CSWI - Earnings call transcript Q1 2025

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Operator

Greetings, and welcome to the CSW Industrials, Inc. Fiscal 2025 First Quarter Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Alexa Huerta, CSWI's Vice President of Investor Relations and Treasurer.

Alexa Huerta

welcome Call. CSW and First Fiscal everyone, Earnings Quarter morning, to Industrials the XXXX Good

today the Joseph prior Perry, me our on This of Form of accessing and Joining XX-Q is Financial earnings CSW and Executive portion at www.cswindustrials.com. Chief Relations is the Industrials; President release, Officer updated call information and presentation We market's James Officer. being Executive Investor President replay our Armes, today, and Vice of issued Chairman, and all the opening the in Investors to which available webcast is earnings are included website on release. Chief

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

Joseph Armes

$XXX $XX of million, all-time operations and highs earnings of flow million of income serve. that morning, everyone. fiscal diluted results of million. EBITDA we $X.XX, cash revenue team each $XX in net outperformed we morning, quarter has once the share $XX reported of proud Good of This to for quarterly our per has I'm markets report the first our again, delivered million, of record XXXX and from

containment XXX result mix, pricing, of favorable to as gross XX.X% cost margin efficiency. points Our basis operational expanded additional product profit an and a

quarter. EBITDA margin the to XXX in also points Our basis XX.X% by expanded

flow or $XX operations the focus drove record growth sharp cash on XX.X% year. first fiscal million quarter Our a over from of prior

on focused allocation will our flow returns remain and inorganic investment opportunities of continue with strategy, to we building cash will shareholder our fund strong that value. capital pipeline Our grow

utilized facility, the our cash We we by of quarter, first with down $XX our expense $XXX fiscal to debt to further on the million quarter to maximize the pay fund million the $XXX balance flow and strong a ended During on revolving credit our to million. us, facility will interest outstanding us capital reduce allowing future they as our available outstanding which arise. opportunities

being X during Our strength, balance deliver and the size. able on quickly sheet their and let the us CSWI impressed execution, of to each increasing on increasing resilience ability James provide opportunities quarter. results. segment of performance value. flows Once act business with demonstrated X-year of segments during the quarter cash track the details record a I of liquidity long-term shareholder has will each give the business of more luxury to again,

markets model. served We continue our success, succeed. to key using a capital balance than from a grow we and care of rigorous, distribution one maintain power analysis grow and how we At allowing sheet, our allocate returns acquisitions about faster to to us. greatly to The strong also efficiently is CSWI, guide us our revenue risk-adjusted benefit model this our product meaningfully

to I remarks. us And our which investing at following I long-term on will customers, look team time, closer and will our our for At well-being prepared return for and profitability. our members this the James in and results. turn prioritize we conclude focusing positions growth over a So sustainable that, call

James Perry

everyone. morning, you, and Joe, good Thank

the from The representing nearly initiatives. year compared pricing record million revenue growth million, the first fiscal year. million was came to record Free in organic, the $XXX our of mentioned, and of Consolidated $XX first was acquisition was XXXX gross year quarter XX% Joe some the a and for volumes quarterly over mainly growth increase fiscal As CSWI. during consolidated period in of prior high XX% or increased quarter profit $XXX $X of the $XX million, all-time Dust growth of when through this February remaining the prior million a period.

by mentioned, points Joe our As to year prior in to profit gross XX.X% margin compared period. XXX improved basis the XX.X%

for Our period. record XX% consolidated to million quarter to $XX when EBITDA prior which the increased first million, year compared growth was by $XX the

by compared the margin XX.X% EBITDA basis by year quarter, as Our prior expansion. to XX.X% the to gross XXX points improved margin in driven

on for and As revenue manage to year-end will strive fiscal call continue we in May, expenses. as EBITDA our grow mentioned additional we we leverage

our of our very are levels. and hard However, to recent margins, works EBITDA proud team we maintain these

will the in fiscal remain or attributable $X.XX diluted in or EBITDA record a as revenues CSWI compared our a focus on income first to share the dollars record to per increasing XX%. million million Net diluted of $X.XX Our was representing share year $XX growth $XX period, per quarter grow. prior

million million a X.X% came of unit organic, volumes for segment's and markets in Free or $XXX growth the delivered XX% initiatives. for of of Growth total and reported revenue prior was revenue, end some our quarter million in the while the XX.X% result in revenue consolidated Our to or when this growth $XX.X Dust million compared or acquisition. quarter. all and $XX.X Contractor was pricing the X.X% segment from the Of was accounted remaining with quarter, the Solutions year $X.X increased

