Earnings call transcript Q4 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to CSW Industrials Fourth Quarter and Full-Year Fiscal 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded.

like Huerta. the I'd your over time, Alexa host, this to conference turn to At you. Thank

may You begin.

Alexa Huerta

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

Armes, Chairman, me of Industrials, Chief James and is and Joining Executive President Officer Chief CSW Vice today Perry, Financial Officer and Executive President Joseph

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

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

now over turn the Joe. will to I call

Joseph Armes

that, continued conference delivering And you, fiscal fiscal quarter Thank for to call. performance. in exceptional our we report joining I'm morning. you XXXX, successful fourth track pleased of our Alexa. thank Good record

revenues supply treat that commitment profitability our exactly well effectively chains customers for. growth and manage to hoped our to drove in Our kind employees well, our to we and serve the had of

growth which the balance our of of Organic represented on million, total segment. acquisitions, share. coming we revenue Today, Contractor Solutions record reported year. $XXX of the Fiscal all per recent with the XXXX over reported growth represented revenue, of our from EBITDA XX.X% year earnings are and growth, another XX% record prior

or million over year. record prior growth reached a the fiscal $XXX XX% EBITDA

diversified business compared are $X.XX global leverage fiscal model, operational despite record which market to operating our our EPS and and allocation record attributable year. in results These XX% capital as $X.XX, of financial prior commitment increase adjusted to was excellence, to impressive Finally, an the drove disciplined uncertainties.

year, the positive prior from to pricing growth all compared our three As driven increased acquisitions. sales actions by segments, and in

Solutions Contractor decline or record end million, HVAC/R increase in of sales, in volume. $XXX HVAC/R $XX sales market of sales an including record $XXX million, unit segment despite XX% of million growth including Our slight a achieved million our $XX organic

Solutions by challenges multiple team integrating Contractor significant our again recognition managing acquisitions supply year, Our deserves inflation exceeding while presented for expectations and constraints. and this chain successfully

named and president including thank segment's and XXXX. Jeff and in external of senior this team, recognition that team's fiscal their Johnstone marketing extraordinary year. the I to hard Sullivan want Don award of the we is by were vendor Supplier his pleased performance which share each congratulate that work, their In Underwood, I'm only vice recently to given is for Supply, Year sales for

commercial construction Engineered gains Building by $X decline products successfully competitive XXXX and overcoming or market fiscal XXXX. end due developed Our promoted our his market and to lead and the maintained and newly Stratton effectively million team X%. Scott Solutions share existing times, grew during segment

tailwind all-time As team's and a as backlog, the high achieved XXXX, a an this then EBS result fiscal the end of into of XXXX. all-time of productive end commercial reached the efforts, signaling April, of segment's high, another by

improved of revenue strengthened record significantly. growth Our of XX% million as million, markets served revenue which all and $XXX in operational represents organic $XX and execution Specialized commercial or Reliability Solutions segment achieved demand end

specialized products. team for XXXX, CSWI and the our and addressed strategically marketplace, highly in in demand June he fiscal revenue In within year Bass his current have impressive an by fiscal fact, million. XXXX Since Mark the segment the XX% competitive $XX has of enhanced exceeded or position our market-leading, joined

solid On we achieve fiscal confident growth in our margins heels in XXXX, of in the and XXXX. execution strong to this further remain ability fiscal

executed of as expenditures. Cover million fiscal allocation our cash aggregate repurchase Guard, aspects last shareholders and $XX We and the as we During our $XX of Guard on capital year, $XX million all AC returned in through to our acquisitions, in well capital million strategy, program an of including Falcon, investing share dividends.

to year-end, share, per the in ability XX% business our approved generate and in Subsequent a fiscal in to board our to $X.XX confidence the increase signaling quarterly cash. our dividend

of to to distribution with products ability acquisitions portfolio of I'm our pleased well. fiscal I'm acquisitions, vitality impressed adding new during products. and to customers, of front, are M&A broad our report all progressing efficient of offer XXXX all our these the to of On our the that integration base our

many active from opportunities strategy with M&A remains generated the of and best within ideas our Our organization. organically

channels. decisions platforms, on This our Our capital the on maximizing remain basis. approach shareholder our current serving risk a allocation customers favors distribution returns focused value disciplined and end through adjusted extensive markets same

maintain remains initiative, access ample to active pipeline acquisition to we of on decisively and provides and strength sheet act strategic quickly an and as The balance acquisitions Inorganic key capital arise. our growth continue a opportunities. capacity to of opportunities

our Each treat well. our on an provide commitment quarter, employees to we update

quarter, performance This on would I for our like focus culture. to pay

approved payments. performance sharing For profit XXXX, has fiscal our incentive of again bonus year Board Directors annual once and

