Earnings call transcript Q3 2023

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Operator

Greetings, and welcome to CSW Industrials, Inc. Fiscal Third Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. is conference this note being recorded. Please

now James Perry, would Officer. you. may turn and the host, your Thank begin. you Perry, to over Mr. CSWI's Financial conference Chief I Executive President Vice

James Perry

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

Joining is Chairman, Joseph Chief President Officer and me CSW Industrials. today of Armes, Executive

our www.cswindustrials.com. available We market's opening the call XX-Q prior on Investor webcast on issued the to and our at the earnings is accessing release, presentation release. Web portion being is the of which This included Form are site earnings and information today, in replay

We results During this of the factors as made materially with today report Form based that well XX-K and are and and our differ in duty forward-looking the statements. call, risk SEC. statements not this as discussed assumptions release our filings will Actual we annual are during subject statements. identified in risks could to These update current on various do expectations forward-looking comments because on other any to undertake any earnings call make factors uncertainties. and the

to I call will over Joe now the turn Armes.

Joseph Armes

Good call. in economic our for thank and third quarter executed fiscal headwinds. conference James. you the you, Once Thank team morning our of again, joining well face

Demand quarter our high the record our remains diligence globe. reflect around results the for Our team value third and professionalism members of strong. products

pursuing our while managing focused market growth. are We on costs share highly

future arise. maximizing our reducing strengthening revolver thereby increasing leverage to proactively balance We pursue ratio our to have sheet and opportunistically continued our opportunities liquidity through capital our deploy they while capacity, as ability and

current the in we while $XX the EBITDA XX% XX% quarter, numerous actions last We growth all on delivered contributed price organic the million, segments of equal revenue growth taken primarily of million in flow years. by have also to revenue, driven grew cash In over XX% $XX by to operating three revenue. as impressive generating two free leverage,

are productivity still inflationary pressure, experiencing we these able cost with have gains. we been offset While to partially

seen as well as costs cost domestic face reduction shipping line but We certain containers still in of higher have freight. the as such lower items for materials, raw for costs from certain Asia,

successfully thereby maintained margins. We expanding our our have pricing,

However, these we our at here returned remains historical variables the of us net not of a result yet that margins, for have is pre-pandemic all to goal which CSWI.

fiscal and profitable our consummated the expands our the of announced Stainless. into offerings markets. we third quarter, previously plumbing acquisition HVAC/R Falcon product This sold end During line

of sold Shoemaker year, As our acquisition, a HVAC/R GRD the end expanded quarter last reminder, we fiscal closed in which third offerings our into the market.

third reported was the contributed categories, These and and reflect our Cover quarter, served. During in revenue, collectively $XX Guard acquisitions in capital of focus nature end complementary allocation strategy accretive the Guard, existing our Solutions all fiscal and our million acquisitions our Falcon AC of markets Contractor Shoemaker, the on segment. which product

purchases, nine of million expenditures. first $XXX capital year deployed we and via XXXX, the In capital acquisitions, share opportunistic fiscal months dividends of

returns risk-adjusted opportunities both and pipeline with acquisition disciplined of maintain growth, opportunities. pursue to continue external and methodology consistent We our internal to for a

recent optimistic months our focus as intended and is and reducing cash free to progress And to this see am in shifted we quarters, and global by I'm made inventory up interest the eased, our in we have shipping these other accompanying and uncertainties and prudent. mitigate delays discussed continuous have accounts leaders prior In chain. effort with an about strategic encouraged the This to in to focus working supply capital delays I business that to have investments area. ability receivable improvement reduce expense. the report pleased in

all three remain in I provide their James the leadership performance. I performance in on with changes details and Overall, pleased will then segments, segments, our of our markets. particular to touch want to team's with briefly the on response the

and average. gearing Solutions are for Contractor our team our exceeds season is industry the busy up entering of for the We segment, growth another that year

this acquisition products to lies network, integration in of distribution high leveraging value bringing optimizing The our and segment our strength customers.

have and add on always products Our been the portfolio recent well our to acquisitions as well, customers integrated as our focus offerings. serving we remains new of

capacity growth operational remains exceed mix Reliability of continues and Specialized main products. to focused offering efficiencies team and there strong. the and markets on industrial are stable. segment facility line continues end our markets Our top Solutions And our by The expectations. driving utilization increase, to line optimal Energy remain in bottom

distributors inventory demand. to we close communication levels, cautious with Our so about relative in stay remain their them

