CSW Industrials, Inc. (Nasdaq: CSWI or the "Company") today
reported results for the fiscal 2022 second quarter and first half
periods ended September 30, 2021.
Fiscal 2022 Second Quarter Highlights
(comparisons to fiscal 2021 second quarter)
- Total revenue increase of 48% to
$155.6 million, compared to $104.9 million
- Organic revenue growth of 15%, or
$15.4 million, all segments report organic growth
- GAAP net income attributable to
CSWI (net of non-controlling interest in the joint venture) of
$18.0 million, compared to $16.4 million, no adjustments in either
period
- Diluted EPS attributable to CSWI
increased to $1.14, compared to $1.10
- Growth of 33% in EBITDA to
$33.8 million, with a 22% EBITDA margin
- Net cash provided by operating
activities of $23.8 million
- Pandemic-driven operating
reductions at TRUaire manufacturing facility in Vietnam during the
fiscal second quarter negatively impacted profitability by $1.4
million, equivalent to $0.07 of diluted EPS; facility is returning
to full operations
- Maintained balance sheet strength
with leverage ratio, in accordance with our credit facility, of
approximately 1.5x debt to EBITDA
Fiscal 2022 First Half
Highlights (comparisons to fiscal 2021 first half)
- Increase in total revenue of 62% to
$316.9 million, compared to $195.9 million
- Organic revenue growth of 27%, or
$52.1 million, all segments reported organic growth
- GAAP net income attributable to
CSWI of $38.0 million, or $41.0 million adjusted to
exclude the final TRUaire purchase accounting effect, compared to
$28.3 million, in prior year period
- Diluted EPS attributable to CSWI
increased 26% to $2.41, compared to $1.91
- Growth of 36% in adjusted diluted
EPS attributable to CSWI to $2.60, compared to $1.91
- Growth of 66% in adjusted EBITDA to
$74.3 million, with a 23% adjusted EBITDA margin
- Net cash provided by operating
activities of $42.8 million
TRUaire Vietnam Manufacturing Facility
Update
As reported in August, strict local COVID
protocols required that the number of employees on-site at the
TRUaire manufacturing facility in Vietnam be reduced. As these
restrictions relaxed in recent weeks, approximately 900 team
members returned to the TRUaire facility, bringing the on-site
operations to approximately 1,150 team members, producing key items
for shipment to the United States. On average during August and
September, nine containers per week were shipped, which compares
with 22 containers in the week ended October 29, 2021. We
anticipate a return to full operations, or approximately 36
containers per week by the end of November 2021. The strategic
production decisions made, in conjunction with our TRUaire
inventory position in the United States, proved sufficient to meet
customer demands, with no loss of TRUaire revenue expected in
fiscal 2022.
Fiscal 2022 Second Half
Guidance
In light of current economic volatility, due to
persistent, rapidly rising material and freight costs, combined
with the lag in the effectiveness of our pricing initiatives, CSWI
is providing consolidated guidance for the fiscal 2022 third and
fourth quarters as follows:
Third Quarter:
- EBITDA range of $17.0 million to
$18.5 million
- EPS range of $0.40 to $0.45
Fourth Quarter:
- EBITDA range of $33.0 million to
$35.0 million
- EPS range of $1.10 to $1.20
Comments from the Chairman, President,
and Chief Executive Officer
Joseph B. Armes, CSW Industrials’ Chairman,
President, and Chief Executive Officer, commented, "Our fiscal
second quarter results reflect the continuation of significant top
line growth, demonstrating strong customer demand for our
recognizable brands and high value products. Our disciplined and
focused team has expertly addressed the direct and indirect issues
arising from the pandemic, resulting in impressive performance
despite the difficult operating cycle. As rising costs and supply
chain disruptions have fueled inflation, we have acted quickly and
equitably raised prices to our customers. Importantly, our
commitment to our employees’ well-being, exemplified by our
decision to protect their jobs through the darkest days of the
pandemic, has paid off, particularly as we avoided the workforce
shortages that have been widely experienced throughout the economy.
Undergirding all of this is our commitment to maintain a strong
balance sheet and ample liquidity, which enables us to think and
act strategically.”
Armes added, “Our dedication to these core
operating principles has yielded outstanding financial results in
our first half, best demonstrated by the 66% increase in adjusted
EBITDA compared to the prior year period. We do expect that
historical trends will prevail and our volumes and,
correspondingly, our profits will moderate as we enter the cooler
fall and winter months. However, we remain positioned well to
deliver very attractive long-term performance to our shareholders,
especially as the price environment stabilizes."
