CSW Industrials, Inc. (Nasdaq: CSWI or the "Company") today
reported results for the fiscal 2022 third quarter and nine-month
fiscal year-to-date periods ended December 31, 2021.
Fiscal 2022 Third Quarter
Highlights (comparisons to fiscal 2021 third quarter)
- Total revenue increased 52% to
$136.3 million, compared to $89.9 million
- Organic revenue growth of 22%, or
$19.6 million
- GAAP net income attributable to
CSWI of $8.3 million, compared to the prior year period of $2.3
million, or $8.8 million adjusted to exclude expenses related
to TRUaire acquisition and Whitmore JV formation
- Earnings per diluted share (EPS) of
$0.52, compared to prior year period EPS of $0.16, or $0.59 as
adjusted
- Adjusted EBITDA growth of 25% to
$19.9 million, compared to $15.9 million
- Net cash provided by operating
activities of $26.7 million, compared to $9.2 million
- Maintained balance sheet strength
with leverage ratio, in accordance with our credit facility, of
approximately 1.6x debt to EBITDA
- Executed capital allocation
strategy, closed previously announced Shoemaker acquisition on
December 15, 2021, for aggregate purchase price of $43.3 million,
enhancing future growth into the heating, ventilation, air
conditioning and refrigeration (HVAC/R) end market
- TRUaire manufacturing facility in
Vietnam resumed normal production activities in late November
Fiscal 2022 Year-to-Date
Highlights (comparisons to fiscal 2021 year-to-date
period)
- Total revenue increased 59% to
$453.1 million, compared to $285.8 million
- Organic revenue growth of 25%, or
$71.7 million; all segments reported organic growth
- GAAP net income attributable to
CSWI of $46.4 million, or $2.93 of EPS, compared to
$30.7 million, or $2.06 of EPS
- Net income attributable to CSWI,
adjusted to exclude the TRUaire purchase accounting effect, of
$49.3 million, or $3.12 of EPS, compared to
$37.2 million, or $2.49 of EPS, adjusted to exclude expenses
related to TRUaire acquisition and Whitmore JV formation
- Adjusted EBITDA growth of 55% to
$94.2 million, compared to $60.7 million
- 21% adjusted EBITDA margin in both
periods
- Net cash provided by operating
activities of $69.5 million, compared to $54.0 million
Comments from the Chairman, President,
and Chief Executive Officer
Joseph B. Armes, CSW Industrials’ Chairman,
President, and Chief Executive Officer, commented, "In our fiscal
third quarter, we saw the benefit of our diversified business model
in our strong results, as all three segments contributed to our
growth. We achieved significant year-over-year revenue and adjusted
EBITDA growth. On December 15, we celebrated the one-year
anniversary of the TRUaire acquisition, and simultaneously closed
on the Shoemaker acquisition. I’m also very pleased to report that
our TRUaire manufacturing facility in Vietnam returned to full
production in the fiscal third quarter as in-country COVID
restrictions eased."
Armes continued, "In response to current
inflationary pressures in the global supply chain, primarily in
material and freight costs, we implemented additional price
increases for specific products and end markets served. We remain
committed to appropriate price actions that continue to maintain
profitability.”
Fiscal 2022 Third Quarter Consolidated
Results
Fiscal third quarter revenue was $136.3 million,
representing 51.5% growth from $89.9 million in the prior year
period. Of the $46.4 million total growth, $19.6 million (21.7% of
the 51.5% total growth) resulted from organic growth, with the
remainder contributed by the TRUaire and Shoemaker acquisitions
($26.8 million). In the current quarter, price actions contributed
to revenue growth across all segments and end markets served. These
price actions were in response to higher input costs and were
incremental to actions in the nine months ended September 30, 2021.
During calendar 2021, price actions targeted the initial objective
of protecting profit dollars.
GAAP gross profit in the fiscal third quarter
was $50.0 million, representing 27.2% growth from $39.3 million in
the prior year period, with the incremental profit resulting
predominantly from the TRUaire acquisition and increased organic
sales. Gross profit margin as a percentage of sales was 36.7%,
compared to 43.7% in the prior year period. The decline in gross
margin resulted from the inclusion of the TRUaire acquisition,
material and freight cost inflation that outpaced instituted price
increases, and a shift in sales to lower margin projects in the
Engineered Building Solutions segment. Fiscal third quarter 2022
profitability was also negatively impacted by $0.5 million of
under-absorption costs resulting from reduced production levels and
incremental compensation expense incurred at the TRUaire
manufacturing facility in Vietnam to maintain operations in
accordance with COVID-19 restrictions ("TRUaire Vietnam COGS
Impact"). There were no adjustments in either period.