Our capacity expansion with complete for will announced calendar facility to existing continues previously revenue gain year, Shell joint And project to and momentum. which the allow this expect venture our increased later profitability. of we

an segment grow X.X% segment's Our of all-time consecutive of for revenues year-to-date. fourth Engineered an Building increase Solutions reached quarter, this continued to high. with a backlog And

in the is projects for seeing projects, with of the on current delivering due completion. that begin. projects are at in in pursuing performing likelihood focused highest line well the our highest lower data developers are when margin a new quality AIA And slowdown with We by highly to projects, biddings those those on albeit a recent undertaken team

either repair the would the are diversification Strength or to performance to this mission the as of financial lifespan demonstrated community and applications positioned. in the model. the extend products end portfolio assets. of critical to many consumable replacement business Before include resiliency serve, James, well and everyone a over we as turn expectation our of the reliability, year, markets we well of Despite like in our remind many I the of and that of model nature maintenance, our remain business of product the of our used call of of I recession

we largest for HVAC/R often markets, we homeowners the end fundamental and Specific non-discretionary, plumbing, and are products to value businesses. provide our the sell necessities and

growth withstand us market with headwinds opportunities our liquidity us a that across businesses. affords allows portfolio of pursue to have ability maintained strong that We to balance ample sheet the

outlook. prepared time, this turn with remarks call James And at for the conclude I a over our look to closer I'll the will our strategic results. then At

James Perry

Thank you, Joe, good morning, everyone. and

during Our third was year million, Consolidated and prior of quarter from profit driven acquisitions. profit XX% incremental the million, revenue the as fiscal representing pricing increase contributions consolidated period, to from in compared XXXX quarter growth, $XX gross actions XX% fiscal by $XXX resulting primarily the a with was growth. third revenue

year increased Consolidated $XX compared to by improved XX% outpaced year the our in recent period, Solutions revenue margin profit XX.X% segment the acquisitions in slightly strong to to due Gross or higher as in margin our as prior the part growth million, to growth revenue in compared XX.X% EBITDA prior other segments. Contractor period.

in $X.XX audits. prior to or growth, uncertain margin in or to net The which current million, to share upon compared quarter Consolidated or $X tax as tax improved $XX diluted driven XX% million, of CSWI to position per benefit certain outpaced the fiscal in XX% the the quarter, incremental period. reserve an million, $X.XX income share, prior related year includes third Reported was $X.X expenses. per EBITDA attributable by compared release the year quarter tax Vietnam revenue of the of $X.XX closure

million for XX% Contractor with AC as and to growth of revenue organic of prior XX to $XX of acquisitions. revenue growth that compared becomes or year current million inorganic growth was million quarter. Guard growth fiscal comprised Cover our and of starting XX% and the segment from $XX Falcon Shoemaker, organic Note with delivered Shoemaker fourth quarter. of growth the Guard, Solutions the attributable Our million total accounted This revenue consolidated $XXX

year slight growth was products continue decrease revenue Organic million, the compared resulted architecturally period, benefit in initiatives, to inflationary the from recover to or unit by building in volume as specified EBITDA period of as pricing compared segment end by the The last XX% XX% Segment revenue of compared the year. $XX or to offset driven as year from HVAC/R our prior margins in the a of strong $XX markets. to cumulative the environment. and partially revenue, million, growth was prior

costs many remain to declined. this pricing to point we've our in Of decline We costs recover able in rates, of have the segment high. note, outside have margin started freight been our as a of maintain certain input ocean as however,

structure are we cost our overall So managing carefully.

the Specialized Solutions of improvements in XX%, respectively, and organic XX%, and including pricing million, execution. operations prior Segment energy general and the continued quarter another in benefits due segment market quarter in EBITDA revenue compared EBITDA impressive or and third to from million growth achieved $X million industrial, our period. of year $X XX% the margin and and XXXX Our to $X initiatives, fiscal demand, Reliability strong end were

this we incurred EBITDA Canadian the for in is pension reflected our results. in charge note, $X.X quarter million termination small a of in one-time the This segment. plan Of

we exit Whitmore as our in equipment position the of addition to in are fiscal ongoing the growth & quarter Texas next with our rate progress venture, support Shell fourth of mentioned, post to Joe year. As a the and compelling into Rockwall, through facility a we joint