ESOP, all in interests plan, with of or alignment previously, reported which our shareholders. in have are domestic participants direct employees employee eligible stock results our ownership we As

is XXXX match with recognized rate, Our our contribution, choice, ways X% through employer and sharing an in our some XXX(k) are profit along to retirement, a XX% XXX(k) the programs, interests dignified is X% contribution, significantly secure our plan we industry of addition quality our a aligning talent. X%. discretionary Of with participant employees boasts sharing higher programs XXX(k) than be to which retaining in the profit attracting note, plus also standard of safe, participation ESOP an included competitive which and Providing fiscal strive for benchmark. a of

on rates. in employee focus a of fact, centric consistent culture, exceed standards to maintaining continue our In as retention we result industry a

employees high, pleased year, were conducted our engagement showed survey to in engagement Place Recently, that which announce, XXXX we fiscal in our Great we approximately certification. participated of the of received to and this January Place through Work scores Great to Work, that our XX% remained

remain well, products believe our high employees demand. well, profitability. manage serve our collective our is supply have that and truly the customers diligently our growth our in effectively. treat I sustainable team working And positioned long-term to Our chains and efforts company for And

time, a this At results. look call at over turn for to the James closer our I'll

James Perry

good you, everyone. Joe. Thank And morning,

$XX compared growth, profit with that fourth consolidated gross the prior-year acquisitions from multiple resulting in quarter pricing representing the period. fiscal Our the initiatives profit year. Consolidated fiscal fourth million, quarter predominantly XX% XXXX made incremental during revenue the $XXX during increase XX% was million, to a we was and the

as was compared actions across our three the to XX% profit margin segments. profit year predominantly The prior gross in period. margin increase Gross XX% pricing positive from resulted

a prior margin, expense operating of year XX%, as improvement expense period. as was operating The an basis defined to XXX percentage of revenue, compared the points

fourth Fiscal million as to year XX% EBITDA $XX period. prior compared the increased to quarter

discipline quarter, margin EBITDA primarily the higher as the in Our the margin fourth XX% profit was gross to compared operating with expenses. around and XX% prior due improvement to year

to $XX attributable income in in fourth prior $X.XX period. million CSWI $XX the year compared the Reported million diluted increased share to or quarter or XXXX $X.XX per net fiscal

segments. Now, I will of transition discussion our to a

or our our prior-year million total consolidated million revenue of for XX% compared recent segment, and acquisitions. Solutions inorganic and from million growth $XXX of revenue, to $X of growth comprised growth with accounted of XX% of $XX organic Contractor of quarter, delivered Our as the million $X

This XX% margin a testament compared in $XX million, margin, pricing a in and was Quarterly the strong is segment growth operating management EBITDA a margin, XX% $XX year million, prior to segment. period. disciplined to this actions the

XX% increase to year Solutions supported $XX period. million, project further million, million revenue or reduction was expenses. a X% of to fiscal a operating was from million fiscal increase fourth XXXX $X.X X% or by fourth segment XX% as Our compared EBITDA a prior in Engineered grew in revenue, XXXX Building quarter of favorable mix quarter $X.X $XX revenue the a

respectively, year-to-date XX% continue compared and XX%, strength period. by to Bidding and our booking backlog approximately trends as the and year to bookings demonstrate prior as increased

ratio to As X.X at segment quarters improved a backup. record this the XXXX for our trailing end to of fourth book-to-bill quarter, leading to the in X, the four fiscal

revenue Reliability million $X joint along Shell-Whitmore Specialized continue XX% volumes sales Solutions pricing venture from incremental provide posted to growth of and both that due the actions or tailwinds. Our segment Whitmore business organic with legacy our to

and fiscal year margin XX% EBITDA quarter EBITDA improved significantly XX%. and prior in to growth EBITDA million $X.X fourth Segment to million the in represented XX% compared of impressive and This period. $X.X XXXX the

our organic all to million, representing to fiscal achieved now growth. $XXX revenue record results. of with a We year compared growth reporting segments as XX% consolidated XXXX, full Turning fiscal

multiple representing million, predominantly $XXX made current pricing profit Consolidated that acquisitions from gross with and initiatives was in profit the the growth, the during the incremental year. resulting year we XX%

