CSW Industrials, Inc. (Nasdaq: CSWI or the "Company") today
reported record results for the fiscal 2024 first quarter ended
June 30, 2023.
Fiscal 2024
First Quarter Highlights
(comparisons to fiscal 2023 first quarter)
- Total revenue increased 2% to a
record $203.4 million, driven by $5.1 million in revenue from
recent acquisitions
- Net income attributable to CSWI
increased 4% to $30.6 million, compared to $29.4 million,
with no adjustments to earnings in either period
- Earnings per diluted share (EPS)
improved 5% to $1.97, compared to $1.88
- EBITDA increased 10% to
$54.4 million, with margin expansion of 200 bps to 26.8%
- Record cash flow from operations,
which increased 199% to $50.3 million, compared to
$16.8 million
- Paid down $43.0 million of debt,
improving strength of the balance sheet significantly, resulting in
a leverage ratio (Debt to EBITDA), in accordance with our credit
facility, of approximately 1.1x
Comments from the Chairman, President,
and Chief Executive Officer
Joseph B. Armes, CSW Industrials’ Chairman,
President, and Chief Executive Officer, commented, "Once again, our
team executed well in the face of unit volume declines in key
markets and against strong prior year period results. Our first
quarter results demonstrate yet another quarter of solid sales,
excellent operational execution, and prudent expense management,
resulting in record revenue and earnings. We meaningfully reduced
our outstanding debt thereby strengthening our balance sheet,
increasing our liquidity, and reducing our leverage ratio and
interest expense."
Armes continued, "We delivered impressive
operating leverage as EBITDA grew by 10% on 2% growth in revenue,
while also generating over $50 million in cash flow from
operations, an increase of almost 200% over the first quarter of
last year. Taking into consideration the strength of our fiscal
first quarter results, we still expect to deliver year-over-year
revenue, EBITDA and EPS growth for the company as well as strong
cash flow generation."
Fiscal 2024
First Quarter Consolidated
Results
Fiscal first quarter revenue was a record $203.4
million, representing 1.7% growth from $199.9 million in the prior
year period. Of the $3.4 million total growth, $5.1 million
was contributed by last year's Cover Guard, AC Guard and Falcon
acquisitions. Organic revenue declined by $1.7 million as
pricing initiatives were able to partially offset a unit volume
reduction compared to last year's strong results. Revenue increased
in the energy, plumbing and mining end markets.
Gross profit in the fiscal first quarter was
$92.2 million, representing 6.6% growth from $86.4 million in the
prior year period. Gross profit as a percent of revenue increased
210 bps to 45.3%, compared to 43.2% in the prior year period. Gross
margin improvement was the result of pricing actions and a
reduction in ocean and domestic freight costs.
Operating expenses as a percent of revenue were
23.1%, compared to 22.8% in the prior year period. Operating
expenses were $47.0 million, compared to $45.6 million in the prior
year period. The additional expenses were primarily due to
increased employee expenses, and increased amortization of
intangible assets as a result of recent acquisitions.
Operating income increased to $45.2 million, or
22.2% as a percentage of revenue, compared to the prior year period
of $40.9 million, or 20.4% as a percentage of revenue. The 180 bps
improvement in operating income margin resulted from the
improvement in gross profit margin.
Net income attributable to CSWI increased 4.0%
to $30.6 million, compared to the prior year period of $29.4
million, while EPS increased 4.8% to $1.97, compared to $1.88 in
the prior year period.
Fiscal 2024 first quarter EBITDA increased to
$54.4 million, representing 9.9% growth from
$49.5 million in the prior year period. As revenue growth
outpaced incremental expenses, EBITDA as a percent of revenue
improved to 26.8%, from 24.8% in the prior year period.
The Company’s effective tax rate for the fiscal
first quarter was 25.2%.
During fiscal first quarter, the Company paid
down $43 million of debt, utilizing the record cash flows from
operations of $50.3 million, an almost 200% increase over the
prior year period. As of June 30, 2023, $210.0 million was
outstanding on our $500 million Revolving Credit Facility,
which resulted in borrowing capacity of $290.0 million. Our
interest rate swap executed in February 2023 hedges our exposure to
variability in cash flows from interest payments on the first
$100.0 million of borrowing under our Revolving Credit Facility. As
of fiscal quarter end, CSWI reported a leverage ratio, in
accordance with our Revolving Credit Facility, of approximately
1.1x debt to EBITDA, lower than the 1.3x reported for the fiscal
year ended March 31, 2023.
Following quarter end, the Company declared its
eighteenth consecutive quarterly regular cash dividend in the
amount of $0.19 per share, which will be paid on August 11,
2023, to shareholders of record on July 28, 2023.