Solutions Building segment strong. increase to million trends million, a $XX booking to prior the revenue Bidding year period. grew in compared Engineer X% $XX remain Our and

year-to-date by approximately and compared bookings and our XX% to fact, In backlog period. XX%, increased year prior the respectively, as

of bill X.X almost third X. book our the to ratio quarter, trailing end to the fiscal was As eight of quarters the for

fiscal and the XXXX remarks, As balance our prior the third fiscal backlog cash Joe first strength operating the million $XX Of an cash record $XX December year cash as fiscal of in of of fiscal to in in million of period. million in we cash opening in this the year-to-date million Transitioning mentioned third year-to-date, three quarter we quarter our quarters was million with his $XX generated ended million and compared operations current in consecutive flow, compared aggregate from to to the half. $XX fourth of flow ended first sheet the flow our the fiscal the quarter reported with in segment. $XX $XX of of

capital working due the due other in factors, of levels we recent the progress quarter-to-quarter to the quarters held inventory have strategically levels the and we global made have reducing safety in that vary seasonality to from supply uncertainties in While will chain.

our will committed have the We and be having products continue been need. to customers to

up constrains have reduce a the As eased, our metrics on to interest and at capital capacity and expense. free supply level laser-like our business we sheet balance focus committed chain continuous have are improvement to working

further XXXX pleased refinement look out our we to and by cash enter as close year, with fiscal progress am demonstrated fiscal and forward flow XXXX. our I As this

defined to as compared cash cash million $X.XX operations a was compared same as as in to in year allocation the the was million same period cash third per per strategy flow months minus ago. flow share That the capital in Our million fiscal resulted the in $XX.X fiscal $XX.X nine free in returns year or free enhances quarter cash third in quarter to period ago. impressive shareholder Through $X.XX free million $XX.X the compared flow free same in a our $X.XX share risk-adjusted of fiscal flow first which period from our the expenditures of turn $XX year ago. $X.XX cash the or capital flow share The as a value. of level year, drives per

An from last multiple acquisitions compared our non-cash a important years component the amortization to per million preceding of $X.X December immediately is or assessing the in cash assets That TRUaire of amortization share this of $X.XX in $X.XX of in months in flow is share the as to acquisition years. as arise generation fiscal first ago few intangible or figure $XX.X when nine compared of alone few nine year the the XXXX. per months million that

markets the revolving feature. exercise Of change important During current by or pricing credit no of $XXX we having to an increased with the of market the facility many million in uncertain quarter, note, effective capital capacity announce gives access companies pleased This face. investment the expansion challenging third despite this capacity to an opportunities environment. terms the to increasingly us that were pursue through fiscal additional was credit accordion flexibility increase without our in

$XXX the are of future increase We testament profitable now million end. to fiscal a by with outstanding opportunities our revolver, the third the million and our growth. million We appreciative the quarter $X to for recent a on success shown ended strong prior bank fiscal group, compared support $XXX quarter

cash of a As of $XX.X the Falcon. the during fiscal quarter, acquisition million reminder, third we invested with

as as bank from to quarter strong an our leverage X.Xx, quarter X.Xx covering due preceding current Our the growth. ratio improvement EBITDA the approximately was end end of of

guided repurchases As value broad we our of capital by share committed strategy, allocation remain part opportunistic model. intrinsic our to

approved that During have a available Directors of XXX,XXX new aggregate prior our the In shares an for $XX.X calendar million of that had million Board fiscal share the we authorization XXXX. price announced repurchased purchase XXXX year, December, is under of $XXX repurchase we authorization. $XXX end through our million

to the GAAP were were fiscal for mentioned balance release tax tax we sheet. basis, the rate and was point the a able reserve XXX several received XX.X% benefit on audits previously in effective due basis our when third quarter we for Our years Vietnam closed to the on

a fiscal full We XX% XX% XXXX expect to rate year. the tax for

As growth with growth full to segments close we for flow out level leverage, year, cash we XXXX, which, generation. operating meaningful and consolidated anticipate when revenue at and look strong in result the fiscal three across as EBITDA coupled all strong will EPS year-over-year as well the

benefit to raw our expect from continued costs. in material We freight stability and

to closing turn call With Joe the now back that, I'll for remarks.