Fiscal 2022 Second Quarter Consolidated
Results
Fiscal second quarter revenue was $155.6
million, representing 48.3% growth from $104.9 million in the prior
year period, with growth in all reporting segments. Of the $50.6
million total growth, $15.4 million (14.7%) resulted from
organic growth, with the remainder ($35.2 million) contributed
by the TRUaire acquisition. In the current year period, across all
segments and end markets served, price actions contributed to
revenue growth. These price actions were incremental to those that
occurred in fiscal 2021 fourth quarter and fiscal 2022 first
quarter and were in response to higher input costs. The cumulative
impact of implemented price actions will be realized by the end of
this fiscal year, and are expected to achieve the initial objective
of protecting profit dollars. As inflation, primarily in material
and freight costs, continues in the global supply chain, additional
pricing actions will continue to enhance profitability.
GAAP gross profit in the fiscal second quarter
was $63.1 million, representing 29.4% growth from $48.7 million in
the prior year period, with the incremental profit resulting
predominantly from the TRUaire acquisition and increased sales
volumes. Gross profit margin as a percentage of sales was 40.5%,
compared to 46.4% in the prior year period. This decline is
primarily due to inclusion of the TRUaire business, and $1.2
million of costs resulting from reduced production levels at the
TRUaire manufacturing facility in Vietnam and incremental
compensation expenses incurred to comply with COVID-19 protocols
established by local authorities ("TRUaire Vietnam COVID COGS
Impact"). The reduction in profitability was also impacted by
ongoing material and freight cost inflation that outpaced
instituted price increases in some end markets served, and a shift
in sales to lower margin projects. There were no adjustments in
either period.
GAAP operating expenses increased to $37.2
million in the current year period, from $26.6 million in the prior
year period, mainly due to the incremental expenses related to
inclusion of TRUaire and the Whitmore JV in the current period,
increased equity compensation expenses, increased depreciation and
amortization expenses related to TRUaire and enterprise resource
planning systems, increased headcount, travel, and commission
expenses as operations return to normal, and $0.2 million
compensation expense for TRUaire Vietnam employees on furlough
under COVID restrictions ("TRUaire Vietnam COVID Furlough
Expense"). Operating expenses as a percent of revenue improved 140
basis-points in the current quarter to 23.9% from 25.3% in the
prior year period, as strong sales growth outpaced the increase in
operating expenses. There were no adjustments in either period.
GAAP operating income in the current period was
$25.9 million, a 16.7% increase from $22.2 million in the prior
year period, as the aforementioned increase in gross profit was
partially offset by the increase in operating expenses. GAAP
operating income margin in fiscal 2022 second quarter was 16.6%, a
450 basis-point decrease compared to the prior year period, as the
previously discussed decline in gross profit margin was only
partially offset by the improved operating expense margin. There
were no adjustments to operating income in either period.
GAAP net income attributable to CSWI, in the
fiscal 2022 second quarter was $18.0 million, or $1.14 per diluted
share, compared to $16.4 million, or $1.10 in the prior year
period. There were no adjustments in either period.
Fiscal 2022 second quarter EBITDA increased
33.3% to $33.8 million from $25.4 million in the prior
year period. EBITDA as percent of revenue was 21.7% and 24.2%, in
the current and prior year period, respectively.
Following quarter end, the Company declared its
eleventh consecutive quarterly regular cash dividend in the amount
of $0.15 per share, which will be paid on November 12, 2021,
to shareholders of record on October 29, 2021.
The Company’s effective tax rate for the fiscal
second quarter was 25.2% on a GAAP basis.
Fiscal 2022 Second Quarter Segment
Results
Contractor Solutions segment revenue was $103.3
million, a $40.0 million (63.1%) increase from the prior year
period, with inorganic growth from TRUaire ($35.2 million), and
organic growth of $4.8 million (7.6%) due to pricing initiatives
that started in the fiscal 2021 fourth quarter, continued, and
increased through the current period. GAAP segment operating income
was $26.8 million, 23.6% growth over $21.7 million in the prior
year period, as the inorganic revenue growth from the TRUaire
acquisition and implemented pricing initiatives were partially
offset by further inflation in material and freight costs, the
TRUaire Vietnam COVID COGS Impact and Furlough Expense discussed
above, increased depreciation and optimization expenses related to
enterprise resource planning systems, and incremental headcount.
Segment operating income margin in the fiscal second quarter was
25.9%, compared to 34.2% in the prior year period, as the increased
expenses discussed above outpaced revenue growth. Segment EBITDA in
the fiscal second quarter was $32.4 million, or 31.3% of revenue,
compared to $23.1 million, or 36.4% of revenue in the prior year
period. There were no adjustments in either period.
