CSWI - Earnings call transcript Q2 2025

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Operator

Greetings, and welcome to the CSW Industrials Second Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Alexa Huerta, Vice President of Investor Relations and Treasurer. Thank you.

You may begin.

Alexa Huerta

Maria. you, Thank and Second everyone, the Industrials CSW Good Earnings welcome Call. XXXX Quarter Fiscal morning, to

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

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

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

over now Joe. will call to the turn I

Joseph Armes

Thank earnings and for $XX share revenue diluted of million records from second fiscal of net $XX our you, year record we has per $XX This good Alexa, quarterly for and quality of quarter proud this results million, team for of EBITDA second morning, the quarter delivered $XXX reported outperforming flow million cash of that once the operations everyone. and all-time high to million. fiscal I'm income report and markets we again, for serve. $X.XX morning, of

basis as pricing. result profit our margin of the volume to expanded points an period, compared and As XX a additional leverage year XX.X% to gross prior

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

offered shares the our first During the of shares equity issued balance sheet. saw successful million demand common offering, issue ultimately of strong for CSWI further investor quarter, million to in in raising for the equity the strengthening the a second total allowing company X.XXX $XXX history. public our time We to the fiscal follow-on proceeds,

to S&P to the Also September, Small we Index. were pleased in Cap be added XXX

the growth We other strength testament long-term overall this Russell company. as XXXX member a new are to a already inclusion index but and our is a indices, of in

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

now cash follow-on continued Our combined fund equity proceeds to flow, continue the strategy. strong offering, from with our capital will allocation

will pipeline our opportunities shareholder on inorganic of that returns value. with focused remain We enhance investment innovative,

the borrowings During of line operations the equity fiscal of outstanding second quarterly cash revolving cash from under million. $XX received of our all credit our utilizing offering quarter, from down the flows follow-on we paid and record our

debt result, we ended with quarter outstanding. a the As no

balance on and size. opportunities delivered and impressive strength, am quarter that the to sheet any profitability resilience cash of announce each execution. during liquidity flows pleased act of swiftly results Our growth business marked to enable and X CSWI increasing by the I business segments and

compounder of ability our performance James this a shareholders on has to continue a and of existing long-term will record track shareholder our and during new follow-on I to proven believe value of proved CSWI success quarter. equity that the each more perform. in the let provide offering details both as segment

growing company. helps drive revenue while foundation for At results success culture allocating employee-centric truly to CSWI, matter. strong been sheet, to approach and balance of health the our the a has team meaningfully and Our these the capital, and the profits, members our safety maintaining of

being of by and their well customers our partner chains growth for and long-term our serving on managing choice to position focus supply effectively also We us profitability.

And look remarks. following our our return James for results. to over at closer call prepared the to turn I'll time, I'll this James, At a conclude

James Perry

everyone. Joe, good and you, morning, Thank

million, second or initiatives. CSWI. $XX a quarter our to for record As revenue XX% mentioned, high when the quarterly growth increased record prior million increase the fiscal the and a period $XXX $XX year all-time consolidated XXXX and pricing million a of during Joe was of volumes compared through was organic

came Consolidated second growth quarter of gross the dust-free the million the $XX million, growth PSP fiscal prior period. in acquisitions. from profit and was XX% representing remaining year The over $XXX

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

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

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

grow for strive as to we manage EBITDA expenses. leverage continue and will We revenue additional

representing However, we or are grow record EBITDA focus very XX%. to second dollars fiscal year $XX growth revenue. Net increasing $X.XX million a the a prior period, on in attributable share remain million $X.XX will proud income was we of our of these or $XX CSWI the margins, diluted quarter in diluted record compared and share to per as per

year in with the for revenue, Of consolidated organic, was while came X.X% in revenue XX.X% $XX.X of or million $X.X delivered growth compared million million when Solutions the or quarter, Contractor $XXX recent X.X% accounted revenue to Our segment, prior quarter. growth and from XX% the or $XX.X acquisitions. our million remaining total the

slight as was million plumbing mostly or unit pricing in increase and was and year. volumes XX% a a quarter the normal year in and Segment of prior gross HVAC/R, as for reported revenue compared compared or margins. the ago. from XX% well end volume as result expansion the to million margin of revenue the initiatives leverage from increased markets EBITDA Growth to EBITDA of came $XX.X was $XX.X electrical

year the revenue the improved end to current end basis period. period's in The an general results the rail transportation to to prior margin Reliability XXX segment $XX.X the in energy, million compared X% increase increased segment driven markets, manufacturing and revenue Specialized Revenue by was prior and in primarily the in efficiencies. of as declined increased mining quarter the the driven million in market. unit of $X.X by the $X.X increased increase XX.X% EBITDA from million points primarily second period, The in Solutions but by Our industrial volumes. XX% EBITDA represented by