Joseph Armes

Thank you, James.

growth approximately XX% growth adjusted this record million of of These same of year-to-date delivered During the over Operating expect approximately fourth imply revenue growth revenue the quarter year with last of EBITDA expectations EBITDA in year, EBITDA period, year-to-date year-over-year XX% and XX% of growth representing period an compared XX% year. results, the of revenue we XX%. with XX% strength as fourth of full EPS. growth on of in quarter. In margin light our growth an in $XXX leverage fiscal to drove the approximately fiscal we the margin full X% for

through We begins budget fiscal XXXX, for on working April which our X. currently are our process

headwinds deliver end and consolidated we growth While in are there expect CSWI. for certain earnings revenue to markets,

objectives to and in are without but We employment. level gains accomplish reductions, our on of efficiency we focused reductions involuntary cost these plan

on the team to products service quality that and with customers rely goal. members dedication and from expect our high providing to CSWI, they will that committed the are of we We our accomplish

We and are cash driving expanding conversion. margins flow

for with long-term enabled allocation, in which We capital past, XXXX face utilize and of balance the remain delivered to committed even value, We same are of have growth of strength and beyond. that economic financial we confident opportunities is the shareholder the sustainable near-term doing this and in enhancing uncertainty. consistently outstanding in approach results will the we sheet. our By disciplined our and remainder by

strong an health employer distinctive pleased I'm level affirms demonstrating third row, selected of for in of workplace well intention employees a to culture for through our CSWI program. being year a to reinforces share commitment designation employee-centric workplace healthy their Cigna our a as and to choice. our recipient the that and the our gold wellness has This improving be of

we we here here commitment colleagues driving say our must we capital results stewards hear year-to-date value. no often. My your long-term me demonstrates this succeed. good outstanding CSWI and to matters. goal There's At option. to will CSWI, at other succeed these But and be our at CSWI, of shareholder how of Achieving

CSWI thanking to their stock at As approximately colleagues in, interest of all our here CSWI close always, want company. by support shareholders I continued as collectively of employee as X% for and of ownership all own who our well plan, through of our my

questions. now we're to operator, take that, With ready

Operator

[Operator Thank Instructions]. you.

CJS with Tanwanteng Jon from Securities. is question Please first Our proceed.

Jon Tanwanteng

you your translated discussions first [indiscernible] my QX, of Just was about your you've is, on if My we've you and and to today's macro 'XX? you about forward question since questions with help and Hi. visibility bit two that forecasts then. in or environment. discussed much started in think in internal Has Good negative things how just to heading taking or sentiments a earlier as could by in I improve the change visibility into overall and much got seems go us the changes nice expectations pretty for congrats results. fiscal or any customers seen It talk or over last months? your three morning. wondering macro experienced terms Thank

Joseph Armes

is tough know, visibility you as days. these John, Yes,

balance regardless great season our And March value eventuality. February, of to and us, pre-sale profitable products be important for and business and HVAC for a prepared goal late in high backdrop. the our We diversification is and the model, the the strong brands month a to think March whatever the business. our going for our is are so be sheet, great of the offer kind of products to really business, we provide the economic that strength of customers cost, low popular

our And don't that. major we our we'll expectations. this to us know so got focused At up have a changes indication. that's distributors timeframe stocking are eyes in on the point, for But give who any any our indications when we've then. very of best more But pre-market, sales pre-summer important the us will

say just would I So stay tuned.

Jon Tanwanteng

you expect and in industry then have margin growth Got do blended, the assuming fiscal it. next revenue year? And

James Perry

for Jon. is Thanks on. James, This morning. Good being

to We're expect working we said, and continue push year. EBITDA certainly growth Joe margins. do As to revenue next

we As and They've for can last we couple years focused stayed certainly they in come call, mentioned of move. the on the rates. know quickly container how down. a that lot now in We down,

high, retain domestic Some facilities out other done costs and freight our obviously; good of that. high. pricing, costs to able the the raw costs, job are we've been material still freight, remain shipping with customers, But a between those our

we our margins. when That's goal not always higher and goal. That we're is challenging. As you obviously said, pricing are margins are more because higher, costs tougher, back pre-pandemic to to have a move

the But firm we to a So yet continue Joe able leaders recover our type goal so per push business guidance far. -- margin to don't yet, and have have we we've a been se. and I certainly on of to margin view pace in