Engineered Building Solutions segment revenue
was $23.8 million, a 0.6% increase from the prior year period, as
an intentional focus on backlog diversification resulted in adding
institutional, education, and commercial projects, which fully
offset the decline driven by multi-family construction. GAAP
segment operating income was $2.3 million, a decrease compared to
the prior year period of $3.5 million, due to a shift in sales to
lower margin projects, and investments in future growth with
additional sales team members and new product development. Segment
operating income margin in the current year period was 9.8%,
compared to the prior year period of 14.9%, due to the additional
expenses. Segment EBITDA and EBITDA margin were $3.0 million and
12.6% in the fiscal second quarter, compared to $3.9 million and
16.3% in the prior year period. There were no adjustments in either
period.
Specialized Reliability Solutions segment
revenue was $28.5 million, a $10.4 million (58.0%) increase
from the prior year period of $18.0 million, due to increased sales
volumes into energy, rail, and mining end markets and the initial,
positive impact from multiple pricing initiatives this fiscal year.
GAAP segment operating income was $1.0 million, a $0.6 million
(180.0%) increase from the prior year period as organic revenue
growth outpaced the growth in expenses. Segment operating income
margin in the fiscal second quarter was 3.5%, compared to the prior
year period of 2.0%. Segment EBITDA and EBITDA margin were $2.5
million and 8.9% in the fiscal second quarter, compared to $1.7
million and 9.6% in the prior year period. There were no
adjustments in either period.
Fiscal 2022 First Half Consolidated
Results
Fiscal first half revenue was $316.9 million,
representing 61.7% growth from $195.9 million in the prior year
period, with growth in all reporting segments and all end markets
served. Of the $120.9 million total growth, $52.1 million
(26.6%) resulted from organic growth from increased sales volumes
and implemented pricing initiatives, with the remainder
($68.8 million) contributed by the TRUaire acquisition.
GAAP gross profit in the fiscal first half was
$131.6 million, representing $40.2 million (43.9%) growth
from $91.5 million in the prior year period, with the
incremental profit resulting predominantly from the TRUaire
acquisition, increased sales volumes, and pricing initiatives.
Gross profit margin as a percentage of sales was 41.5%, compared to
46.7% in the prior year period. Adjusted to exclude the final
$3.9 million purchase accounting effect reported in fiscal
2022 first quarter, gross profit and gross profit margin for the
fiscal first half were $135.6 million and 42.8%, respectively.
The decline in gross profit was primarily due to incremental
expenses related to inclusion of the TRUaire acquisition, and the
TRUaire Vietnam COVID COGS Impact discussed above. Throughout the
current year period, material and freight cost inflation outpaced
instituted price increases in some end markets served, which
combined with a shift in sales to lower margin projects,
collectively resulting in a negative impact to gross margin profit.
There were no adjustments in the prior year period.
GAAP operating expenses increased to
$77.3 million in the current year period, from
$53.1 million in the prior year period, mainly due to the
incremental expenses related to inclusion of the TRUaire and the
Whitmore JV in the current period, depreciation and amortization
for TRUaire and enterprise resource planning system, and increased
expenses related to normal business operations, such as equity
compensation, travel, commissions, and headcount. Operating
expenses as a percent of revenue improved 270 basis-points in the
current quarter to 24.4% from 27.1% in the prior year period, as
strong sales growth outpaced the increase in operating expenses.
There were no adjustments in either period.
GAAP operating income in the current period was
$54.4 million, a 41.5% increase from $38.4 million in the
prior year period, as the aforementioned increase in gross profit
was partially offset by the increase in operating expenses.
Adjusted to exclude the aforementioned purchase accounting effect
during fiscal first quarter 2022, first half operating income was
$58.3 million, a 51.7% increase over the prior year period.
GAAP operating income margin in fiscal first quarter 2022 was
17.2%, or 18.4% on an adjusted basis, representing a 120
basis-point decrease from the prior year period, as the previously
discussed decline in gross profit margin was only partially offset
by the improved operating expense margin. There were no adjustments
to operating income in fiscal 2021 first half.
In the current period, reported net income
attributable to CSWI was $38.0 million, or $2.41 per diluted
share, compared to $28.3 million, or $1.91 in the prior year
period. Adjusted to exclude the TRUaire purchase accounting effect,
adjusted net income was $41.0 million, or $2.60 per diluted
share, or 36% over the prior year period, which had no
adjustments.
Fiscal 2022 first half adjusted EBITDA increased
66% to $74.3 million from $44.8 million in the prior year
period. Adjusted EBITDA as percent of revenue was 23.4% and 22.9%,
in the current and prior year period, respectively.
Net cash provided by operating activities for
the fiscal 2022 first half was $42.8 million, compared to $44.8
million, primarily due to an increased use of working capital
driven by incremental inventory, higher accounts receivable
associated with increased revenue, partially offset by an increase
in accounts payable.