Fiscal 2024
First Quarter Segment Results
Contractor Solutions segment revenue was $140.0
million, a $2.3 million, or 1.7% increase from the prior year
period. Revenue growth was comprised of inorganic growth of
$5.1 million from the Cover Guard, AC Guard and Falcon
acquisitions, which was partially offset by an organic revenue
decrease of $2.8 million. The 2.0% decrease in organic revenue
was primarily due to a decrease in unit volumes which was partially
offset by pricing initiatives. As compared to the prior year
period, net revenue growth was driven by the plumbing and
architecturally-specified building products end markets. Segment
operating income improved to $39.7 million, compared to $36.3
million in the prior year period. The incremental profit resulted
from the inclusion of the Cover Guard, AC Guard and Falcon
acquisitions, as well as a reduction in ocean and domestic freight
expenses compared to the prior year period. This incremental profit
was partially offset by increased spending on employee related
expenses as well as additional amortization expense from recent
acquisitions. Segment operating income margin improved to 28.3%,
compared to 26.4% in the prior year period, due to gross margin
improvement driven primarily by pricing and a reduction in ocean
and domestic freight costs. Segment EBITDA in the current year
period was $46.7 million, or 33.4% of revenue, compared to $43.0
million, or 31.2% of revenue in the prior year period.
Specialized Reliability Solutions segment
revenue improved to $37.7 million, a $2.0 million, or 5.5%
increase, over the prior year period, due to pricing initiatives
and growth in the energy and mining end markets. Segment operating
income improved to $7.0 million, a 36.7% increase from $5.1 million
in the prior year period, driven by pricing actions and the
management of operating expenses. Segment operating income margin
in the fiscal first quarter improved to 18.5%, compared to 14.3% in
the prior year period. Segment EBITDA improved by 26.9% to $8.5
million, or 22.4% of revenue, compared to $6.7 million, or 18.6% of
revenue, in the prior year period.
Engineered Building Solutions segment revenue
was $27.6 million, a 3.3% decrease from the prior year period, due
to a slight volume decrease partially offset by pricing actions.
The project mix of the current backlog skews more toward larger
jobs in the architecturally-specified building products end market,
which can take up to two years to turn into revenue. Segment
operating income was $4.3 million, or 15.4% of revenue, compared to
the prior year period of $4.4 million, or 15.5% of revenue.
Segment EBITDA was $4.7 million, or 17.1% of revenue, compared to
$4.8 million, or 16.8% of revenue, in the prior year period.
Conference Call Information
The Company will host a conference call today at
10:00 a.m. ET to discuss the results, followed by a question and
answer session for the investment community. A live webcast of the
call can be accessed at https://cswindustrials.gcs-web.com/. To
access the call, participants may dial 1-877-300-8521,
international callers may use 1-412-317-6026, and request to join
the CSW Industrials earnings call.
A telephonic replay will be available shortly
after the conclusion of the call and until August 17, 2023.
Participants may access the replay at 1-844-512-2921, international
callers may use 1-412-317-6671, and enter access code 10180705. The
call will also be available for replay via webcast link on the
Investors portion of the CSWI website at
www.cswindustrials.com.
Safe Harbor Statement
This press release includes forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934,
which are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995, as amended. Words
or phrases such as "may," "should," "expects," "could," "intends,"
"plans," "anticipates," "estimates," "believes," "forecasts,"
"predicts" or other similar expressions are intended to identify
forward-looking statements, which include, without limitation,
earnings forecasts, effective tax rate, statements relating to our
business strategy and statements of expectations, beliefs, future
plans and strategies and anticipated developments concerning our
industry, business, operations, and financial performance and
condition.
The forward-looking statements included in this
press release are based on our current expectations, projections,
estimates, and assumptions. These statements are only predictions,
not guarantees. Such forward-looking statements are subject to
numerous risks and uncertainties that are difficult to predict.
These risks and uncertainties may cause actual results to differ
materially from what is forecast in such forward-looking
statements, and include, without limitation, the risk factors
described from time to time in our filings with the Securities and
Exchange Commission, including our Annual Report on Form 10-K.
All forward-looking statements included in this
press release are based on information currently available to us,
and we assume no obligation to update any forward-looking statement
except as may be required by law.
Non-GAAP Financial Measures
This press release includes an analysis of
adjusted earnings per share attributable to CSWI, adjusted net
income attributable to CSWI, and adjusted operating income, which
are non-GAAP financial measures of performance. Attributable to
CSWI is defined to exclude the income attributable to the
non-controlling interest in the Whitmore JV.