GAAP operating expenses increased to $37.9
million in the current year period, from $35.2 million in the prior
year period, or $27.3 million adjusted for the $8.0 million in
expenses related to the TRUaire acquisition and Whitmore JV
formation ("transaction expenses"). Operating expenses increased in
the current period, primarily due to the inclusion of TRUaire,
Shoemaker, and the Whitmore JV, as well as higher sales commission,
equity compensation, and travel expenses. Operating expenses as a
percent of revenue was 27.8% in the current period, compared to
39.2% in the prior year period, or 30.3% adjusted for the
transaction expenses, as strong sales growth outpaced the increased
operating expenses. There were no adjustments in the current year
period.
GAAP operating income in the current period was
$12.1 million, compared to $4.1 million in the prior year period,
or $12.1 million adjusted for the previously mentioned transaction
expenses. GAAP operating income margin was 8.9% in fiscal 2022
third quarter, compared to 4.6% in the prior year period, or 13.4%
adjusted for the transaction expenses. The decrease in margin
resulted from the previously discussed decline in gross profit
margin that was only partially offset by the improved operating
expense margin. Fiscal third quarter 2022 operating income margin
was also negatively impacted by $0.5 million of Shoemaker
transaction expenses; no adjustments were made in the current year
period.
In the current year period, GAAP net income
attributable to CSWI (net of non-controlling interest in the joint
venture) was $8.3 million, or $0.52 of EPS. In the prior year
period, GAAP net income was $2.3 million, or $0.16 of EPS, and when
adjusted to exclude the transaction expenses, was
$8.8 million, or $0.59 of EPS. While there were no adjustments
to earnings in the current period, the negative profitability from
the sum of the previously discussed TRUaire Vietnam COGS Impact and
the Shoemaker transaction expenses reduced current period EPS by
approximately $0.05.
Fiscal 2022 third quarter adjusted EBITDA
increased 25.4% to $19.9 million from $15.9 million in
the prior year period. Adjusted EBITDA as percent of revenue was
14.6% and 17.7%, in the current and prior year period,
respectively.
Following quarter end, the Company declared its
twelfth consecutive quarterly regular cash dividend in the amount
of $0.15 per share, which will be paid on February 11, 2022,
to shareholders of record on January 31, 2022.
On a GAAP basis, the Company’s effective tax
rate for the fiscal third quarter was 19.1%, which differed from
the statutory rate primarily due to excess tax deductions related
to stock compensation.
Fiscal 2022 Third Quarter Segment
Results
Contractor Solutions segment revenue was $82.5
million, a $38.0 million (85.6%) increase from the prior year
period, comprised of inorganic growth from TRUaire and Shoemaker
($26.8 million), and organic growth of $11.2 million (25.3% of
the 85.6% total growth) due to pricing initiatives that
started in the fiscal 2021 fourth quarter, continued, and increased
through the current period. GAAP segment operating income was $10.8
million, compared to $2.9 million in the prior year period, or $9.8
million adjusted for the TRUaire transaction expenses. Strong
revenue growth was partially offset by increased material and
freight costs, the TRUaire Vietnam COVID COGS Impact discussed
above, and increased spending on sales commissions and depreciation
and optimization expenses related to enterprise resource planning
systems. Segment operating income margin in the fiscal third
quarter was 13.0%, compared to 6.5% in the prior year period, or
22.1% adjusted for the TRUaire transaction expenses. Segment
operating income margin decline resulted from the increase in
operating expenses discussed above, which outpaced revenue growth.
Segment adjusted EBITDA in the fiscal third quarter was $16.6
million, or 20.2% of revenue, compared to $12.3 million, or 27.6%
of revenue in the prior year period. There were no adjustments in
the current year period.
Engineered Building Solutions segment revenue
was $23.9 million, a 7.0% decrease from the prior year period, as
demand softness in multi-family residential construction outpaced
strength in other categories of the architecturally-specified
building products end market. GAAP segment operating income was
$3.2 million, compared to the prior year period of $4.2 million,
due to the shift in sales to lower margin projects. Segment
operating income margin in the current year period was 13.4%,
compared to the prior year period of 16.3%, due lower margin
projects. Segment EBITDA and EBITDA margin were $3.6 million and
15.1% in the fiscal third quarter, compared to $4.2 million and
16.5% in the prior year period. There were no adjustments in either
period.
Specialized Reliability Solutions segment
revenue was $31.4 million, a $11.5 million (57.9%) increase
from the prior year period, due to sales growth into energy,
mining, general industrials, and rail end markets and the positive
impact from multiple pricing initiatives this fiscal year. GAAP
segment operating income was $2.7 million, compared to $0.6 million
in the prior year period, or $1.7 million excluding the Whitmore JV
formation expenses. Strong organic revenue growth was partially
offset by increased material expenses that outpaced implemented
price increases, as well as additional commission and travel
expenses associated with sales growth. Segment operating income
margin in the fiscal third quarter was 8.4%, compared to the prior
year period of 3.1%, or 8.4% adjusted for the Whitmore JV formation
expenses. Segment adjusted EBITDA and adjusted EBITDA margin were
$4.0 million and 12.9% in the fiscal third quarter, compared to
$3.0 million and 15.0% in the prior year period. There were no
adjustments in the current year period.
