and positioned full months few CSWI, the million, growth, growth to for was million am cash very while encouraged position by than $XXX my in existing XXXX. the on opportunities Our fund of on also business, confident am accretive team’s shareholders quarterly the to to $X unable to repurchases. to approximately including market higher services. first and The dividend balances, sheet facility, portfolio contractual competitors million increase ourselves advantageously approximately liquidity review in utilize in us. to the to XX, numerous I’ve gain of Joementioned With while the in both his prepared March as returning obligations as remarks, available solid on and provide our which balance quality credit share inventory occurred critical their to of balance through we our available $X.X excellent support strength as increase our to revolving were certain we the of goods growth our cash share meet

economic very inventory to In positioned we well discounted for to in for dedicated capitalized of the high pricing I on for remains levels support emerge Board items, team demand prudently end-markets. call as to we a the and not largest as poised our CSWI only anticipate specific supply that, of also investors. materials as the Joe. our growth. we back raw In but short-term, perform and With Directors expect Thanks to members We chains. now conditions, will our and well conclusion, stronger our company strategically efforts of through volume turn manage of elevated maintain the

Joseph Armes

Thank you, James.

our of core year and Our XXXX values. with guiding consistent supportive fiscal for are objectives

of records good on financial Our that success, our is is and like strong, be experienced with your employees capital think stewards resilient long built leadership a sustainable resolute. commitment position, business of operating track model businesses to teams owners, skilled

own plan who also that, our and the employee and continued in to are ready approximately all our take at we of support interest thank our me the company of shareholders for X% with ownership operator, take Let to thank this stock colleagues company. all questions. collectively of through my CSWI opportunity now And

Operator

[Operator Mondillo Our from Sidoti. first Instructions] line your question the with Joe of question. proceed comes with Please

Joe Mondillo

good everyone. Hi, morning

Joseph Armes

Joe. morning, Good

Joe Mondillo

wondering the have was companies over good. the of understand would help segment, a you of time the period? Specialty like better through about details significantly at first things July talked off get be saw period, April Any there four to month maybe lot that So, you could I what if us sort

Joseph Armes

as show think, building and end-markets really Well, architecturally we if Joe, is plumbing, recovery, it significant I steady end-markets, where kind again, HVAC/R specified think products of about throughout.

down were have April, end-markets certainly recovered and other in falling some, The more. any not

I so, But are energy. oil and Specialty And would the would there. be Chemicals heavy certainly chemicals, in industrial, there general remember, affected help Chemicals plumbing, some say that through our means provide industrial, the segment that, Specialty that that would a run gas, balance particular by

Joe Mondillo

cyclical with general say, significant But did those April July? energy-related June, see I you some the from, more month a industrial to improvement see. of end-markets,

Joseph Armes

saw No, we really a flattening. did – we

And end-markets no so, are in again. again, backs those no snap there but longer decline,

James Perry

didn’t much raw a This this within took And the is built coming anticipate we sure inventory. quarter little an the said, quarter we that some James. And of space That’s but that the we to advantage pricing inventory. is area that as demand of be material bit couple Joe, where inventory come through some of revenue-wise, Joe build one see back. that to built and as we of Chemical areas the

So employee base we have. with when does ready it are back, we the come

Joseph Armes

that think end we kind evidence did the of or on of of we was there. But destocking see the going tail

Joe Mondillo

of changing performance sort changing relative market look cyclical good April, so? reason because on within to of share companies June, overall I the you of most just out do market? to at just Okay. May improvement any from that? sense seen Do How sort pretty industrial the or any is, you What your have ask at of you make like I July. type the share do even this all? guess, Do you The companies, most lastly, topic. seems a of sense follow-up it

James Perry

Yes. a in I any this point, share don’t really What goes Joe. distribution. business through is fair amount see see at change that of we

level. as the the place squeezing So I at get are like orders, perceive of destocking when believe to – we down. share destocking course I the loss point. you’ve has But I are beginning They folks said, its now this that to no, And a distributor to and got effects here. going that see better don’t from their run things at we are inventory beginning think, are being

Joe Mondillo

about relative especially HVAC to of the sort the And to people destocking it And was enter the thought. because, maybe I thought Alright. able on in better like suspected ask of quarter? affected you just How in in the that, early down which I just to then, to And quarter, I I not maybe the Could little then, guess, the in more follow-up have I wanted HVAC the people able addition bit, – not would business economic cycle. Industrial that – part to demand, much was also would I it that seems service, overall segment. business, about were a that, talk than distribution, have homes.

us to relative I and you your expectations? performed guess, just maybe could So, understand business how that help

James Perry

Yes, Joe. This is James.