Jon Tanwanteng

you. Understood. Thank

you're it of architectural. slowdown Can continue? when a -- bit in you that that? you bidding kind And to mentioned where talk one. a the might just And of seeing Number see impact is about P&L? in expected the the You little markets and in two,

James Perry

Yes, it's a good question.

cycles mini COVID of few couple really in slowed a almost through been we've and things market, the hit that know, years. down. you last As

have spiking things period things Then of kind we're economic hold. as margin up that, again interest Biddings were are margin been lower some said, rate on to some just and uncertainty, the presence good projects. we you solid, we producing good. and a And some our looked couple some have lower leadership So and The again, Guard in on. some we especially Despite market, And with a had the very taking would and the as pretty because going our We has the manufacturer. where we're in Toronto imagine. I'll California Smoke distributor there, know we put days say. Sunbelt has been of the the the as Northern that we softer. now good talking grown. California, nice opened projects, construction geographic, little have because in specifically, has where last projects opportunity of part remains group you were a of a backlog

So been market, softer. dip a that's we that have of kind we when that and double into fell little

So there's pockets and here geographic there.

developers of a good bidding where is team our think interest longer are has up firm I his we've backend. backlog because a likelihood our So down of ground. We seen slow on those funding with get these the now a just the But rates doing in right know, job, they're mentioned equity are. Joe parts know quality expectations because that projects or as high The are and for little little projects taken done. to really And high at to focused that there going projects you in comments, out a our as is are solid.

X, XX last what's quarter months or for the that's in been now orders two, out. XX, we've the taking So backlog that

and even going. seeing as 'XX, really is just loud, of fiscal softer, then we entries job the come that's good away a the hard think start I say back a given group's revenue. these margins The in for are the meantime, to through the little out But keeping over year deeper busy, into the which a a the to those newer keeping 'XX, projects get nature half we'll but products. the doing us, So little fiscal into backlog

Jon Tanwanteng

Okay, where great. do you And expect from slowing today? to bidding are continue you

James Perry

the interest market. I parts will think again, rising Jon, that slow of rates

little We've high on been less focused We speculation a that entrepreneurial focused on projects. been them. may institutional have quality have in projects

the in continue of we're interest can do small speculative so relatively market. to impact grow remaining have the kind of think a more on will an We But we every high still we And projects. rates some think player. that

And of focus on so institutional, I healthier portions going for market is our that focus think us. to dividends the pay our on

Jon Tanwanteng

you it. growing kind quarter any Thank as go where that and have color into James, expect of mix price to trends versus do Got continue just you you more in past on volume the you. future? the

James Perry

pricing talked Yes, with flat. here growth continue acquisitions into bit. that's for Jon, in Reliability from then The segments going here Solutions really on really four pricing down some was the over the a basis have the down the certainly helped, we're pricing based of a Joe As Solutions. last Then Where and we slowed pricing. here? calendar in organic the Contractor and a to this But year-over-year fourth the about, was going Volume, other said, consolidated increases just is quarter to last the that quarter. driver on offset year. of the overall, the quarter pickup months, kind that the fiscal back half the pretty XX we had little acquisitions growth. Specialized first

that speak. lapping, so So start will to

pick normal year. outside in annual this of price need unless So to up, action take we just we another of you see implement step that have up our time increases cost. so to And we speak, won't which opportunity,

be it's a to job talking the for going quarters their wait customers, a tailwind Joe is couple pricing bit volume, The doing So of and across on a what us a year-over-year. for are segments. understanding is great little continue The stocking of said, team see. a to levels to as

volume down are be to being I our little in and continue think I destocking, think think overstocking. of bit inventories that right-sized. careful I been And a bit. a There's distributors slowed little

for course. and Contractor we'll in And said, on year how a call have especially we ordering February and So sense Solutions us of looks, results, buying of as Joe a much tell will better have fiscal with the the March that May lot. into our season

Jon Tanwanteng

improves. excess Last you capital are cash me What much kind working the of assuming your off, can you supply improvements levels? for now? carrying throw right to optimized it. get as you Got How just