XX% with and management margin XX% period, par in to was the operating Gross from gross the the in profit showed on expense margin adjusted the prior effectiveness improvement points Despite compared prior-year the an the XXX of year. of acquisitions, inflation basis of demonstrating of discipline profit operating our expenses.

the a an adjusted a to of an prior year, million, in into compared compared of $X.XX, These prior EBITDA equating margin reported the record year. to XX% In the XX% record increase $XXX adjusted $XXX year. results and we in $X.XX XX% a to to translated XX% of current an as in million EPS increase

Contractor delivered segment, This million from million our of revenue, million consolidated Solutions accounted growth. $XX organic of of Our growth inorganic or and growth with of for our XX% comprised and $XXX acquisitions. $XX XX% total of million was $XX

$XXX compared the to in margin and margin, XX% XX% a increased $XXX EBITDA a year. Segment of million million, XX% prior to

$XXX our XX% consolidated Engineered increase fiscal in prior the year. of reflected to a X% accounted which revenue million year. our approximately Building This of segment, total, Solutions over current for the with Continuing

XX% Segment the of XX%, a improvement and period. year was margin an prior segment from million, million a of of $XX margin EBITDA in $XX EBITDA

organic price venture. strengthening Shell-Whitmore impressive Our initiatives and due Specialized growth to posted $XX end by the dynamics, increased segment driven market volumes, Reliability million sales volumes XX% of revenue incremental Solutions or joint to

improved and Segment and in XX% $XX the EBITDA and million $XX million to XX% to prior compared EBITDA year. margin

from and On support cash working working capital flows our objectives. XXXX commitment we a cash to our the ended to and million with liquidity to over capital quarter of profit first and XXXX reported $XX year. increase We call, affirmed improved management operations as due was to free sufficient fiscal of strategic our This increased maintaining generation, $XXX prior prior flow XX% year. the the cash compared million, fiscal management, year strong prudent of

year, capital $X.XX and million million per the cash less per flow, free cash our expenditures, $X.XX in to flow share from operations or was XXXX. $XX compared $XXX share defined For as as fiscal

income, net XXXX, of rate, free cash conversion prior cash the of from in rate flows defined improvement as percentage XXX% conversion flow in XX% free was fiscal Our as a the year. an

of of million revolving At fiscal in $XXX outstanding we credit borrowings a accordance which million. leverage This capacity had year-end, resulted facility, million of in ratio our borrowing resulted $XXX a with in $XXX our under to range of provides times. approximately flexibility EBITDA, facility within liquidity X X.X strategic execute credit with stated organic to our ample inorganic and X well and to on times debt us initiatives. our This

calendar we the of fixes interest comparable of In SOFR of of May to our to and rate base at May settles rate revolver monthly. $XXX into through current of our this year, of the the XXXX. X.X% early first in swap favorably This swap, compares expiration the which revolver XXXX. portion an extends borrowings This current million over entered X.XX% of February

of This XXX,XXX during the under invested shares. We fiscal share share capital. shares $XX We acquisition $XX our any million fiscal did our fourth by the count quarter. to not returned reducing shareholders program year, approximately million we repurchase, repurchase

our the We million current program end outstanding $XXX the repurchase at have year. on share of

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

compensation and our XX.X to is shares million total since the of have in seven what approximately time, years repurchased our but we over outstanding, programs, used. approximately public ago. shares when acquisitions used that and have have number similar equity impressive, EBITDA have given a have our tripled We as in shares same we This we went that

company's for currently call. The discussed approximately a a previous XX% the company's to XXXX XX% with We XX.X% of as effective XX% third was which fiscal XXXX. our tax expectation fiscal GAAP XXXX during rate expect tax fiscal of on quarter rate for basis, aligned

three all look the expect we year-over-year in EPS XXXX, to segments have across with As when which, growth. we meaningful leverage, to fiscal coupled operating growth will consolidated at and result EBITDA revenue level, and solid

year, the fiscal higher quarters, level last four rates higher our interest our normal seasonality expect at being the quarter ending over look lowest earnings. of December prior item back third two depend than year earnings we the debt. we As cadence with the we year-over-year expect will With of in interest our the the of periods, than be our in and for year line for will quarters first outstanding of the level expense fiscal that on comparison the half