CSWI utilizes adjusted EBITDA (earnings before
interest, tax, depreciation and amortization) as an additional
consolidated, non-GAAP financial measure, which consists of
consolidated net income including income attributable to the
non-controlling interest in the Whitmore JV, adjusted to remove the
impact of income taxes, interest expense, depreciation and
amortization, and significant nonrecurring items. Free cash flow is
a non-GAAP financial measure and is defined as cash flow from
operations less capital expenditures.
For a reconciliation of these measures to the
most directly comparable GAAP measures and for a discussion of why
we consider these non-GAAP measures useful, see the “Reconciliation
of Non-GAAP Measures” section of this release.
About CSW Industrials, Inc.
CSW Industrials is a diversified industrial
growth company with industry-leading operations in three segments:
Contractor Solutions, Specialized Reliability Solutions and
Engineered Building Solutions. CSWI provides niche, value-added
products with two essential commonalities: performance and
reliability. The primary end markets we serve with our well-known
brands include: HVAC/R, plumbing, general industrial,
architecturally-specified building products, energy, mining, and
rail transportation. For more information, please visit
www.cswindustrials.com.
Investor Relations
Alexa HuertaVice President, Investor Relations &
Treasurer214-489-7113alexa.huerta@cswindustrials.com
CSW INDUSTRIALS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
(Unaudited) |
(Amounts in thousands, except
per share amounts) |
Three Months EndedJune 30, |
|
2023 |
|
2022 |
Revenues, net |
$ |
203,360 |
|
|
$ |
199,934 |
|
Cost of revenues |
|
(111,193 |
) |
|
|
(113,509 |
) |
Gross profit |
|
92,167 |
|
|
|
86,425 |
|
Selling, general and administrative expenses |
|
(46,961 |
) |
|
|
(45,552 |
) |
Operating income |
|
45,206 |
|
|
|
40,873 |
|
Interest expense, net |
|
(4,009 |
) |
|
|
(1,784 |
) |
Other income, net |
|
314 |
|
|
|
169 |
|
Income before income
taxes |
|
41,511 |
|
|
|
39,258 |
|
Provision for income
taxes |
|
(10,455 |
) |
|
|
(9,620 |
) |
Net income |
|
31,056 |
|
|
|
29,638 |
|
Less: Income attributable to
redeemable noncontrolling interest |
|
(445 |
) |
|
|
(195 |
) |
Net income attributable to CSW
Industrials, Inc. |
$ |
30,611 |
|
|
$ |
29,443 |
|
|
|
|
|
Net income per share
attributable to CSW Industrials, Inc. |
|
|
|
Basic |
$ |
1.97 |
|
|
$ |
1.88 |
|
Diluted |
$ |
1.97 |
|
|
$ |
1.88 |
|
|
|
|
|
Weighted average number of shares outstanding: |
|
|
|
Basic |
|
15,520 |
|
|
|
15,643 |
|
Diluted |
|
15,547 |
|
|
|
15,652 |
|
CSW INDUSTRIALS, INC. |
CONDENSED CONSOLIDATED BALANCE SHEET |
(Unaudited) |
|
|
|
|
|
|
|
|
(Amounts in thousands, except
for per share amounts) |
June 30, 2023 |
|
March 31, 2023 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
14,788 |
|
|
$ |
18,455 |
|
Accounts receivable, net of allowance for expected credit losses of
$1,422 and $1,365, respectively |
|
127,075 |
|
|
|
122,753 |
|
Inventories, net |
|
157,042 |
|
|
|
161,569 |
|
Prepaid expenses and other current assets |
|
19,775 |
|
|
|
20,279 |
|
Total current assets |
|
318,680 |
|
|
|
323,056 |
|
Property, plant and equipment,
net of accumulated depreciation of $95,736 and $92,703,
respectively |
|
89,392 |
|
|
|
88,235 |
|
Goodwill |
|
243,162 |
|
|
|
242,740 |
|
Intangible assets, net |
|
313,355 |
|
|
|
318,903 |
|
Other assets |
|
68,510 |
|
|
|
70,519 |
|
Total assets |
$ |
1,033,099 |
|
|
$ |
1,043,453 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
46,252 |
|
|
$ |
40,651 |
|
Accrued and other current liabilities |
|
60,193 |
|
|
|
67,388 |
|
Total current liabilities |
|
106,445 |
|
|
|
108,039 |
|
Long-term debt |
|
210,000 |
|
|
|
253,000 |
|