Fiscal 2022 First Year-to-Date
Consolidated Results
Fiscal year-to-date revenue was $453.1 million,
representing 58.5% growth from $285.8 million in the prior year
period, with growth in all reporting segments and all end markets
served. Of the $167.3 million total growth, $71.7 million
(25.1% of the 58.5% total growth) resulted from organic growth from
increased sales volumes and implemented pricing initiatives, with
the remainder ($95.6 million) contributed by the TRUaire and
Shoemaker acquisitions. Sales increased in all three segments.
GAAP gross profit in the fiscal year-to-date
period was $181.7 million, representing $50.9 million
(38.9%) growth from $130.8 million in the prior year period,
with the incremental profit resulting predominantly from the
TRUaire acquisition, increased organic sales volumes, and pricing
initiatives. Gross profit margin as a percentage of sales was
40.1%, compared to 45.8% in the prior year period. Adjusted to
exclude the final $3.9 million purchase accounting effect
reported in fiscal 2022 first quarter, fiscal year-to-date gross
profit and gross profit margin were $185.6 million and 41.0%,
respectively. The decline in gross profit margin was primarily due
to incremental expenses related to the TRUaire inclusion, material
and freight cost increases outpacing implemented pricing
initiatives, and the TRUaire Vietnam COVID COGS Impact discussed
above ($1.7 million year-to-date). Additionally, a shift in sales
to lower margin projects for the Engineered Building Solutions
segment also contributed to the gross profit margin decrease. There
were no adjustments in the prior year period.
GAAP operating expenses in the current year
period were $115.2 million, compared to $88.3 million in
the prior year period, or $80.3 million adjusted for the
aforementioned transaction expenses. The increased operating
expenses were mainly due to the incremental expenses related to
inclusion of TRUaire, Shoemaker, and the Whitmore JV in the current
period, depreciation and amortization for TRUaire and enterprise
resource planning system, and expenses related to normal business
operations, such as equity compensation, travel, commissions, and
headcount. Operating expenses as a percent of revenue improved to
25.4% in the current year period, compared to 30.9% (28.1% adjusted
for the transaction expenses) in the prior year period, as sales
growth outpaced the increase in operating expenses. During fiscal
third quarter 2022, $0.5 million of Shoemaker transaction
expenses were also included in operating expenses; no adjustments
were made in the current year period.
In the current period, GAAP operating income was
$66.5 million, or $70.4 million adjusted for the
aforementioned purchase accounting effect. In the prior year
period, GAAP operating income was $42.5 million, or
$50.5 million adjusted for the transaction expenses. The
adjusted operating income growth resulted from the aforementioned
increased gross profit, partially offset by increased operating
expenses. GAAP operating income margin in the current period was
14.7%, or 15.5% on an adjusted basis, compared to the prior year
period of 14.9%, or 17.7% on an adjusted basis. The comparative
period margin decrease resulted from the previously discussed
decline in gross profit margin that was only partially offset by
the improved operating expense margin.
In the current period, reported net income
attributable to CSWI was $46.4 million, or $2.93 per diluted
share, and when adjusted to exclude the TRUaire purchase accounting
effect was $49.3 million, or $3.12 of EPS. In the prior year
period, reported net income attributable to CSWI was $30.7 million,
or $2.06 of EPS, and when adjusted to exclude the transaction
expenses was $37.2 million, or $2.49 of EPS. These EPS figures are
without any adjustment for the negative profitability from the sum
of the previously discussed TRUaire Vietnam COGS Impact and the
Shoemaker transaction expenses, which reduced current period EPS by
approximately $0.11.
Fiscal 2022 year-to-date adjusted EBITDA
increased 55% to $94.2 million from $60.7 million in the
prior year period. Adjusted EBITDA as percent of revenue was 20.8%
and 21.2%, in the current and prior year period, respectively.
Net cash provided by operating activities for
the fiscal 2022 year-to-date was $69.5 million, compared to $54.0
million, with the increase due to improved profitability and
accounts payable management, partially offset by cash used in
incremental inventory purchases.
The Company’s effective tax rate for the fiscal
year-to-date was 23.6% on a GAAP basis, and the Company continues
to expect a 25% tax rate for fiscal year 2022.