The Company’s effective tax rate for the fiscal
first half was 24.5% on a GAAP basis, and the Company continues to
expect a 25% tax rate for fiscal year 2022.
Fiscal 2022 First Half Segment
Results
Contractor Solutions segment revenue was
$213.6 million, a $100.3 million (88.6%) increase from
the prior year period, with inorganic growth from TRUaire
($68.8 million), organic growth of $31.5 million (27.9%)
due to increased sales volumes in all end markets served and
pricing initiatives. GAAP segment operating income was
$56.3 million, or $60.2 million adjusted to exclude the
previously mentioned purchase price accounting effect, resulting in
60.2% growth over $37.6 million in the prior year period.
During the current year period, revenue growth was partially offset
by inflation in material and freight costs, the purchase accounting
effect, the TRUaire Vietnam COVID COGS Impact and Furlough Expense
discussed above, as well as increased headcount, depreciation, and
optimization expenses related to enterprise resource planning
systems. Segment operating income margin in the fiscal first half
was 26.3%, or 28.2% after adjustment for the purchase price effect,
compared to 33.2% in the prior year period, as the increased
expenses discussed above outpace revenue growth. Segment adjusted
EBITDA in the fiscal first half was $71.8 million, or 33.6% of
revenue, compared to $40.4 million, or 35.7% of revenue in the
prior year period. There were no adjustments in the prior year
period.
Engineered Building Solutions segment revenue
was $49.5 million, a $3.6 million (7.9%) increase from the
prior year period, primarily due to enhanced marketing efforts
promoting existing and newly developed products, market share gains
due to competitive lead times in the market place, and improved
specification levels. GAAP segment operating income was $6.2
million, a decrease compared to the prior year period of $7.6
million, due to a shift in sales to lower margin projects, and an
investment in future growth with additional sales team members and
new product development. Segment operating income margin in the
current year period was 12.5%, compared to the prior year period of
16.5% due to the additional expenses. Segment EBITDA and EBITDA
margin in the fiscal first half were $7.3 million and 14.7%,
compared to $8.1 million and 17.6% in the prior year period. There
were no adjustments in either period.
Specialized Reliability Solutions segment
revenue was $53.9 million, a $16.9 million (45.6%) increase from
the prior year period of $37.0 million, all of which was organic,
driven by increased sales volumes into all end markets served, and
the initial impact from multiple pricing initiatives this fiscal
year. GAAP segment operating income was $1.3 million, a $0.6
million (91.5%) increase from the prior year period as organic
revenue growth outpaced the growth in expenses. Segment operating
income margin in the fiscal first half was 2.4%, compared to the
prior year period of 1.8%. Segment EBITDA and EBITDA margin were
$4.4 million and 8.1% in the fiscal first half, compared to $3.6
million and 9.7% in the prior year period. There were no
adjustments in either period.
All percentages are calculated based upon the
attached financial statements and reconciliations of non-GAAP
financial measures.
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 1-877-407-0784,
international callers may use 1-201-689-8560, and request to join
the CSW Industrials earnings call.
A telephonic replay will be available shortly
after the conclusion of the call and until, Wednesday, November 17,
2021. Participants may access the replay at 1-844-512-2921,
international callers may use 1-412-317-6671, and enter access code
13724087. The call will also be available for replay via webcast
link on the Investors portion of the CSWI website
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.
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 growth-oriented,
diversified industrial Company with industry-leading operations in
three segments: Contractor Solutions, Engineered Building
Solutions, and Specialized Reliability 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. For more information, please visit
www.cswindustrials.com.