great Our of operating maintaining a the pricing quarters. job rapid teams achieved have we that done inflation several the last during the

reductions leads potential. freight, including this in seen certain higher inputs, ocean have we As margin cost the to of

continue will we eye We costs the confident and expect. have keep come in that are to ability to shareholders profitability on and our a our close to our and achieve margins

as we more continue well taken customers. profit new the our selling expect As categories our we we look adding to outpacing by Solutions pricing have growth driven actions segments, three products revenue and of operating maintaining, serve, and at and segment our we as in to customers Contractor the existing

public as deliver reported growth are is commercial and team unit to the and HVAC/R expectations, execution. line this for decline bottom OEM year, top companies, committed by While through operational our volumes to strong

backlog margins. expect outperform to With the our the construction revenue team Building improving at Engineered highs, while is market, execution all-time growing on and focused and end Solutions

Solutions although to the of the historical Reliability to the than expects segment growth two returning deliver our year a achieved fiscal plus strong expanding years, rate in growth, of slower line we another margins Specialized growth Our XXXX. top GDP while improved norms, exceptional last at

like President back Investor to enthusiastic call who week Before today. Relations this I started with Treasurer, to turn of an welcome and Vice I'd offer and new Huerta, call our just CSW Alexa opened Joe, the our to

Alexa And to brings as experience with coming meet a her tremendous to I you. IR our community in background of weeks financial introducing and and us. the forward look investment we days, to months

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

Joseph Armes

James. you, Thank

one want fiscal year a and term take we mention to to I longer a perspective. another, metrics As a conclude few begin moment with

fiscal for compound XXXX annual XX%. revenue was growth Our through rate years XXXX

Our CAGR EPS adjusted XX%, adjusted period our during an CAGR XX%. of was with was this and EBITDA EBITDA adjusted XX% margin

The grow through acquisitions, continue to would revenue organic acquisitions, thereby included supplementing expect growth. growth, of has inorganically we our and to course,

total in return our of value this public in since of has creating shareholder resulted of All all fall a shareholders. of for tremendous XXX% the we XXXX, went

end sheet and enviable earned reputation to As growth channels, enthusiastic market we look about strong ahead, customer and balance with relationships, healthy we fiscal best-in-class exposure, attractive believe execute a products, that diverse and hard us opportunities distribution on quality XXXX. every innovation, our be for gives reason to

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

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

Operator

Instructions]. [Operator

comes question Jon CJS Securities. first Our from with Tanwanteng

Jon Tanwanteng

a Joe clarification. little or wanted James, just get to bit of

for a in growth I think three the expected directional that in did of press of Is guidance XXXX? kind is that the margins you off margin the each for forward. EBITDA going XXXX fiscal year XX% you segments release, the of and

Joseph Armes

This is Joe.

of in unless there's have or some long made history the guidance a that some not correction needs to We market. providing be misperception

this very profits revenue. So been markets growth then commitment our serve, outpace is always But has and top the than to grow for conceptual. very, the always faster we line

to want to that's you add willing James, point. give the this we're So all at guide anything?

James Perry

across some We the clear and momentum the that do years a grow We've expect segments wanted from remarks couple margin. we grow to to be nice my revenue in ago. seen

so keeping great bit. job we've as a year Jon, well a our bit know, and for turned inflation catching took as that we continue. of hit margins the that, expect of to a you we've pricing, businesses kind quite again, we've expanding with we given or talked started corner math, there up done a margin about were up But through in We've As kind momentum a of that now. to we and

Jon Tanwanteng

outlook risk as on have how thoughts broader other macro the economists are a recession. underlying assumptions firms what But all? affect and for know coming. go talk of planning a that if at I just you're default There's called your the for demand forward? the and about business you your Can several we could always

James Perry

on ground Jon, our talking thing TV on that our that, best but a obviously. and commercial segments. newspapers, and we understand always is to customers keep and an teams of do suppliers and not The and job eye necessarily the across the operating tremendous

across We the continue board. to few have see months last Orders nice been good the demand.

the year. this public and talked You about unit those looking we that slowdown space volume in of look kind at HVAC Solutions, are OEMs for companies Contractor