Retirement benefits
payable |
|
1,148 |
|
|
|
1,158 |
|
Other long-term
liabilities |
|
136,503 |
|
|
|
137,117 |
|
Total liabilities |
|
454,096 |
|
|
|
499,314 |
|
Commitments and contingencies
(See Note 13) |
|
|
|
Redeemable noncontrolling
interest |
|
18,909 |
|
|
|
18,464 |
|
Equity: |
|
|
|
Common shares, $0.01 par value |
|
163 |
|
|
|
163 |
|
Additional paid-in capital |
|
128,451 |
|
|
|
123,336 |
|
Treasury shares, at cost (887 and 902 shares, respectively) |
|
(83,072 |
) |
|
|
(82,734 |
) |
Retained earnings |
|
520,965 |
|
|
|
493,319 |
|
Accumulated other comprehensive loss |
|
(6,413 |
) |
|
|
(8,409 |
) |
Total equity |
|
560,094 |
|
|
|
525,675 |
|
Total liabilities, redeemable
noncontrolling interest and equity |
$ |
1,033,099 |
|
|
$ |
1,043,453 |
|
CSW INDUSTRIALS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(Unaudited) |
(Amounts in thousands) |
Three Months Ended June 30, |
|
2023 |
|
2022 |
Cash flows from operating
activities: |
|
|
|
Net income |
$ |
31,056 |
|
|
$ |
29,638 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation |
|
3,239 |
|
|
|
3,273 |
|
Amortization of intangible and other assets |
|
5,868 |
|
|
|
5,340 |
|
Provision for inventory reserves |
|
2,509 |
|
|
|
1,667 |
|
Provision for doubtful accounts |
|
108 |
|
|
|
1,060 |
|
Share-based and other executive compensation |
|
2,805 |
|
|
|
2,284 |
|
Net loss on disposals of property, plant and equipment |
|
(12 |
) |
|
|
(5 |
) |
Net pension benefit |
|
17 |
|
|
|
49 |
|
Impairment of assets |
|
92 |
|
|
|
— |
|
Net deferred taxes |
|
843 |
|
|
|
310 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(4,319 |
) |
|
|
(21,044 |
) |
Inventories |
|
2,141 |
|
|
|
(15,020 |
) |
Prepaid expenses and other current assets |
|
2,443 |
|
|
|
458 |
|
Other assets |
|
(788 |
) |
|
|
81 |
|
Accounts payable and other current liabilities |
|
3,233 |
|
|
|
8,426 |
|
Retirement benefits payable and other liabilities |
|
1,022 |
|
|
|
296 |
|
Net cash provided by operating
activities |
|
50,257 |
|
|
|
16,813 |
|
Cash flows from investing
activities: |
|
|
|
Capital expenditures |
|
(4,971 |
) |
|
|
(2,015 |
) |
Proceeds from sale of assets |
|
12 |
|
|
|
20 |
|
Cash paid for acquisitions |
|
(112 |
) |
|
|
(2,000 |
) |
Net cash used in investing
activities |
|
(5,071 |
) |
|
|
(3,995 |
) |
Cash flows from financing
activities: |
|
|
|
Borrowings on line of credit |
|
15,432 |
|
|
|
34,797 |
|
Repayments of line of credit and term loan |
|
(58,432 |
) |
|
|
(13,937 |
) |
Purchase of treasury shares |
|
(2,864 |
) |
|
|
(31,398 |
) |
Dividends |
|
(2,947 |
) |
|
|
(2,670 |
) |
Net cash used in financing
activities |
|
(48,811 |
) |
|
|
(13,208 |
) |
Effect of exchange rate changes
on cash and equivalents |
|
(42 |
) |
|
|
(710 |
) |
Net change in cash and cash
equivalents |
|
(3,667 |
) |
|
|
(1,100 |
) |
Cash and cash equivalents,
beginning of period |
|
18,455 |
|
|
|
16,619 |
|
Cash and cash equivalents, end
of period |
$ |
14,788 |
|
|
$ |
15,519 |
|
Reconciliation of Non-GAAP Measures
We use adjusted earnings per share attributable
to CSWI, adjusted net income attributable to CSWI, adjusted
operating income, adjusted EBITDA, and free cash flow, together
with financial measures prepared in accordance with GAAP, such as
revenue, cost of revenue, operating expense, operating income, net
income attributable to CSWI and cash flows provided by operating
activities, to assess our historical and prospective operating
performance and to enhance our understanding of our core operating
performance. We also believe these measures are useful for
investors to assess the operating performance of our business
without the effect of non-recurring items. In the following tables,
there could be immaterial differences in amounts presented due to
rounding.