Solutions Our revenue the million, prior fiscal in to in the to increased mix a period, conversion Bidding quarter, seen in XX% in booking to trends second by compared the Engineered year million backlog and $XX.X $XX.X solid and the revenue. strength as segment driven a favorable backlog. margin have increase we in bookings remained Building

a EBITDA in a the Segment margin or XX% to compared period. EBITDA year and $X.X $X.X margin to XX.X% XX% EBITDA million grew million prior

but in our mix. a XX% will We the in segment are EBS the a target that margin on this keep basis mind due reach row, EBITDA to to quarterly for fluctuate see second pleased quarter project

quarter last and Transitioning balance compared to $XX XX% prior with over quarter million our our to same sheet reported cash $XXX strong growth flows. million and record fiscal cash of the flow from $XX quarterly XXXX in We second year, all-time the ended operations million cash period. of representing year

will cash in severe quarter the in half federal record flows storms benefited paid flow Cash under the in and the The an CSWI. Texas to early in temporary tax the from fiscal a relief first million deferral quarter XXXX in quarter. taxes was operations be from related from from operations for tax XXXX. third $XX.X fiscal These all-time calendar flooding payment a

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

CSWI's shares the On public us the the to announced the we that during commencement This with of impressive into goal shareholder equity company X first offering allows level mentioned issued value. common market. an invest September for of of and million flow [indiscernible] history, the quarter in time X, cash underwritten increasing of long-term public of second the free growth stock. in earlier

shares. X.XXX the discount net the an day, million to were an in to announced and shares $XXX of expenses additional common to XXX,XXX the of of upsize the directly X.X with sold, next stock per to issued pricing the up purchase million, at shares resulting public share and The option All million proceeds of for approximately company $XXX the price offering. the of underwriters offering registered related ultimately and underwriting

quarter, second cash the able to were to from follow-on due received all revolver the the under pay offering we During borrowings and off equity of cash our flows. our strong our

the market accounts the result, proceeds a interest company the income. generate offering and to As able money was from and eliminate interest expense, equity to invest net

the For early due to shares count share timing in our equity average weighted was the XX.X quarter, offering the million September. of fiscal second

shares include the full will of quarter fiscal third issued. the The new amount

million. outstanding Form our shown As of shares was cover of on October as XX XX.X XX-Q, the the

the basis. for quarter a rate tax effective Our second on XX.X% was GAAP fiscal

tax quarter in acquisitions. the our a may impact related to potential be lower of be third in fiscal reminder, rate due As also income a uncertain to on There quarter the positions third favorable a may result. potential tax as net prior fiscal our release

full EPS, announce EBITDA strong results. when and in detail we growth this cash our impact quarter anticipate still will third year We We flow. delivering continued along revenue, with

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

Joseph Armes

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

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

Looking we XXXX, of outpaces delivering fiscal into markets second CSWI will growth focused serve. on that the the half remain

of that organic to strategic We pursue will continue acquisition products growth. and complement companies our innovative pipeline

group management family to Products CSWI. acquisition PSP through like brings load take I August. join superior products protection of surge of of the would moment to to family recent a the to welcome and in employees most a CSWI PSP our

our segment In electrical series electrical recent of continue our CSWI by umbrella expanding team Solutions an HVAC develop industry-leading Bringing further the teams partnered under have of will market new pace our innovation Contractor offering. this in together allow end products. years, our the product to to

Lastly, I at here shareholders dedicated that the stock as new prepared our of who remarks and for own company acknowledge October long-term I approximately CSWI, through my our collectively their our as in employee our of as team want anniversary investment our and independent always plan to year, want interest as enter CSWI. company. marked well X% thanking in all ownership And we we X, close public on an the by ninth to tenth

want we're thank We time. questions. your now you to operator, your ready And for for

Operator

comes Tanwanteng Securities. CJS Instructions] with Our [Operator question first Jon from

Jonathan Tanwanteng

could can on of the Congratulations if What were was level? you EBITDA versus to of the next keep same Xx XX% those margins period year, what the the -- drivers do think next you come that results. saw? sustainable talk seen close you've wondering half really you the guys sustainability of year? we first the this I the as Maybe in about to nice that you another strength