You're comps. coming a tough of years pretty off couple

growth. years of unit couple of tremendous volume had You

expected. that's So

about We perspective. say, or through a volume high expect then, talked revenue other mid expect have outperform certainly outperform to pricing the we declines. unit – to at profit a And that. and rate. as high single-digit on higher generally to I grow we They've single and that And methods grow

little of So you're seeing headwind a there. bit

seeing thing a up existing numbers to there's they We've give new good housing lately, don't bit good because One anecdotally want have. have mortgage down you're their in that slowed people starts. sales home is some rates seen

the business But thing as good we're tied OEM about the our market. to is, not

water products and whether made repair So or into that system with those to heater, we've type unit, more penetrate new things into in or having home. it's HVAC and the a are the acquisitions HVAC our continuing we're going replacement more and of the maintenance of the

for continues Canada, Ontario. to business equity rates. and with little be Institutional to especially dependent education a at and a or his that You less we've type team. those on or really Solutions, have Hospitals Engineered areas things, Greco do Scott airports those in returns place nice hard, our in construction Multifamily, less important opportunity. us. us dependent are up look commercial Building interest pinpointing worked on is

that bright after focus going those and continue able grow sectors. right into been lean and spots areas backlog we on as the continue a result. to sure those And we'll to So be to we're

Specialized Reliability thing, again, operating team same team into have job the Solutions, markets. those and leaning In Mark a done his doing and exact great commercial energy

opportunities Shell-Whitmore gain they joint momentum some mining rail strides globe. America. venture continues to with team good Our the made The in the see North international where has and in sector across

job efforts eye tell that have I for we're we shifting more have So opportunity efforts on micro on our would areas our while commercial have most the a macroeconomy, much those that businesses and focused, production an the great growth. always you out and our done

Joseph Armes

thing is product that, raised the lot this we Jon, Joe. have can't type we we that balance R The only is, we to but end add our sheet, I'd non-discretionary. diversified businesses, portfolio, strong absolutely have a consumable of really markets, just And generation. products Diversified across real diversified recession. a you word, prepared. predict, and in And cash are strong

us so, resistant that more business attributes those the has cycles. And are makes to that our

And economic add prepared, think especially so, to certainly, cycles are. is just our the what resilient, said, I almost and of business to regardless what James we're so

Jon Tanwanteng

of, to as input be compared a you the high in through? that have of tailwind Do you where that priced first that snapshot And supplement off quarter coming forward? you the fiscal inventory to QX? versus come do have that, have spread is a you one, of And to going kind you pricing going were in a still

James Perry

into segment, the inventory you earnings, on you margin of that the look fruition cadence as improvement. lag that have that your comes especially with in ocean. last the if margins you of the think To each inventory, point, that through a across kind I go year's at come you see

can lag. a that be couple So, quarter

year year the fiscal that as year coming I year, through the through. and went of you late So was in still our think calendar then some last

inventory. through turns. a of generally the I the now. system there that's out of some There's think speaking, have level good we always that's most But in inventory

for have would now. a a down you ocean But that. bit of So little has freight been while

the its that's way working So through system.

inflation were increases significant of last summer. related were round last Our price that

think little our more start few year. we terms in increases at beginning. a earlier price tailwind confidence cost before But inventory, that months a type saw calendar we provided worked usual that's in there we way And asked be the about with had system, most of pricing. high I the you but and its the through, lapping So of thus with that margin the the annual this seasonal we then may improvement

Operator

Alex Our next [ph] is Company. with Hatman question from & Sidoti

Unidentified Participant

Julio come what venture. Congrats and leverage Romero. the operating This of to joint Can fruition expectations is seen operating on to far is questions going about are so two and My Alex on forward? that results. leverage first for your the you the talk you've

James Perry

This is James.

Shell-Whitmore couple the while about, venture. partnership. we And last and We're we're would we've profitability get It's been seeing as volume formulations seeing we're to continue strategy through. pick As a through up coming to together. I some nice are that. said, And a joint the few a years momentum. it the get And nice over quarters into some talked take we think just the

joint volumes equipment of we And us then we've venture that overall always the absorption helped said and see joint has contributes good the through certainly venture. grow. to room can of And that And has that you absorption margins the add there have that joint opportunity base, Shell the and volume. venture Whitmore, profitability continue with to to add to the facility the

Unidentified Participant

Solutions Can benefiting from much for if segment. a of lower driver question how the quarter and this Contractor second then continuing? costs that regarding can talk see about you price My you versus were is maintaining