Additionally, as year new in of or to the EBITDA revenue market-leading million required from volume margins XX% the Segment stock from of $XX.X up to already a distribution onetime a compared quarter a revenue mostly adding $XX.X expand or continue leverage. center we period our XX% in was inventory. prior that benefited first million network of customer

volume Solutions $XX.X decrease. to to million Specialized Our revenue X% due Reliability slight a segment decreased

and Texas, industrial fiscal rail positive energy certain general quarter, quarter During expenses. than leading the in in IT revenue in prior plant in delay had offset as XXXX and a event of but as period manufacturing markets quarter Pricing the was end the well our at with a mining transportation in higher but on normal to by EBITDA weather impact maintenance power the volume. first increased X-day The a results. were in outage slight in in decrease year May declined revenues in caused the $X.X end the Revenue a and the initiatives markets. line million Rockwall, segment

However, improved XX in points EBITDA above for period, our basis margin to business target XX% XX%. margin EBITDA the of current this

period. our segment $XX.X remain booking Solutions Building to to end XX% Engineered solid. quarters and margin prior a million quarter, fiscal compared trends And Bidding increase year-end XX% the XX% year prior XX% and of compared at EBITDA million EBITDA to Our or trailing revenue in from $XX.X million, increased margin million $X.X year period. book-to-bill first X the the at a as EBITDA grew the $X.X ratio remained unchanged for X.X:X. to the in Segment

on quarter all-time last $XX million cash an million over compared We period. first fiscal that see keep prior to to growth of operations fluctuate for $XX this same our But flow. cash will quarter balance segment due in mix. and CSWI. and The quarter. first the quarterly fiscal are from our strong reported $XX flow to record reach the EBS the XXXX year with operations sheet pleased the the our ended project Transitioning mind We representing EBITDA was basis for XX% target quarter XX% year, of quarter flow from a in in record cash margin million to cash

per $X.XX from cash in capital quarter defined That a of to flow, free million million cash cash resulted as free ago, $X.XX same share a period in year period expenditures, in Our the in the minus to first flow compared quarter fiscal $XX.X compared year $XX.X XX%. growth same flow in fiscal of operations was as the the ago. first

cash growth goal mentioned invest increasing we our shareholder of this As us level the value. that mentioned, flow impressive allows down with free paid Joe revolver million due flows. cash Joe our of to $XX long-term of to strong in

ratio As to at a covenant leverage the end XXXX. end fiscal our declined result, X.XXx at quarter of from the X.XXx bank

lowest expense. As reducing year for reminder, spread grid company a pricing rate and interest has saving in revolver of a our the tier interest on solid the now, our been

fiscal quarter With now growth revenue, call for Joe and his the to rate was remarks. on anticipate closing tax basis. growth I'll with for the EBITDA strong turn We flow. GAAP effective Our in XX.X% back still along first delivering year that, full cash a EPS

Joseph Armes

during for earnings summarize, EBITDA, revenue, of quarter share, fiscal per first the we To XXXX, net and for results for posted for income record flow. for all-time cash operating

both Our organic due included inorganic XX% higher revenue growth to in resulted operating and strong margins and leverage. growth

our continue deliver to into that outpaces served. fiscal growth CSWI further markets will XXXX, Looking

excel while dignified important consecutive offering our And and proud We for to cultivate to affect is part our are of team XXXX with retaining $X.X success will employee them of great last to our million very $XX.X our of is we a plan. X the one announce complement acquisition our recognizing way that This with drive organic rewarding margins. growth CSWI year I'm secure an CSWI, ESOP. to plan the the strategy. members. through to pipeline and our to and our At focused and retirement. talent, in who maintaining a relationships safe, while members careers team on recruiting superior strategic Partnering opportunity providing continue month, this CSWI aggregate to contributed since million ownership stock our contributed that marks we cost ninth has contributions at now employees