CSW INDUSTRIALS, INC. |
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO CSWI TO
EBITDA |
(Unaudited) |
|
|
|
|
(Amounts in thousands) |
Three Months Ended June 30, |
|
2023 |
|
2022 |
Net Income attributable to CSWI |
$ |
30,611 |
|
|
$ |
29,443 |
|
Plus: Income attributable to
redeemable noncontrolling interest |
|
445 |
|
|
|
195 |
|
Net Income |
$ |
31,056 |
|
|
$ |
29,638 |
|
|
|
|
|
Adjusting Items: |
|
|
|
Interest Expense |
|
4,009 |
|
|
|
1,784 |
|
Income Tax Expense |
|
10,455 |
|
|
|
9,620 |
|
Depreciation & Amortization |
|
8,915 |
|
|
|
8,470 |
|
EBITDA |
$ |
54,435 |
|
|
$ |
49,512 |
|
EBITDA % Revenue |
|
26.8 |
% |
|
|
24.8 |
% |
CSW INDUSTRIALS, INC. |
RECONCILIATION OF SEGMENT OPERATING INCOME TO SEGMENT
EBITDA |
(Unaudited) |
|
|
|
|
|
|
(Amounts in thousands) |
Three Months Ended June 30, 2023 |
|
|
Specialized |
Engineered |
|
|
|
Contractor |
Reliability |
Building |
Corporate |
Consolidated |
|
Solutions |
Solutions |
Solutions |
and Other |
Operations |
Revenue, net |
$ |
139,954 |
|
$ |
37,712 |
|
$ |
27,587 |
|
$ |
(1,892 |
) |
$ |
203,360 |
|
|
|
|
|
|
|
Operating Income |
$ |
39,667 |
|
$ |
6,966 |
|
$ |
4,260 |
|
$ |
(5,686 |
) |
$ |
45,206 |
|
% Revenue |
|
28.3 |
% |
|
18.5 |
% |
|
15.4 |
% |
|
|
22.2 |
% |
Adjusting Items: |
|
|
|
|
|
Other Income (Expense) |
|
172 |
|
|
(37 |
) |
|
8 |
|
|
172 |
|
|
314 |
|
Depreciation & Amortization |
|
6,895 |
|
|
1,530 |
|
|
441 |
|
|
48 |
|
|
8,915 |
|
EBITDA |
$ |
46,734 |
|
$ |
8,458 |
|
$ |
4,708 |
|
$ |
(5,466 |
) |
$ |
54,435 |
|
% Revenue |
|
33.4 |
% |
|
22.4 |
% |
|
17.1 |
% |
|
|
26.8 |
% |
|
|
|
|
|
|
(Amounts in thousands) |
Three Months Ended June 30, 2022 |
|
|
Specialized |
Engineered |
|
|
|
Contractor |
Reliability |
Building |
Corporate |
Consolidated |
|
Solutions |
Solutions |
Solutions |
and Other |
Operations |
Revenue, net |
$ |
137,628 |
|
$ |
35,737 |
|
$ |
28,514 |
|
$ |
(1,940 |
) |
$ |
199,934 |
|
|
|
|
|
|
|
Operating Income |
$ |
36,289 |
|
$ |
5,097 |
|
$ |
4,415 |
|
$ |
(4,927 |
) |
$ |
40,873 |
|
% Revenue |
|
26.4 |
% |
|
14.3 |
% |
|
15.5 |
% |
|
|
20.4 |
% |
Adjusting Items: |
|
|
|
|
|
Other Income (Expense) |
|
309 |
|
|
5 |
|
|
(79 |
) |
|
(66 |
) |
|
169 |
|
Depreciation & Amortization |
|
6,408 |
|
|
1,561 |
|
|
451 |
|
|
49 |
|
|
8,470 |
|
EBITDA |
$ |
43,006 |
|
$ |
6,663 |
|
$ |
4,787 |
|
$ |
(4,944 |
) |
$ |
49,512 |
|
% Revenue |
|
31.2 |
% |
|
18.6 |
% |
|
16.8 |
% |
|
|
24.8 |
% |
CSW INDUSTRIALS, INC. |
RECONCILIATION OF FREE CASH FLOW TO NET
INCOME |
(Unaudited) |
|
|
|
|
(Amounts in thousands) |
Three Months Ended June 30, |
|
2023 |
|
2022 |
Net cash provided by operating activities |
$ |
50,257 |
|
|
$ |
16,813 |
|
Less: Capital
Expenditures |
|
(4,971 |
) |
|
|
(2,015 |
) |
Free Cash Flow |
$ |
45,286 |
|
|
$ |
14,798 |
|
Free Cash Flow % Net
Income |
|
145.8 |
% |
|
|
49.9 |
% |
CSW Industrials (NASDAQ:CSWI)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
CSW Industrials (NASDAQ:CSWI)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024