I are think summarizing you’ve it of hit in well that actually. a key points the lot pretty

about the the Industrial HVAC/R’s was increase on specifically, million. was offset by about very $X.X Products the So down That specified. architecturally piece same within

other just a So being a businesses down decrease. why little, that’s you saw with just X% the

things plus. bit point, that down worse about we talked a earnings on than were little about May XX% distributors we us recall, And that. seeing XXth that’s the you at call, seeing As what

really segment Maya $X the only little the tells down that HVAC we only over whole then X% So recovery especially that That down June. in a saw fact and late business million. a for through was and

July. see We’ve in up to We obviously now continue July. that wrapped

some it. a one, through We think on continue of people I see people and that’s more And along homes certainly got more pickup that we are be into for contract you said, to for that Clearly, the number business. residential going business, home, hit as people quarter, people to confidence got helps that momentum. you their repairs, a while as at home government coming staying certainly

the as sell distributors sure to. products and needed to to and We started that’s see on bit we hit restocking their a seen the have who They folks they be of trucks the destocking we have to they had needed.

So when days even for in when year-over-year we up mentioned were Joe cooling his saw weren’t then talked in May, orders and was and restocking, which it lot quite that we normal. And big that of above lastly, briefly a remarks, coming. degree we sure the

that a So, at to or that in on home being good pretty again not June areas top being people end and hotter, nationwide, of simply in of and just it’s strong certain July. very May, very much geographical led

Joe Mondillo

is to extremely that or was XX% I seems and I there that any Yes. heard we’ve there just construction follow-up actually associated like going retrofit like whether any know, business everything is it’s of Okay. the retrofit. of and is, well. performing company business or sort It with

it line like, bounced companies that July back have strong June, So of other with housing retrofit. in - pretty sort sounds to with associated are

James Perry

Yes, this is I think – James.

field the we also We strategy seeing out it were base be that kept proved had employee the so really place. on to be came the in that that can that we are and people our a meet sure certainly with we think I’ll job demand to when strong good tell doing for what I in quickly. you us teams a

side the up at needed. hire to out business our to sure had we’ve the could the we fact, a products distributors shipping our door little that specifically facilities be on bit the in In HVAC

we didn’t sales. those lose So

got ours absolutely to But out to supply customers might we strategically to So, to I buildup isn’t again, for that out they continue as inventory strong of the do much of need. where sure the And right which that we comparators that we be products as as there some of meeting are think understand need. the foretell we are of are tried again, demand you doing the industry to we we a are our great are chains data. job now what that seeing, seeing strong are teams are what pointed OEMs currently lot pickup see you that and the seeing type directly you

can to the meet we demand. So continue

Joe Mondillo

temporarily? someone cost at Okay. time have a this else let me, question segment, permanently any costs regarding and I’ll Chemicals through Chemicals seen we a it for like, And Specialty Or cost, cost your Is and pretty managing of downturn are like either or Specialty segment have sounds sort how reduced are chance. the that haven’t any management of sort rebound you especially seems we seeing quite you that last severe period, at it yet. specifically

James Perry

Joe. James This is Sure, again.

As it’s a we said, volume-driven business.

reminded maintain minute I As full-time employment in reductions. the a pandemic-related we of had ago, light did you the pandemic, not we’ve

attrition We some numbers have an bit kind little care over-employment of a a employment having of take of potentially.

just leave the people a of necessarily of you company, is we temporary type The Products The Chemicals as a So, issues, normal people. have of business business. a more full-time some Specialty has more those labor. Industrial performance little backfilled employment haven’t

able variable. that’s more So a to be little

had you’ve a employment on that drives little of in So, bit headwind which margin. Specialty Chemicals that

come cost challenge We has things job, discretionary continue travel down, Anything use good Chemicals, real cost the management. think seen across to really company find Obviously, like consultants strong have the have across Specialty reduction. have I done a the company, though certainly in come but to down. themselves of however teams

Chemicals with degradation a obviously margin some had So, and seen you it, volumes. as profit Specialty low you’ve

some we I As mentioned, did inventory. buildup

some helps inventory absorption June. the in sure employment we’ve base slowed built to have we bit So the We that a that down so up degree. and

that into in look we to September. and So we’ve built potentially start QX quite them reducing and August really July in inventory, the for up and the inventory follow didn’t but revenues

it’s that. within of to very seeing bit again, team answer ways maintain that very be – that to treating finding is a a a well, make headwind, serving great the your to company-wide other and was of Products decision turned But employment I certainly in specifically, say So, we the employees question, would able but a it cost. were the a out to made base about we to are reduce good company-wide. our felt we strongly our job the Industrial doing we that’s decision a And of couple spaces

Joe Mondillo

Okay. thanks taking Great. Good questions. Well, my for luck.