$XXX ESOP contribution of members. since stock for have our of today. million with to XXX(k) And of growth over value many our helped tenured the match these XXXX With long together well our price, retirements facilitate have team grown

and close of stock the dedicated as as by for of lastly, own our to collectively I just continued at well here So Industrials. to CSW the in, all our thanking my who investment company CSWI, loyal commitment their shareholders remarks X% ownership want plan through prepared of team support employee

Operator

question-and-answer We'll conducting a session.[Operator be Instructions]. now

of comes Our with Jonathan CJS first line Securities. from question the Tanwanteng

Jonathan Tanwanteng

sustainability margin going that James, looking were and account? we there items a forwards pull should And about unusual at or of can little you the QX? sales any into into QX, more talk think bit momentum

James Perry

quarter. demand work of the this prepared Let was me of the that there. the was all, well just, team did, first Really proud an exceptional say for

a EBS you our X that timing. QX the that about good bit that. little you type you mix of at given May Reliability year-over-year. SRS solutions delay but saw pretty we up, that bit. made truly fluctuate and continued always, as overall, product QX, Specialized little obviously, affects feel about talked But segments, I we just and segments, We do in opportunities look revenue Margins Contractor those exceptional. should much think see Solutions. growth and if in will They

comments, You large job centers distribution those about and and customer asked have customer of we in they great a distribution my that stock team new one our opened ours pull up doing I specifically network, a mentioned that's to forward. a that. had of did

bit of demand of may expected. pull than little QX a Some back we orders large of been a forward. QX, that little sooner some could another have versus near come part a The placed customer QX. the

QX. say pull there's from So forward a you could QX little to

know country. I summer, revenue perspective, would performance had So most if around from places have the we a don't say I'd repeat expect I a to hot but

been margin exceeded has year solid. our would to said year-end of last maintain had QX demand We a obviously the quarter. we So be From that call we that perspective, this margins on type expectation. our

bit But think QX may at with around of have more accomplish, especially had of to that's couple the they'll going several over pull at the help is margins to able Solutions been I type of a that volume Contractor at margins. we've looking generally again little orders when team On go-forward larger some. realistic. pull-through the had basis, quarters those a last was move that you the forward,

move to by There's beat set driven. year-over-year that number fixed of kind that to through that So push volume hundred in more see of you've is some several margin points, lot overhead there. need got business to don't a lot But costs volume a system. good basis just the mix of its a

That's forward for year's growing So rates year total. quarter, quarter, optimistic We last of growth QX. obviously way seasonally a to the about at proud that acquisitions. year. the solid first talked we're still long the exceeded plus saying, but a of a the of really strong roughly We looking rest in

Jonathan Tanwanteng

And versus of increasing thoughts OEM, companies and on MRO base if their demand? guys forecast kind that the of flows to you HVAC the kind through

James Perry

is were about higher by morning residential obviously, of see encouraged market even HVAC OEM thing behind They've pretty all us. won't They've a kind forward residential talk volume said here We're I've There But from interest the a is the clearly, of bit mentioned. recently. The some base. order OEMs Clearly, residential the said soft for installed last year-over-year We've been while. headwind HVAC. couple for rates Yes. about this them. has But volumes being good that. of all a inflation the all We're I a talked things emphatically think for pickup. pull up couple years. that destocking a caused about nice for that and of to COVID,

going into most go units touch new into homes, The touch because maintenance. more us new what's repair, in touch we moving, homes, important putting unit, existing units So people the touch that we to are replacement a a is we more that base new replacement installed unit, we units.

coming talking teens The they is this about being things never from a They off mention other are time I'll some comps. pretty were year-over-year had single thing perspective. volume said down soft that. low to -- We've year, their numbers last high

gamut. not because our throughout about well pretty just mix the It's installation. across up held we've this So OEM new of

are bit tougher. comps little So, our a

continue certainly there's share from tailwind the while demand. see seeing volume So, unit from more gains, we market a OEMs to growth