James Perry

for Jon, coverage thanks us. being and of on your

support. some first or anything we necessarily. we we've give I always, us has yet, think across anything was appreciate in As Yes, that the ins year half good the and but There's unusual quite board. always talking the don't fiscal there see the quarter that next outs. guidance, and started about We don't been not demand in tells

really across to Our the responded EBS. booking portfolio. picked We're teams share well market We've up in have that. projects good

team of to benefit continue acquisitions higher organic relationships. more we into team our which find more manufacturing Contractor fronts and and across so . And as -- say, always of we as continues continues those Our operations the products country we volumes great facility SRS future in to distributors' improve acquisitions, course, continuing distribution hands, absorption have from the the there. get to good store growth, to in fuel Solutions into will

up we're grow leverage operating as line. top And we the picking

assuming would the we half the the always given grow of to year continue next the levels time change say that this year. quarter want there's see to would first margins we that of they're So unusual caution about at, that the we while strong or nothing will people

Joseph Armes

And that is Jon, to only The this pricing remarks Joe. I is we're our James' would power. add highly just thing in confident

to we to any the don't why pass costs, continue historically that. we input and couldn't see do have reason We ability along seen

Jonathan Tanwanteng

helpful. Got it. That's

else there expectations the acquisition was was it quarter? where you the are and M&A if compared What that more if something that? to pipeline How more or now. does look there's larger for like cash or raise targeted a help me for cash with flush out going on? You're for opportunities specifically that understand Just last

Joseph Armes

no we be We great question. sheet. Jon. particular as successful more war us our result a do that Yes. could light did was to so exploit No, raise acquisition came in a of had have that offering, identified. That's any we position Yes, cash It of attractive for about. that the not the thanks, on in of chest equity and a obviously, that we really opportunities debt capital balance

be We're I our would level seeing, that of result we're very continues say in balance when to receiving able you pleased debt ago the then is a acquisition and that sheet, ourselves pleased that we very our found opportunities been to has that inbound would calls most activity our had with years this now the which pipeline just as I the of X the And position were successful with remind we no we're TRUaire, on we of robust. and to with this. cash that when consummate and acquisition about date. and we're

us helps provide those speed we can in and raise also need to the a that position. like that and we seller. certainty us to attractive market and we helps being capturing and seller move actually from think And to don't we quickly so And in that valuation go it financing. like a able to to is opportunities being We the standpoint to

sort robust rigor the evaluating We stick to the So and pipeline. capital disciplined return to analysis same on that apply decision of our and approach have will always will put risk-adjusted we made. opportunities intend our but always work, these drive to we this

Jonathan Tanwanteng

doorways Great. new talk of little talk prospects PSP business to open more about verticals. M&A outside seems or does? you type little to that pathways going the Maybe kind that does It kind business, up and bit that business? add of to Could about what And a the forward? of your on bit a the traditional of financials

James Perry

Thanks pleased with James. mentioning is this PSP the Jon, I'm for Yes, that. really acquisition.

Dust doing model in our a We like product, very electrical with understood space. us. folks this for and the for in had the earlier sales is industry. the that out understood and distributing partnered their little that Free turned while. again, Just bit year, the were a products company And been a product, we learned well force once We the

always is it, gets seriously obviously much that is and kind of in This end the of plumbing electrical way. electrical We've said big there us HVAC a in part there the is more market. small

us allows with through channels even put same that through our distribution do now we other run it PSP to more the So and distributors. products

innovating will And owner the us a continues quite a of new great business products. so that with for is and innovator, to while, work

HVAC devices your are these So protection protect surge that can unit.

your So installs relatively repair, house when unit literally protector does the a a contractor can comes new out surge to for a and add or unit a low cost.

of years, We've care part most have your that system HVAC most these the is we always said, always and computers for surge protectors and house. TVs of and of your important our kind expensive those Well, take things.

very a price, that for that of event myself install relatively low quickly. protect house. So done the in I've contractor a in a can and your surge now it

opportunities business, and explore who's the more within to ability our and with we'll to of And great with end that market that more working and job start so more. team about our continue to doing talking seller continue the innovate a electrical

us of products see people electrical a provider well. Now as as

I lastly, allows acquisitions going a distribution said, is channels than previously us more product to done. like distribute strategy hallmark always that of same the And and folks to our was that probably through

grow. In roughly The you very on opportunities to as basic in continues that terms performing with we gave margins well and business of some details did where that our already. initial business financials, kind press the there's is Margins earnout are. overall release of line

that in few already very performance seeing and So the that first the with months. growth prospects business pleased of we're

Operator

Tom Our Hayes CL King. next from with question comes

Thomas Hayes

well. Congratulations on as the quarter

Joseph Armes

Tom. Thanks,

Thomas Hayes

briefly. to PSP. was I want a little just bit about in know asked the -- dig I I hoping more Jon

fully kind now? that typically with the is And different into a of kind do network kind integrated up? ramp of how CSW they Is there wondering, speed? kind me help out or of acquisitions start business that. of Just the slower start Just a

James Perry

Yes. Sure, Tom. This is James.