James Perry

put great Yes, It's still month-to-month. a a because vary week-to-week to James. number it, to specific on it's question, hard it's Jon. going is This and

and days metrics they do look look little use And you When around a of is looking up just things from teams the back, do But a and hold, really know I on our overseas. really And product-by-product, Our seasonality that bump stocking job forward much like. hand. good they a product and you we bit. a seasons. we those job. how good down especially comes that, for businesses what have look, think like said, they like need Part to that

still While times I'm product. sorry, get shorter, a to down while shipping or have have takes slowed gotten it

produce So this you can't lot overnight. of a

it's goals to given those a chain get supply need on hard go much budget and certainly real going to what be metrics. hard few and So the work constraints we goals some is, probably easing identify little We we to How we're million that that dollars. And as is precise. have a of our through season, have.

we I dollar we on you have start hand, put when there. days think we Again, we and up. kind into out hard few stocking So a quarter-over-quarter a But still dollars there basis. that this think million opportunity. back days of number cash, out But can in a turn there's forward quarter, about wouldn't

Jon Tanwanteng

it. a question. let guys. Got someone I'll else Thanks, ask

James Perry

Jon. Thanks,

Operator

is Our proceed. Julio question Please Sidoti next & from with Romero Company.

Julio Romero

on that is in and hoping well. segment to just strong seasonally well growth quarter if the just segment? inorganic about could working especially about this just morning. more detail Maybe pricing I weakest start talk little for Solutions, usually gains your the know Good Contractor much. what's you strong Hi. But segment? you on that for profit, this off, as mentioned Thanks a given very talk

Joseph Armes

mix to Yes, did board We're the few across to of across our OEM the some grow. manufacturers Julio, I strength some strength share would we good I to that mini-split impact products ago. board. anything of There really. for particular that ductless customers got that we're months growing us; continuing were a grow we the in know and a are than thanks. shortages customers. by our selling were maybe We provides don't down. slowing the that That able wallet say would continue that particular. note more so with There that I'd business. GRD are I be say

shutdown to you we production after of had Vietnam bought all rebuild in of pandemic of slowdown that. we and inventory. We've recall, As because the TRUaire, kind had

the wallet we And share we're beginning planned so on And gain see some for now of of delayed little were that bit. kind of had acquisition some a that. that to

And so acquisitions, have anything, performed integration positive as across as portfolio. and think the much I gone entire just well The there's things the really has well.

And very so we new those through products pleased channels. put that can with distribution we're our

rate of have market. is customers bring end our to continue products organic different increase, likes new to strong users, Our the trade kind our the into sell. products an growth like The to that. professional new to And that's important or of part

James Perry

a Julio, brought are I mentioned tremendous we've there that And performing team done briefly, in at The levels. The TRUaire add leadership job. great just Joe operations briefly. would Vietnam has

well TRUaire now. working have really Our to been and together. there get able over people are Shoemaker

pleased in really operation an this from commercial side side between. -- So and everything to with

Julio Romero

segment? on very staying of ready the Okay, balancing you're kind season Maybe color there. Solutions within that's about being the helpful. just segment, That's reduction how just your the Contractor for initiatives good busy talk inventory with

Joseph Armes

don't on call as forecast Really, forward timeframe. of every historically for have not And slowest that and quarterly that on think we March talked trying trying that sense is make the a at a the it to we end to focus weeks measure last product-by-product looking that at our to the product because December, about to hand, that's want wanted but a seasonally said, we've calibrate Yes, in to really just absolutely. levels inventory really of inventory a that had each I time. you was and sales focus James looking at -- type

And -- December, getting them those February-March in getting some you for be shipments products, ready if you buy the of manufactured China, timeframe. some in even if they're may

period want have for that the shelves. don't time. so can customers. early that. of And on season We And the season is want the inventories high want vendor for little at March in on reliable in opportunity selling our the product we there. odd boy, the to be to like look especially sales, a miss us, But to We

that making the right same on reduction. properly trying right real do by product shelves, the offend focus that. products having so to that in commitment careful of to take got we're is we we amounts very customers, just So don't not a on calibrate a have But don't do. we the we've miss on we're the shelves and sure good customers way working cautious, which our time, don't At care capital and to trying the our sales, we