Jonathan Tanwanteng

Can going to you at update cost especially you margin overseas via or your provide look dollars maintain with in the margin us risen forward, input significantly ability an which expectations pricing? has when freight,

James Perry

of ocean seen to X, impact the accelerate X, takes before benefit about through as year. in know, phone, clearly the that the QX, throughout but for freight and you much talked system. get we've on months X we've others the Not So the

were in containers November, kind were January, you really frame. QX, So priced time February seeing December, of back that

months. the seeing a prices you're last accelerated those lot Now have few over

the headwind of a QX QX weeks, seen rates margins. and that is gone The some in months. Rates the QX up for of is week start seeing weeks, about which every certainly about will. last to So XX%. last X have few impact, to going last come couple we've down

and So we're certainly the hard going a even But rates X is what's QX, you've say down. coming nonetheless, to trend, of us inform freight now encouraging but seeing now that peak QX and it's to weeks maybe are last that's couple QX. the seen on months in into a

it's a taken back bit So that and we closely. if continue doubt. without We've March, but input we pricing a elevated is that normal something always look watching through it of put we our pricing headwind we're consider costs we beyond see through year. counteract certainly in margin And a a action February to not at then as to taking go cost, the

Operator

the Company. with comes & from line Our Romero next question of Julio Sidoti

Julio Romero

just on start Maybe Solutions. Contractor

needed mentioned nice very You quarter? volumes quarter. benefit then called load the this from that will you second also in? that maybe you a quantify order. the Can much contribution in out customer sales one to a How placed that customer And second that large

James Perry

in it QX. enough not it's have something revenue. XX-Q but that, a that or like customer the that we It's -- call mean percent I out material it's was of in some few anything ordered would

they simply So it's deliver. hard pulled much to we were able to forward know but was ordered exactly how and

of because we sure needed get nothing a couple revenue, mentioned of do shift probably have be want when revenues it to expectations material that, So that QX. to we a some few understood enough see so specific we about, they to are be but QX sure into different real what percent to forward we it was people a like as look little there you to inform customers, from been could QX, the of that

Julio Romero

we was of for quarter time. I performance this your this nice regards long that finally XX% have in function what segment, Solutions EBITDA talked of margins, runway continue? through? secondly, more you've And know target to while for in mix through? plus very Building Engineered higher higher about flowing the for to Is just that the to the are inning Do And turning a then margin that And there flowing margin second a was mix we a straight then there.

James Perry

quarter. proud kind We of this hitting work long-term of goal XX% impressive. the Really that was this and margin did EBS is that quarter said our really

it some and was congratulations of and That's through them. backlog that higher-margin to revenue. result the obviously converting products to So of really team, Yes, coming proud a important.

Backlog going good so flat. or generally backlog out remains another of have that. The solid. was We visibility quarter

if quarters. the on that see couple the do You the last of book-to-bill you math

So certainly the in the in despite able commercial backlog multifamily some to maintain markets, we've the market. been weakness construction

The really new products, effort good quarter team is for really fruits a tried out to point mix think find concerted products. better they supply of take I from the products this some other the had and chain. the finding some They've the some ways sources inputs the as last has assemble thing for besides the I job would different done their to a reengineer costs saw out and of that year, we

come led The bounce points. margin nice some to is that's going to around. So margin And through. that's

So of goal. of I yet. permanently XX% don't said a kind that's think we're saying We've bit that little longer-term a we're

to bounce going it's So around.

in quarters, continue solid look revenues, say, Joe What around. the to we at and of As coming. it inning? next margin the kind we'll to see of couple I often backlog we're going is to bounce going have

we are there, part feel in is year backlog things back now. a the the the it. of would good right softer about say Given We little maybe

So we're fill working in. to that

Some it of in year or these be out. last backlog X a week, just something projects, put if the may we

some a little year, fiscal we that of year we the So sped see specific in softness again. up, the in very maybe Toronto the and a as up some the part projects up picking next fact, that of There in are market have back see example.

about some there backlog a many gotten have bit. quite up sped there. and Toronto because so We've labor a us up. projects nice They're those some heard are of having talk got You've crunch

slowed has we've down Other from that. slowed because little benefited demand a down have bit. the So things markets,

quarter. it's rest looks, really the the proud But So to year but way a and bit. way little a to pop going of say of it We're proud really around. the up that long down of bounces the