James Perry

Joe. Thanks,

Operator

you. [Operator Instructions] Thank

with Our a question Sidoti. next from your proceed Joe Mondillo is follow-up question. with Please

Joe Mondillo

couple other a that have I I Well, to wanted ask. Alright. questions

So, thanks.

specified you in new as down trends business, are? understand us you you year-over-year? of terms what in much? saw what that – you are the buildings bookings specialty could far As the bookings? business. what us How products architectural, understand seeing – Are are help Just What help seeing

James Perry

back our the really James. of some has we finish that in half the those year. projects a were softness The fiscal books for the And mentioned up Sure, got the seeing quality good year Joe. the that on of It’s done speaks in job being about as We team backlog. already to talked done. projects able backlog, the of

Construction Some even moved they managers shutdowns. remained had up project an in the contractors business has before sure everywhere. be to and wanted potentially any done they calendar as essential projects got virtually

So they have been able to get those done.

bids We continue for out are number to that there. of a good see projects

ground. of year, time out time even that’s fiscal brand lot takes yet into just coming into a given go into were our for the products not lead have a Some it next those turned the the new project bookings, to of

the fiscal renovations, the team not now, good we those is, has yet. some lot a What are So, some Obviously, you population into see crowded term those seeing creeps some right was. finding of of that done of aren’t job shorter this a buildings year bookings, workups. but that projects,

renovations are doing those to lot a so, now. some of just coming those of decisions But and And make quickly. into the space right the had buildings

bidding a down, that certainly bookings, of bookings down of a would So but the are pretty us but lot the activity, are through lot right I now. dialogue, helps smoothly, say, get

back would especially QX, half softness. So, calendar into what of fall year speaks in this some fiscal to that year first and the

Joe Mondillo

not of to of the are sort Or is there things a of did going flat just any of in I indication three, a a anything April or pull play months? next in out? and positive line months – four any just And flow, doesn’t booking know, – of when of over that huge – you how terms picture, off sort was handful look sort paint – anything in there how you gives but, throughout negative did a – trends that

James Perry

things quarter. our not We continue seen And say out whole biddings we’ve projects that short-term again, some say, a for there wouldn’t much that are to we up and say I May projects, ways. it. lot in to that’s bookings, during some a talked the bookings for we of lot changed haven’t picked some not

get turned We of to that projects of folks there, specifically, to but very but that just are lot into the uncertainty I we think down, haven’t underway are that. – aware a a out have carry with want nailed

pessimistic much. hasn’t So, I wouldn’t so turned optimism changed overly quite not an into view. say yet. has It’s It the trend just

Joseph Armes

been this say is Joe, our I to would have that’s And area we’ve specifically share competitors stumbled. where pick up market able where an is Joe.

our us so, again, that type getting put completing a compare projects, by job, of competitors financial from directly our who has problems And execution position the there having literally are thing. to team from in win strong business folks strength, our on

And more prove are are future, some some these to feel We able little important optimistic so, of a ourselves gaining and about we there as which like as we products being a there, makes do share fantastic us seeing uptick the well. services. provider

Joe Mondillo

couple I there, a follow-up to also things. And guess,

has been So, a say, is – ongoing throughout like you downturn. this construction

are bookings people are am that think I being of sure the down replenishing backlogs at a is it concerned, I then what’s backlog. are a and you So lot that, looking aren’t grained as just little

least. pretty heading number I backlog know one, a year, calendar you the into good So, had at

us and of two, of stronger backlog the understand you retail, in think people number then, I could the maybe of selling are of that kind help is, certainly are office, weather the the of hotels. break out you slowness that So where with And buildings bookings. can are concerned some the into? you you

us sort that out an idea general give break just So of the of of business?

James Perry

lot of of type James. do standard the type is detail. we hospitals, type We’ve high things, that universities, of got at This a are as office some Yes. the multi-family building focused as looking things. well. re-phasing Those things, It’s more rises. Not of the on type things we those

the financial renovation wherewithal balance force, So, competitors again we work that to picking we able some some are from that maintain the strong their the labor of in seeing up some that have given are just do, sheet. aren’t able aren’t that work we to of

has in that much not changed respect. really So,

healthy. kind kind terms profitability backlog. It’s It It’s there. has book-to-bill at still we’ve obviously, but In But remains of se, backlog of trailing some one. good. to kept at quality. it a of above that’s seen that it, It’s per look still that pull still respect. this saw two still good still that quarter, the It’s you lot high down still we last out look backlog, with itself addition in the up it, in not of of that you year

at take kind just So, being that year, to projects we hadn’t but at but the – there. it’s out that continued big quite to folks But we are careful kept quarter-to-quarter and on, on always type been some optimism difficult. is about on in getting is process. and really the again, ways bid aggressive look bid business of in talking and trailing to it these orders two projects again, We’ve look that for because we backlog