Investor Relations
Adrianne D. GriffinVice President, Investor Relations, &
Treasurer214-489-7113 adrianne.griffin@cswi.com
CSW INDUSTRIALS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (Unaudited)
(Amounts in thousands, except
per share amounts) |
|
Three Months EndedSeptember 30, |
|
Six Months Ended September 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenues, net |
|
$ |
155,585 |
|
|
|
$ |
104,940 |
|
|
|
$ |
316,850 |
|
|
|
$ |
195,904 |
|
|
Cost of revenues |
|
(92,534 |
) |
|
|
(56,204 |
) |
|
|
(185,201 |
) |
|
|
(104,416 |
) |
|
Gross profit |
|
63,051 |
|
|
|
48,736 |
|
|
|
131,649 |
|
|
|
91,488 |
|
|
Selling, general and administrative expenses |
|
(37,159 |
) |
|
|
(26,556 |
) |
|
|
(77,284 |
) |
|
|
(53,056 |
) |
|
Operating income |
|
25,892 |
|
|
|
22,180 |
|
|
|
54,365 |
|
|
|
38,432 |
|
|
Interest expense, net |
|
(1,430 |
) |
|
|
(284 |
) |
|
|
(2,967 |
) |
|
|
(602 |
) |
|
Other expense, net |
|
(133 |
) |
|
|
(360 |
) |
|
|
(305 |
) |
|
|
(667 |
) |
|
Income before income
taxes |
|
24,329 |
|
|
|
21,536 |
|
|
|
51,093 |
|
|
|
37,163 |
|
|
Provision for income
taxes |
|
(6,121 |
) |
|
|
(5,182 |
) |
|
|
(12,522 |
) |
|
|
(8,851 |
) |
|
Net income |
|
18,208 |
|
|
|
16,354 |
|
|
|
38,571 |
|
|
|
28,312 |
|
|
Less: Income attributable to
redeemable noncontrolling interest |
|
(212 |
) |
|
|
— |
|
|
|
(527 |
) |
|
|
— |
|
|
Net income attributable to CSW
Industrials, Inc. |
|
$ |
17,996 |
|
|
|
$ |
16,354 |
|
|
|
$ |
38,044 |
|
|
|
$ |
28,312 |
|
|
|
|
|
|
|
|
|
|
|
Net income per share
attributable to CSW Industrials, Inc. |
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.14 |
|
|
|
$ |
1.11 |
|
|
|
$ |
2.42 |
|
|
|
$ |
1.92 |
|
|
Diluted |
|
$ |
1.14 |
|
|
|
$ |
1.10 |
|
|
|
$ |
2.41 |
|
|
|
$ |
1.91 |
|
|
CSW INDUSTRIALS,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited)
|
|
September 30, 2021 |
|
March 31, 2021 |
(Amounts in thousands, except
per share amounts) |
|
|
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
17,329 |
|
|
|
$ |
10,088 |
|
|
Accounts receivable, net of allowance for expected credit losses of
$1,106 and $915, respectively |
|
107,660 |
|
|
|
96,695 |
|
|
Inventories, net |
|
110,761 |
|
|
|
98,086 |
|
|
Prepaid expenses and other current assets |
|
9,122 |
|
|
|
9,684 |
|
|
Total current assets |
|
244,872 |
|
|
|
214,553 |
|
|
Property, plant and equipment,
net of accumulated depreciation of $76,007 and $72,944,
respectively |
|
80,956 |
|
|
|
82,554 |
|
|
Goodwill |
|
218,158 |
|
|
|
218,795 |
|
|
Intangible assets, net |
|
280,847 |
|
|
|
283,060 |
|
|
Other assets |
|
78,189 |
|
|
|
75,995 |
|
|
Total assets |
|
$ |
903,022 |
|
|
|
$ |
874,957 |
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
37,785 |
|
|
|
$ |
32,444 |
|
|
Accrued and other current liabilities |
|
47,368 |
|
|
|
49,743 |
|
|
Current portion of long-term debt |
|
561 |
|
|
|
561 |
|
|
Total current liabilities |
|
85,714 |
|
|
|
82,748 |
|
|
Long-term debt |
|
213,495 |
|
|
|
241,776 |
|
|
Retirement benefits
payable |
|
1,670 |
|
|
|
1,695 |
|
|
Other long-term
liabilities |
|
138,278 |
|
|
|
136,725 |
|
|
Total liabilities |
|
439,157 |
|
|
|
462,944 |
|
|
Commitments and contingencies
(See Note 14) |
|
|
|
|
Redeemable noncontrolling
interest |
|
14,918 |
|
|
|
— |
|
|
Equity: |
|
|
|
|
Common shares, $0.01 par value |
|
161 |
|
|
|
161 |
|
|