And through sales our I'll thing was that first selling is product, given of integration that very getting this fact say it we the were channel. smooth. The in already terms

not was this new. So

it bought Some product, acquisitions a get the the time system. day we through the ever while the so do, the we've we first takes sold is company to

back Dust where model August, PSP Free, we in product. were knew February the then and did in already the we

already PSP channels. product were selling we So buying our through and it from

smooth. was that very very, So

smooth. So commercial in of terms integration, very

along. continue said our product to as Now to of go of will blow that we in folks, more like the I response on ability introduce to utility question, folks it out Jon's that through to continue distribution channels, more our educate

In in terms that's of process. integration, systems

Some acquisitions done few of these a matter a get in of months.

need back couple process from the of But on the accounting us not take standpoint. of PSP depending that. any an in a doing Some is to way financial that. or do years, in holding

team the or X the really years Solutions, Contractor within developed numerous last make this with acquisitions repeatable has to Our a the specifically in now very done X we've muscle process.

all these get respect. then in the and our that time. them done and that has in And getting holding but standpoint, makes due which products in getting a comes on system, team from it us So shelves, is our Nothing yes, financial great these eventually, even on job no back cleaner, back-office But there. ERP smoother hiccups our integration a portfolio.

Thomas Hayes

really That's Great. little of That's bit. shifting just Maybe great gears I appreciate. a helpful. kind color.

you're is in half if you last indicated I QX, 'XX, we it the could country. of was that wondering, just think FY on was that spoke, higher the I I the will, bringing be that for time rates think higher shipping into you there back from case? in still coming COGS, products

James Perry

it ocean be in than rates our COGS. the was years And Yes, ocean system on now, crossing second costs over Ocean higher and much pretty year those the half baked the that will has was ago. it and are been obviously the months X, talked we've than is, freight. even It freight Tom. ago about a X

have now They pretty we look good to that's So through a started March to what sense like. down. come going

fiscal an we for have bit. opportunity for a that to But us. it's yes, back enter we So little as headwind may a the year, next come

do we things little you have thought. higher a have originally than So would

the back March, in costs beginning season, year. budget April in at know are. Back those We frame, time fiscal what the our of

have is opportunity And talked that that say we've will that's some costs and that still past. we something justified. they're elevated, have As see that because a to. half -- if other second those Joe that costs ocean higher the prices all. said, they're COGS the yes, exercise will push been I bit, for But we raise some there about than yes, come have the in that But down in it first through and half. that, and power to action makes and sense was pricing offset we of remain alluded we've that's need that those have as we the real, natural the to pricing freight always

Thomas Hayes

Appreciate Solutions just given the or And to you appreciate with talking just guys if any Okay. sentiment similar their just business, mixed And a I time I in Contractor maybe your that. obviously, wondering wondering of lot on spend outlook? outlook specifically change there's customers. the the lastly, a been call was it economic maybe color.

Joseph Armes

those to have those of would rating, refrigerants, I agnostic to say agnostic the we're to that it SEER us as I of issues in OEM we're been times. changes. for the not that over fact The things we're impending really know our OEMs benefit some Tom, inventory agnostic to there all products. relates

the is no. think So answer I

some I so now. we've unit X in the most and like over rearview the mirror are contraction those seen of years think last issues. that Deals inventory or

overriding have see we at from no, do the HVAC/R overall this the is market. and bright not point So prospects any concerns

Operator

turn comments. time. over further I to There back now Armes would closing this no like floor to are for questions the Joe at

Joseph Armes

for us look stewards Great. be We Thank -- in on to our time your second you, forward you, everyone, And Thank to we of meantime, fiscal Maria. good next visit this fiscal capital. will together. quarter joining the continue call. XXXX to

very thank you much. So

Operator

teleconference. today's concludes This

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

CSW Industrials (CSWI) 30 Oct 242025 Q2 Earnings call transcript