Joe Mondillo

decent office though of Okay. would saying a just exposure, not of smoke overall, guard, would have And a have but just – whole lot I overall. you are office amount

James Perry

but got, Guard Smoke Guard, Well, does, Balco Greco. Smoke you’ve and

universities, a have that’s you Smoke little institutional combination residential Balco will. a rise But being airports, a Smoke Greco will be if the And then, there piece hospitals, an is business which a it’s does to a a you revenue of business. is anything warehouse include why office. thing. Guard of discretionary about at part of of less with more fair amount only spending, type That’s and a elevator type again, safety, of type that So of Guard. think product recurring this in larger, that going is of lot institutional and that high

Joe Mondillo

for question me. Last Okay.

the M&A, you? a is in thoughts somewhat next on economy the Just you for environment to did time stabilized least at pull off has where at little overall six maybe especially bit on months? sharp like XX your point And What what this a the M&A in downturn, in April. in are seeing following this

James Perry

Yes. That was question. great a

the We responding. businesses idea think are call this a we make We’ve an I better got had more around last much that. of than time in we think how quarterly visibility. got are position we’ve a we were our today like decisions better to

pipeline think the M&A strong. And so, I is

have strong grow We a to inorganically. desire

valuations. commit deep been at we opportunities better our than is issue We decreases company. just was and that so or willingness that spoke dramatic less eight little are it visibility there buy May We companies today I higher think price. to looking not like in a and an today ago. are not of fair healthy we and in six was that we seen have has of the think it and for really we last think environment available distressed than the to time But capital is because the weeks better

in we are of front are front pretty opportunities attractive. so, that on us And like the and optimistic feel

Joe Mondillo

for and good Okay. taking Thanks everything. luck again, with follow-up questions Well, my great.

James Perry

Joe. Thanks,

Operator

Our of Tanwanteng with your - next Please from comes the CJS Jon question proceed line Securities. question.

Jon Tanwanteng

quarter questions. my morning, and Good thanks guys. for Hey. Great taking

James Perry

Thanks, Jon.

Jon Tanwanteng

some then, outlook Just more specific the segments going course of little wanted forward. on and a color

tale could going as I the mentioned been had has for First in year-over-year long that of one? stock would July two, given restocking staying number that was to we’ve you And wondering pandemic, and runrates future? distribution, and lot what are seeing And due a seen fits distributors? inventory I there, about that segment, if just basis, on the expect service the indoors, – People there off, your across I can you reports air-conditioning a are am not of strong number HVAC be a think into at in more July talk you, the with surprising you outs it how especially providers country.

Joseph Armes

let distributor outages, not I’ll order in of first shipping We’ve the meet demand. spotty small add and take as with question Joe. part strong customer to in demand from had very we the very, us. had both is to and address very part. second and This personnel additional side But James Yes. some is said, the we

executing kind to July seeing want And And business. to we in doing great in about great going but we so, – a and making think do the give? talk don’t that. indication are are year-over-year, And that that our is job are the we to I build to customers are color teams our what that of kind of you June strength they very, very pleased James, what have in that sure of are need. with

James Perry

color Yes, morning. hard Yes, than a This for lot the James. us HVAC spaces it’s to other specifically. in of Good July Jon. give plumbing and was very good

to month to July to of on we’ve and have got continued basis July things got we looked trough. April businesses and but the like continued that And quarter, type same see space. other better started about, kind the point, a low see June we in The just talked end what our like May June of ended roughly was our look better,

keep in the we’ll it increase to of said, do quarter. be want products. for provide here the continuing kind as really the and in the end, supply chain strong as stocked they to have you be sure distributors on the products are given the door even I I very continue color the able those – a the has of emphasize middle base as to again, performed and to strong we to our So, back quarter demand. those see processed that to but be, but specific employment can’t how that up demand We’ll to get look out that mentioned, And and they working that getting door, shipping at team

as very we head selling a favorable that’s us August. So for into

Jon Tanwanteng

from half And first Got slightly Joe, last that consolidated be versus expect you then, perspective, you it. That’s to overall the just year. down an helpful. mentioned

the the math? year-over-year your up that it, are is just in quarter range the of is a outcomes steady strength possible in runrate of maybe, it business, HVAC you the the rest seeing within Given and call second that doing