James Perry

us. have fiscal quantify And that's just to during price kind we hard winter, exactly normal maintaining break annual the it quarter early the and had as It's goes in to late very of up. been important price spring. that our through But increase that

we've about maintain in our we and And and in of where do So, base chain that. needs sit the to tremendous talked customer strengthen where yeah, and value ability our our pricing has done to team really a job it maintaining be. that

been maintenance pricing has So important.

of The rely our container years parties. And we of freight now a to Yeah, come down. is lot last on we were couple years, rates, biggest third a down own from obviously, ocean where input couple are the facilities and about some ago. we've costs we've back seen talked which the lot a

that – good many I and out there's Hard to Alex. that It's really costs to it necessarily because product between combination down well, think has on those parts. hit margin And led price break maintaining it you've coming moving been seeing a so expansion. each product own has overall, has adds its a with really the a nice obviously job even team really then better expense two, category dynamics. of gross kind margin. leverage, operating But to and done with EBITDA adds nice to those an each and profit, which

Unidentified Participant

My last you of some there. And think would more three runway touched for the little reduce but inventory, how think to questions improvement more capital financials. efforts is on you you bit, love have and the hear a of much this I on about working to

James Perry

This a timely of to work and With is being concerted and pleased them sure with customers you, we collections accounts components we is sure end, those their that effort again. on and on three teams lot timely. receivable, done been customers our out being I'll a And the getting all working the bills and we relationships have. the with tell team pay I'm in with our together proud There's really has and that accurately and team. that that. focused have nice of invoices really James the job, a get our

some shaving done a the days that. of job team off nice has So

some some go and improving nice the a only through there the the the look months quarter, quarters, point end sheet when of shaving at momentum and working at capital we're receivable in the seeing balance really segments. You across accounts efforts and get dollars by off time a you

our terms, payable to, we we been bit. to see that little Accounts want the treat we're vendors and extend able but then where opportunity fairly leverage supposed to a bills too, to some pay when we've

over Obviously, third the Because big of on hold own things. things to years. inventories, that's we've like delays with couple both often and And inventory our we products continue last kind as looks said, that party. strategic we And happen can overseas piece. that those seen of and we've what production, the in rely certain

holding now than before TRUaire. appropriate. is have little space. operation a acquired we which a Vietnam, didn't So in an go more is a of you before have the And Contractor did lot we years internal that obviously, few back we Solutions overseas We our production in

have going We're more to inventory.

to while procure to said So, to to a as last the our you're back continue where continue pleased were products. teams But going to really little where call, of products, left, where be way produce the the look proud there strategically we And may get days our we of not to all to our improve, something where and how want at we and with product bit and as I'm on have that improvement but has we sale. a so capital, at good margins the working of type out managing the to achieve got stock in time we've the we work flow have of but sell. of done don't miss We same to to shareholders be dollars often that for our and those stock to sure, inorganically, cash organically put and returns, said, making pre-acquisition. Joe

Operator

CJS Our Tanwanteng Securities. Jon next from with is question

Jon Tanwanteng

the joint go And there? are segment margin question to venture continues to limit you on the with Just a Whitmore and is up utilization the what this in capacity? if filing for that Shell. facility Where

James Perry

in This the of we're is James. about phase what We we capital three talked kind call of expenditures. –

an You'll And pay CapEx. of provide obviously, see updates the we it'll ramped over the and have our pays that equipment to normal course up We'll half. a year. as increase bit in But, flow through quarters. production Shell go over that because get the half along we'll the the of and then be year we fiscal few fully next

So we'll point to that on the statement as of cash appropriate. flows

still that on So we're journey.

the when we quarter. and over three month ramp quarter will I XXXX, to we're, we volumes next as to CapEx. to into started expected literally through even are allow continue up where to over months to the this and phases And just said, of that us that year that couple first fiscal The month model fiscal phase increasing now. And XX ago

In for XX%. to we've segment, margin reaching potential inclusive of which that, of is terms the guided

in digits in with Jon, as were very a fiscal depths down single this quarter. year, mark recall teens. for you the the the pandemic. the we fourth We were veteran As high over got And we this, well, of the XX% in the

fiscal that So certainly and seeing the we current to in that. now may above is part is an bounce think the year venture XX% at quarter, joint margin important of or around achievable quarter and

Jon Tanwanteng

kind they little whether If and more compare from you or there's have HVAC strength that size any and OEM year. last to to recent plumbing this talk acquisitions. the understand it's are are year help there's splits a more just of weakness, – seasonal what us bit this products if distributors? And the data, but I mini your shape year? compared and of pushed about don't the MRO know seeing at this restocking Could if What or things you're being buying you through,