Shares authorized – 50,000 |
|
|
|
|
Shares issued – 16,270 and 16,162, respectively |
|
|
|
|
Preferred shares, $0.01 par value |
|
— |
|
|
|
— |
|
|
Shares authorized (10,000) and issued (0) |
|
|
|
|
Additional paid-in capital |
|
108,604 |
|
|
|
104,689 |
|
|
Treasury shares, at cost (494 and 511 shares, respectively) |
|
(34,313 |
) |
|
|
(34,075 |
) |
|
Retained earnings |
|
380,523 |
|
|
|
347,234 |
|
|
Accumulated other comprehensive loss |
|
(6,028 |
) |
|
|
(5,996 |
) |
|
Total equity |
|
448,947 |
|
|
|
412,013 |
|
|
Total liabilities, redeemable
noncontrolling interest and equity |
|
$ |
903,022 |
|
|
|
$ |
874,957 |
|
|
CSW INDUSTRIALS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)
(Amounts in thousands) |
|
Six Months Ended September 30, |
|
|
2021 |
|
2020 |
Cash flows from operating
activities: |
|
|
|
|
Net income |
|
$ |
38,571 |
|
|
|
$ |
28,312 |
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation |
|
6,021 |
|
|
|
3,776 |
|
|
Amortization of intangible and other assets |
|
14,507 |
|
|
|
3,454 |
|
|
Provision for inventory reserves |
|
331 |
|
|
|
953 |
|
|
Provision for doubtful accounts |
|
847 |
|
|
|
274 |
|
|
Share-based and other executive compensation |
|
3,936 |
|
|
|
2,550 |
|
|
Net gain on disposals of property, plant and equipment |
|
1 |
|
|
|
(13 |
) |
|
Net pension benefit |
|
64 |
|
|
|
81 |
|
|
Net deferred taxes |
|
(61 |
) |
|
|
111 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
(12,576 |
) |
|
|
5,028 |
|
|
Inventories |
|
(16,777 |
) |
|
|
880 |
|
|
Prepaid expenses and other current assets |
|
568 |
|
|
|
(2,380 |
) |
|
Other assets |
|
503 |
|
|
|
(165 |
) |
|
Accounts payable and other current liabilities |
|
6,339 |
|
|
|
1,989 |
|
|
Retirement benefits payable and other liabilities |
|
501 |
|
|
|
(67 |
) |
|
Net cash provided by operating
activities |
|
42,775 |
|
|
|
44,783 |
|
|
Cash flows from investing
activities: |
|
|
|
|
Capital expenditures |
|
(4,941 |
) |
|
|
(4,357 |
) |
|
Proceeds from sale of assets |
|
8 |
|
|
|
6 |
|
|
Proceeds from acquisitions true-up |
|
1,381 |
|
|
|
— |
|
|
Net cash used in investing
activities |
|
(3,552 |
) |
|
|
(4,351 |
) |
|
Cash flows from financing
activities: |
|
|
|
|
Borrowings on line of credit |
|
22,000 |
|
|
|
10,000 |
|
|
Repayments of line of credit and term loan |
|
(50,281 |
) |
|
|
(10,281 |
) |
|
Purchase of treasury shares |
|
(3,181 |
) |
|
|
(9,352 |
) |
|
Payments of deferred loan costs |
|
(2,327 |
) |
|
|
— |
|
|
Proceeds from stock option activity |
|
530 |
|
|
|
1,331 |
|
|
Proceeds from acquisition of redeemable noncontrolling interest
shareholder |
|
6,293 |
|
|
|
— |
|
|
Dividends |
|
(4,718 |
) |
|
|
(3,972 |
) |
|
Net cash used in financing
activities |
|
(31,684 |
) |
|
|
(12,274 |
) |
|
Effect of exchange rate
changes on cash and equivalents |
|
(298 |
) |
|
|
803 |
|
|
Net change in cash and cash
equivalents |
|
7,241 |
|
|
|
28,961 |
|
|
Cash and cash equivalents,
beginning of period |
|
10,088 |
|
|
|
18,338 |
|
|
Cash and cash equivalents, end
of period |
|
$ |
17,329 |
|
|
|
$ |
47,299 |
|
|
Reconciliation of Non-GAAP Measures
We use adjusted earnings per share attributable
to CSWI, adjusted net income attributable to CSWI, adjusted
operating income, and adjusted EBITDA, together with financial
measures prepared in accordance with GAAP, such as revenue, cost of