So a act, it. question it about no balancing is

interest rise, becomes it important. even rates As more

that's so to Interest sheet. are benefit But the focused balance rates strong good the the not on the at that. of day, to been another And a end we've customers. have of so got we've why afford high take we on that's again, that care our cannot And of shelves. products

not Our the that to compared side. the high opportunity on costs are interest customer

Julio Romero

one segment. EBS Maybe up previous Jon's follow helpful. on that's Okay, the question on

either product just guess mentioned still particularly that's to any and Sunbelt geographies, there? or granularity You point that other is Toronto or mentioned are lines solid. you still solid, northern you and can that geographies some I additional slowing, California holding any slowing

Joseph Armes

in recently. in we Toronto, bit. And that would there. we not I felt little like say We install only Florida, by hit but Florida product fabricate a got weather again, Yes.

part, think shut some Toronto. for it construction really plus the a story and But while. the I down a were for of sites of Sunbelt is kind so And most then now

way has Florida. California Southern across the strong been to all

We're which areas are of kind surprising, kind big I would York, us. growth some of and the some for been us. it point. But Toronto the nice picking Sunbelt doing up at business has not for in New in target always story stronger work a this those a plus call So

Julio Romero

the railings are trends product How performing? bidding line for

Joseph Armes

little this in plus strong. as are Again, well. share, Backlog so think the and some very been that's percentage bookings some ton Toronto been Yes, point, the Toronto up has Greco very multifamily the it's and being of very There we're smaller has a some base, built more bodes off at fair because but that strong of well. weather interesting, other that very things. in very obviously but has most there getting a backlog backlog strong our are as overall yes, impressive. But very that. spotty very, geographic the residential a with is area just and with the some it's -- pleased Florida been very, and I a their issues on

Julio Romero

taking I Really appreciate the you helpful. guys questions.

Joseph Armes

Thanks, Julio.

Operator

Securities. a do Please follow-up we proceed. from And CJS Jon with have question

Jon Tanwanteng

at think you to the most your putting current what moment. wondering effective cash to place the Just work be is

Joseph Armes

The It's most, I'm sorry, attractive? Jon. interesting, Yes.

As I down an can right. debt. paying kind rate, debt X%, think on by about save We basis, X% free is of it, risk our repaying annual just

is, of as everything risk-adjusted so that calibrated you else And off know, returns basis. on a

return So all the hurdles gone have up.

the integration And an other so assigned some Each more got has be we little about that has but risk, acquisition. premium. things challenging. risk all a to into become everything and opportunity think execution from less. CapEx risk go And it's a

be risk so investments going that higher likely always returns. organic adjusted to And said are we've

do would by for the pull Opportunities that always really been lot we level of find those inorganic. to capital capital been flow has not our while, attractive been and a management constraint constraint. And generation not us. can has over noted, willing us. constraint So Every But of But we're that constrained bandwidth. a low is a prefer we investing capital James we a trigger. returns, have as of cost says once enough for free when our a cash high we're

Jon Tanwanteng

you Got Thank for it. that.

to up. the acquisitions follow for you've contribution closed? you're the just guidance In be wondering expecting another current from QX, what Just

James Perry

Yes.

become reminder, a anymore as won't Shoemaker That acquisitions look year-over-year. will we was now, as on be that December organic XX, XXXX. So because bought

Guard So your the Cover contribution AC have from and that. those a and smaller, you so acquisitions little are Falcon, are Guard,

to And X% towards be the growth majority organic. at price how much this So to release of volume, the is is of price fourth we being and kind quarter going that of versus more of Joe's February lean still going the EBITDA the so. see about as you're point said talked we said, in comments on But that get the X% But with here we we that what end as brings we or X, way things. quarter, of back us. about see growth see Joe as we'll XX% to that

Jon Tanwanteng

guys. you, Thank great. Okay,

Joseph Armes

Jon. you, Thank

Operator

end comments. to of We closing to the back I reached session. turn conference over question-and-answer our for like would have the management

Joseph Armes

our to for Sheri. end you Great. with May. everyone this. And thanks again And opportunity Thank you, fiscal Very to with the about year the at to results look the in of joining us talking pleased today. forward and have visit pleased

you So thank much. very

Operator

Thank conference. This conclude does you. today's

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

CSW Industrials (CSWI) 2 Feb 232023 Q3 Earnings call transcript