James Perry

of like. of nice still I they it nice years than products. But question. and a more level a the talk stocking, There you little great destocking sounds reached continue were of they've to heard levels you've they clearly, your distributors, be to equilibrium, see course, the about certain a inventory the talk about think but a inventories generally may couple OEMs order ago, and inventory volume. It's When a revenue importantly have, and us, different little we are

miss Just inventory, margins to like a as well. they want they don't we manage They've either. attractive as do. our And sale do we got

pointed again, they've very be and closely on with their team, working now his we what really very with to basis they together. out and daily what need. our a they partnership that can Washington, really combined, Joe RectorSeal supply got our it's nice facility dynamic customers we sure as need Shoemaker, and TRUaire seven And and with And then specifically, and pinpointed. distribution Underwood customers have with a Jeff quickly in really the So our commercial in ability centers worked

In get detailed. I on there of production They some I'll were the But terms mini had OEM areas, won't mini overly you that last say you year, side. some shortage recall mentioned split delays. splits, the

mini seem little to caught split less demand and we've they've led They that seen So what year. like product heard. up a last

have in. a installation sales. little It's lot we those more And area a margins product us. split. of that as leads a the for carry into product products that a we things us mini so, nice And And go we to for a those that where aggregate of that's area excel make

say So MRO pure I'd replacement anything to wouldn't new. – between I maybe, I'd area or that point wouldn't versus highlight distinguish but I

lot of fungible. you that's a pretty As know,

Our all products to into applications. go

I just don't necessarily. just point new to I'd think just repair or So replacement or

As will provided tell we you, revenue we are things we're leads seeing I as And nice that often say, it confidence But don't we've exactly to demand, not us hopefully, overly growth that in segment. seeing we where that goes. and too in that's expect. the vague margin we know

Joseph Armes

That one, but obviously, demand, was that we it's are environment, concept of products. sure great a and that grow selling number success, in growth focus job example those If for making higher with a to rate, mini faster higher add, faster up products. Jon, on our products. of other is really to of part keeping key and and higher the we been of The really Last than throughout would overall can margin thing that. Those margin are slower great on results more our selling we course a our margin and growth highly focused of I category are that splits highly your been the growth, just that's the has question goes really to important on broadening growth up mix in show I over our time. years, being more couple us products of think focused than the mix company will here

Jon Tanwanteng

on because just deploy us have relative always capital. the The update ask, to places last attractiveness of one, I to

more see really get other You opportunities things be cash? to it to now? M&A any sense Or make you good doing right does Do

James Perry

well. that. We focus an important us appreciate for as asking It's your

allocation Our up. returns basis. capital philosophy obviously cost of means of capital, to And has We do rate not about think going that gone up. everything which is our Interest has adjusted risk on a changed. we're

Now but we're up. has cost of some of mitigating our that through swap, gone capital

gone have rates hurdle up. so, And

continues. as really in the businesses Having I seen ability at past, you've said reasonable our accretive to valuations, attractive, buy think, that,

no is part our continue on basis was part more be continues a is an it that. attractive been or of raised. continuing to And an growth of year Paying see There's debt active pipeline. is hurdle to channels be a to us. our two strategy, important that rate ago. nice But a going We important relative than The acquisition distribution our success. focus down question a has about to and leverage for

Operator

Our next with question & is Alex Sidoti Hatman from Company.

Unidentified Participant

I wanted earlier. to follow up on mentioned something you

demand seeing about months out? today sort non-residential. to to And a hear more Are trends And of you HVAC. bit playing what you the compared around how ago? seeing you're that I any to three see spoke You wanted for little residential

Joseph Armes

part really, and first foremost. small of a Alex, our that's business, really

on products only point. address And so, know be the residential far business, piece that that commercial would that I piece handful I few comment the by really of used products commercial, or largest a Really, is of can either market. then at trends in don't the those residential our and very this

seen that, said of having So for anything the that's out haven't we ordinary us.

and expect. our with said, normal pattern order James consistent As would seems what we

for to So there nothing really note you.

Operator

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

Joseph Armes

to Great. Thank really end be forward conference for We to And to you appreciate your of everyone speaking and you at joining stewards capital look good very will much. continue this our the call. we of QX. us

Operator

conference. This concludes today's

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

CSW Industrials (CSWI) 25 May 232023 Q4 Earnings call transcript