James Perry

or standpoint. each highlight five month to we before April Yes, talk really continue relatively ourselves to are we up looking look we you and push certainly the that to slightly you are so and how when really did then and was, Well, at the weak math or correct weeks I from May When correct, we at that. quarter-over-quarter. see we confirm better continuing we the won’t below, last we Yes. think, This see strength. quarter, six half the the it about first James. than that space and of back plumbing and seeing the pick are we the where HVAC half Again, saw of it I

some a earlier our talked still and Joe things are mentioned heavier this We about XX-Q. bit of and industrial we down the in seeing as remarks in businesses in

we what but such looks of in what carefully word a are in to exactly quarter-over-quarter, times. get terms like uncertain at tried is this used as confirm forecast we’ll it that point year-over-year slightly seeing very again, we So,

Joseph Armes

and at Jon, I’ll then And QX – everyone our you know then, lowest. seasonally QX our you the well. fiscal But is remind business very that typically

the And of back seasonality as the thinking so, a that of plays our into of year, there. half lot well,

Jon Tanwanteng

Got it.

Okay.

Just color on bit wanted more get little to front. a the M&A

Maybe diligence see positive now what’s it’s and traveling, opportunities more in available we targets presentation lot just slides or terms M&A, improve didn’t Are ability have three able last go sounded the either seeing a targets? improving dedicated the on terms that pretty in reported you You time is over. two, And being months to of you your traveling to you number – to of your two which compared in opportunities are you two them, number travel to specific or just hood. ago, the of versus under of questions.

Just anymore those specific on two color topics.

James Perry

Jon. Yes. it’s question, a No, great

during kind I side with And potential work diligence in to so intentionally fill think, that April, our we is very, the use March, the timeframe that, to good continue time work targets. to of the to continue very things. continue had May, of also and pause pipeline, in communicate, continue we news the this our

take time. that and were other things able travel to period that of things where of because we so, lot lack longer, get of And during done a

certainly with the in our new opportunity been. making those at limited that very, valuation things processes adapting years with make looking a pleased and capital. get to of allocate would very and kind projections it’s to the or say, need with to few coming But, we into better travel out So, for still is and to good are together as point are and are willingness in of in of we been nicely to diligence to us ourselves front next very to we question ability is that feels the set opportunity us. But set respect comfortable front of this timing the than order I really it’s and our convince like That’s it estimates appropriate now. us. transact

we so, front positive about opportunities And of in the are us.

Jon Tanwanteng

it. Got

it people us game I I Okay. know, was the Do imply or any And future book-to-bill this this as quarter that below over the know business, quarter. just to did lower transacting architectural. have seem business as runrate rates more expected that see for in to estate? one increase that a at switching point lumpy. the it get is get in restructure maybe maybe you where well order either you real

James Perry

them a about. that educate in need lot is, being have of field. with This the as on we in We on Yes. I out don’t contractors remarks, pick out continue an project up. further think the we and briefly is quarter are with look good paper business mentioned the specifically question. us to contractors. and of Joe’s in training experts continuing I and see projects lot a mentioned, we’ve activity which That’s to good We order know of to are They talked it our James. thing done see it those and dialogue products. some The and going opportunity managers a gives we

a people this do the what’s out reliable still lot see So there most of wanting innovation, to there products. to

to are over a looking several they restructure got We’ve don’t that great businesses. systems need joined months ago that just the And so the with having to necessarily those your business. we leadership safety and in point, I reach of us business we expectations folks. contact building lot think

talk for revenue especially moderately go and next it’s earnings we the again. see more so, orders that and when on projects we out are seasonal that make but continue see half. us we they But turn holding these a pleased have. talked front of the the about are you into in to And being doing opportunities cross really to pop. one and fiscal Joe with probably back quarter in remind that about operations before we back We us, very one and Again, being book-to-bill just well. half doesn’t above the year lower trend, that and see in quarter and third we the

of in is that the bookings. even Some based and looking that the fourth current specifically business and seeing quarter third out softness on in some

Jon Tanwanteng

the very Got guys it. again, Thanks and for color nice quarter.

Joseph Armes

Thanks, Jon.

Operator

floor the reached back have I would session. over Mr. the now closing We like end Armes, the you to question-and-answer turn of to comments. for

Joseph Armes

everyone’s next just in I call the quarter. again appreciate to you to to and want Really today. very Great. say you participation interest much. forward And talking thank I look

thank So, you.

Operator

and teleconference. Ladies gentlemen, does conclude this today’s

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

CSW Industrials (CSWI) 3 Aug 202021 Q1 Earnings call transcript