revenue, operating expense, operating income and net income
attributable to CSWI, 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
ADJUSTED NET INCOME ATTRIBUTABLE TO CSWI |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Six Months Ended September 30, |
(Amounts in thousands, except
share data) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
GAAP Net income attributable to CSWI |
|
$ |
17,995 |
|
|
$ |
16,353 |
|
|
$ |
38,043 |
|
|
$ |
28,313 |
|
|
|
|
|
|
|
|
|
|
Adjusting items, net of
tax: |
|
|
|
|
|
|
|
|
Purchase accounting
effect |
|
— |
|
|
— |
|
|
2,959 |
|
|
— |
|
Adjusted Net Income |
|
$ |
17,995 |
|
|
$ |
16,353 |
|
|
$ |
41,002 |
|
|
$ |
28,313 |
|
|
|
|
|
|
|
|
|
|
GAAP Net Income attributable
to CSW Industrials, Inc. per diluted common share |
|
$ |
1.14 |
|
|
$ |
1.10 |
|
|
$ |
2.41 |
|
|
$ |
1.91 |
|
|
|
|
|
|
|
|
|
|
Adjusting items, per diluted
common share: |
|
|
|
|
|
|
|
|
Purchase accounting
effect |
|
— |
|
|
— |
|
|
0.19 |
|
|
— |
|
Adjusted Net Income
attributable to CSW Industrials, Inc. per diluted common share |
|
$ |
1.14 |
|
|
$ |
1.10 |
|
|
$ |
2.60 |
|
|
$ |
1.91 |
|
CSW INDUSTRIALS, INC. |
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO CSWI TO
ADJUSTED EBITDA |
(Unaudited) |
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
|
Three Months Ended September 30, |
|
Six Months Ended September 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
GAAP Net Income attributable to CSWI |
|
$ |
17,995 |
|
|
$ |
16,353 |
|
|
$ |
38,043 |
|
|
$ |
28,313 |
|
Plus: Income attributable to
redeemable noncontrolling interest |
|
212 |
|
|
— |
|
|
527 |
|
|
— |
|
GAAP Net Income |
|
$ |
18,207 |
|
|
$ |
16,353 |
|
|
$ |
38,570 |
|
|
$ |
28,313 |
|
|
|
|
|
|
|
|
|
|
Adjusting Items: |
|
|
|
|
|
|
|
|
Interest Expense |
|
1,430 |
|
|
284 |
|
|
2,967 |
|
|
603 |
|
Income Tax Expense |
|
6,122 |
|
|
5,183 |
|
|
12,523 |
|
|
8,851 |
|
Depreciation & Amortization |
|
8,051 |
|
|
3,541 |
|
|
20,229 |
|
|
7,069 |
|
EBITDA |
|
$ |
33,810 |
|
|
$ |
25,361 |
|
|
$ |
74,289 |
|
|
$ |
44,836 |
|
EBITDA % Revenue |
|
21.7 |
% |
|
24.2 |
% |
|
23.4 |
% |
|
22.9 |
% |
CSW INDUSTRIALS, INC. |
RECONCILIATION OF SEGMENT OPERATING INCOME TO ADJUSTED
SEGMENT OPERATING INCOME AND TO ADJUSTED SEGMENT
EBITDA |
(Unaudited) |
|
|
|
|
|
|
(Amounts in thousands) |
Three Months Ended September 30, 2021 |
|
|
Engineered |
Specialized |
|
|
|
Contractor |
Building |
Reliability |
Corporate |
Consolidated |
|
Solutions |
Solutions |
Solutions |
and Other |
Operations |
Revenue, net |
$ |
103,346 |
|
|
$ |
23,835 |
|
|
$ |
28,458 |
|
|
$ |
(54 |
) |
|
$ |
155,585 |
|
|
|
|
|
|
|
|
GAAP Operating Income |
$ |
26,753 |
|
|
$ |
2,334 |
|
|
$ |
1,008 |
|
|
$ |
(4,203 |
) |
|
$ |
25,892 |
|
|
Operating Income |
$ |
26,753 |
|
|
$ |
2,334 |
|
|
$ |
1,008 |
|
|
$ |
(4,203 |
) |
|
$ |
25,892 |
|
|
% Revenue |
25.9 |
|
% |
9.8 |
|
% |
3.5 |
|
% |
|
16.6 |
|
% |
Adjusting Items: |
|
|
|
|
|
Other Income (Expense) |
(246 |
) |
|
179 |
|
|
(25 |
) |
|
(42 |
) |
|
(134 |
) |
|
Depreciation & Amortization |
5,874 |
|
|
502 |
|
|
1,543 |
|
|
132 |
|
|
8,051 |
|
|
EBITDA |
$ |
32,381 |
|
|
$ |
3,015 |
|
|
$ |
2,526 |
|
|
$ |
(4,113 |
) |
|
$ |
33,809 |
|
|
% Revenue |
31.3 |
|
% |
12.6 |
|
% |
8.9 |
|
% |
|
21.7 |
|
% |
|
|
|
|
|
|
(Amounts in thousands) |
Three Months Ended September 30, 2020 |
|
|