Julio Romero

just very in And margin Obviously, quarter. that kind had here performance thinking then your into dovetails of strong question last the my margins. overall, is you about

You of maybe EBITDA if the volume guys on dollars could way, quarters to year? reiterated that from margin your that leverage, maybe the margin more really get aside the us this another us portion, quarter performance or may talk just the focus for but remaining you why constructive and this growing is X that some sustainable about on of anything from expansion asked isn't

James Perry

first top nice team the market-leading about and The for of that obviously there Obviously, a that. margins talked of into very going think, we quarter matters, expansion. talked favorable has maybe couple volume little was team's and orders of mix orders a mix were bottom. We to quarter, in perspective. also that's from Yes, that forward picked last pull I some it these leverage. the about, we're team, year's there always the of The to work QX mix QX, us, bit aiming the in There from of really in margins a and G&A move team a margin proud proud year, around. really some and did look were we off and that share we maintaining products cost maybe to hard really and when some up The cost talked getting are, can and being has hiring perspective. at from taken about protecting where some on held has

QX, to quarter, fill of so they all pull anybody there. the those we know pick in some to up As see a really to you in you caution need cylinders. in, always we're is that have weren't little which costs optimistic, the forward, holes things success, fired this performance see folks call. as we just you'll QX, volume overall, I bit just on are we think, But and going when maybe but as that strong on as well be continue come to some of a want we but see there seasonally continue And to margin

for the few So for of pull looking asked little going then applying want I little more percent to margins you a the QX, normal to of gets the margin don't talk and as then what's bit maybe and think expectations down year's forward QX much. a rest a we earlier, and that last from QX accounting to too But kind year. revenue, probably back you with forward of at

Joseph Armes

The a to is other point revenue is always margins. Contractor our lowest our thing seasonally I for highest Solutions, has QX which you would

never same is And QX. so that margin as the

So mind. it's in keep that important to

Operator

with Our from CJS is next question a follow-up Securities. Tanwanteng Jonathan

Jonathan Tanwanteng

the one more more more. actually strong still for a you flow, at in and you becoming look you, high When is your opportunities pipeline? cash M&A priority Just X for action there

James Perry

Yes, but year. flow out of kind are million We've capital opportunities return a competitive almost most we Organic in our $XXX don't those always from have growth always to allocation of the policy. cash standpoint, a enough it is. laid of spend

targets. right price on than discovery on were going on folks pleased on still price. today our M&A is meaningful that like going of an time the be. it price part large a there's But talked to be So the things these figure trying what we a on opportunities The months I and has seeing. X We're with ago. say, the of bit guys very these important coming we and together closer continue exactly about is pipeline. we're last of really with to pleased will would now, small you good story. we're little way to been It out We're And mix feels clearing a to targets. acquisition

the are here. very and seeing with pleased we're pleased with I the shake we're valuation very out calls going getting, the opportunities we're to yes, pricing the think, So pipeline, issues,

Jonathan Tanwanteng

in or about the should just year impacting area with driving term? of weather how and the lastly, Just kind demand? impact think general there, in storms And recently Houston any we this

Joseph Armes

ready getting minor earlier. here power some X have replace in honestly, were of did we actually, days roof, Houston and loss out we in Dallas, damage of a The to we anyway. roof, to Yes, were insured laughing

coverage lot business. no a it video their on affected There's get that a for don't but TV power good You outage. of

And so hopefully, those behind are us now.

really as Houston mind organization. it's that keep high something don't this I team always and we very got has think that prepared for. we a in are a risk, through certainly see repeatedly, resilient and we've but been

nothing would affect there's results. So point, would we would at point financial nothing to, this that say our that we

Operator

call further no to I'd back are for remarks. closing like to Armes the over Mr. There questions turn any at additional time. this

Joseph Armes

just look our the and and part taking next appreciate next forward We everybody's call in conversation interest to quarter. this

thank So very much. you

Operator

Thank you. This concludes today's teleconference.

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

CSW Industrials (CSWI) 31 Jul 242025 Q1 Earnings call transcript