Engineered |
Specialized |
|
|
|
Contractor |
Building |
Reliability |
Corporate |
Consolidated |
|
Solutions |
Solutions |
Solutions |
and Other |
Operations |
Revenue, net |
$ |
63,372 |
|
|
$ |
23,696 |
|
|
$ |
18,016 |
|
|
$ |
(143 |
) |
|
$ |
104,941 |
|
|
|
|
|
|
|
|
GAAP Operating Income |
$ |
21,651 |
|
|
$ |
3,531 |
|
|
$ |
360 |
|
|
$ |
(3,362 |
) |
|
$ |
22,180 |
|
|
Operating Income |
$ |
21,651 |
|
|
$ |
3,531 |
|
|
$ |
360 |
|
|
$ |
(3,362 |
) |
|
$ |
22,180 |
|
|
% Revenue |
34.2 |
|
% |
14.9 |
|
% |
2.0 |
|
% |
|
21.1 |
|
% |
Adjusting Items: |
|
|
|
|
|
Other Income (Expense) |
(26 |
) |
|
(199 |
) |
|
(52 |
) |
|
(82 |
) |
|
(359 |
) |
|
Depreciation & Amortization |
1,455 |
|
|
525 |
|
|
1,427 |
|
|
134 |
|
|
3,541 |
|
|
EBITDA |
$ |
23,080 |
|
|
$ |
3,857 |
|
|
$ |
1,735 |
|
|
$ |
(3,310 |
) |
|
$ |
25,362 |
|
|
% Revenue |
36.4 |
|
% |
16.3 |
|
% |
9.6 |
|
% |
|
24.2 |
|
% |
CSW INDUSTRIALS, INC. |
RECONCILIATION OF SEGMENT OPERATING INCOME TO ADJUSTED SEGMENT
OPERATING INCOME AND TO ADJUSTED SEGMENT EBITDA |
(Unaudited) |
|
|
|
|
|
|
(Amounts in thousands) |
Six Months Ended September 30, 2021 |
|
|
Engineered |
Specialized |
|
|
|
Contractor |
Building |
Reliability |
Corporate |
Consolidated |
|
Solutions |
Solutions |
Solutions |
and Other |
Operations |
Revenue, net |
$ |
213,588 |
|
|
$ |
49,485 |
|
|
$ |
53,905 |
|
|
$ |
(127 |
) |
|
$ |
316,851 |
|
|
|
|
|
|
|
|
GAAP Operating Income |
$ |
56,265 |
|
|
$ |
6,188 |
|
|
$ |
1,277 |
|
|
$ |
(9,364 |
) |
|
$ |
54,366 |
|
|
Adjusting Items: |
|
|
|
|
|
Purchase Accounting Effect |
3,919 |
|
|
— |
|
|
— |
|
|
— |
|
|
3,919 |
|
|
Adjusted Operating Income |
$ |
60,184 |
|
|
$ |
6,188 |
|
|
$ |
1,277 |
|
|
$ |
(9,364 |
) |
|
$ |
58,285 |
|
|
% Revenue |
28.2 |
|
% |
12.5 |
|
% |
2.4 |
|
% |
|
18.4 |
|
% |
Adjusting Items: |
|
|
|
|
|
Other Income (Expense) |
(255 |
) |
|
22 |
|
|
6 |
|
|
(79 |
) |
|
(306 |
) |
|
Depreciation & Amortization |
15,804 |
|
|
1,068 |
|
|
3,091 |
|
|
266 |
|
|
20,229 |
|
|
Purchase Accounting Effect |
(3,919 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(3,919 |
) |
|
Adjusted EBITDA |
$ |
71,814 |
|
|
$ |
7,278 |
|
|
$ |
4,374 |
|
|
$ |
(9,177 |
) |
|
$ |
74,289 |
|
|
% Revenue |
33.6 |
|
% |
14.7 |
|
% |
8.1 |
|
% |
|
23.4 |
|
% |
|
|
|
|
|
|
(Amounts in thousands) |
Six Months Ended September 30, 2020 |
|
|
Engineered |
Specialized |
|
|
|
Contractor |
Building |
Reliability |
Corporate |
Consolidated |
|
Solutions |
Solutions |
Solutions |
and Other |
Operations |
Revenue, net |
$ |
113,256 |
|
|
$ |
45,850 |
|
|
$ |
37,014 |
|
|
$ |
(215 |
) |
|
$ |
195,905 |
|
|
|
|
|
|
|
|
GAAP Operating Income |
$ |
37,559 |
|
|
$ |
7,569 |
|
|
$ |
667 |
|
|
$ |
(7,362 |
) |
|
$ |
38,433 |
|
|
Operating Income |
$ |
37,559 |
|
|
$ |
7,569 |
|
|
$ |
667 |
|
|
$ |
(7,362 |
) |
|
$ |
38,433 |
|
|
% Revenue |
33.2 |
|
% |
16.5 |
|
% |
1.8 |
|
% |
|
19.6 |
|
% |
Adjusting Items: |
|
|
|
|
|
Other Income (Expense) |
(51 |
) |
|
(519 |
) |
|
68 |
|
|
(164 |
) |
|
(666 |
) |
|
Depreciation & Amortization |
2,899 |
|
|
1,038 |
|
|
2,864 |
|
|
268 |
|
|
7,069 |
|
|
EBITDA |
$ |
40,407 |
|
|
$ |
8,088 |
|
|
$ |
3,599 |
|
|
$ |
(7,258 |
) |
|
$ |
44,836 |
|
|
% Revenue |
35.7 |
|
% |
17.6 |
|
% |
9.7 |
|
% |
|
22.9 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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