Fiscal 2022 Year-to-Date Segment
Results
Contractor Solutions segment revenue was
$296.0 million, a $138.4 million (87.7%) increase from
the prior year period, with inorganic growth from TRUaire and
Shoemaker ($95.6 million), organic growth of
$42.8 million (27.1% of the 87.7% total growth) due to
increased sales volumes in HVAC/R, plumbing and
architecturally-specified building products end markets and pricing
initiatives, offset by a decline in the general industrial end
market. GAAP segment operating income was $67.0 million, or
$70.9 million adjusted to exclude the previously mentioned
purchase price accounting effect. In the prior year period, GAAP
segment operating income was $40.5 million, or
$47.4 million adjusted for the TRUaire transaction expenses.
During the current year period, adjusted segment operating income
was primarily impacted by inflation in material and freight costs,
the TRUaire Vietnam COVID COGS Impact discussed above, as well as
increased sales commissions, headcount, travel, depreciation and
optimization expenses related to enterprise resource planning
systems. Segment operating income margin in the fiscal year-to-date
was 22.6% (24.0% adjusted), compared to the prior year period of
25.7% (30.0% adjusted), as the increased expenses discussed above
outpace revenue growth. Segment adjusted EBITDA in the fiscal
year-to-date was $88.4 million, or 29.9% of revenue, compared to
$52.7 million, or 33.4% of revenue in the prior year period.
Engineered Building Solutions segment revenue
was $73.4 million, a $1.8 million (2.6%) 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 marketplace, and improved
specification levels, partially offset by demand softness in
multi-family residential construction. GAAP segment operating
income was $9.4 million, a decrease compared to the prior year
period of $11.8 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 12.8%, compared to the prior
year period of 16.4% due to the additional expenses and lower
margin projects. Segment EBITDA and EBITDA margin in the fiscal
year-to-date period were $10.9 million and 14.8%, compared to $12.3
million and 17.2% in the prior year period. There were no
adjustments in either period.
Specialized Reliability Solutions segment
revenue was $85.3 million, a $28.4 million (49.9%) increase from
the prior year period of $56.9 million, all of which was organic,
driven by primarily by demand recovery in the energy, mining,
general industrial end markets, and the impact from multiple
pricing initiatives this fiscal year. In the current year period,
GAAP segment operating income was $3.9 million, compared to the
prior year period of $1.3 million, or $2.3 million adjusted for the
Whitmore JV formation expenses. Improved segment operating income
resulted from organic revenue growth that outpaced the growth in
expenses. GAAP segment operating income margin in the fiscal
year-to-date was 4.6%, compared to the prior year period of 2.3%,
or 4.1% adjusted. Segment adjusted EBITDA and adjusted EBITDA
margin were $8.4 million and 9.9% in the fiscal year-to-date,
compared to $6.6 million and 11.5% in the prior year period. There
were no adjustments in the current period.
All percentages are calculated based upon the
attached financial statements and reconciliations of non-GAAP
financial measures.
Fiscal 2022 Guidance Update
In November 2021, CSWI provided consolidated
guidance for the fiscal 2022 third and fourth quarters and is
updating this guidance.
For the fiscal third quarter, CSWI reported
$19.9 million of adjusted EBITDA and $0.52 of EPS, exceeding
the previously provided guidance ranges for both metrics of $0.40
to $0.45 EPS and $17.0 million to $18.5 million of EBITDA. CSWI is
maintaining the previously provided aggregate guidance for the
second half of the fiscal year, of $1.50 to $1.65 of EPS and $50.0
million to $53.5 million of EBITDA.
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, Thursday, February 17,
2022. Participants may access the replay at 1-844-512-2921,
international callers may use 1-412-317-6671, and enter access code
13726202. 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 EndedDecember
31, |
|
Nine Months EndedDecember 31, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Revenues, net |
|
$ |
136,286 |
|
|
$ |
89,932 |
|
|
$ |
453,136 |
|
|
$ |
285,836 |
|
Cost of revenues |
|
|
(86,244 |
) |
|
|
(50,594 |
) |
|
|
(271,445 |
) |
|
|
(155,010 |
) |
Gross profit |
|
|
50,042 |
|
|
|
39,338 |
|
|
|
181,691 |
|
|
|
130,826 |
|
Selling, general and administrative expenses |
|
|
(37,894 |
) |
|
|
(35,221 |
) |
|
|
(115,177 |
) |
|
|
(88,276 |
) |
Operating income |
|
|
12,148 |
|
|
|
4,117 |
|
|
|
66,514 |
|
|
|
42,550 |
|
Interest expense, net |
|
|
(1,184 |
) |
|
|
(469 |
) |
|
|
(4,151 |
) |
|
|
(1,071 |
) |
Other expense, net |
|
|
(127 |
) |
|
|
(592 |
) |
|
|
(432 |
) |
|
|
(1,259 |
) |
Income before income taxes |
|
|
10,837 |
|
|
|
3,056 |
|
|
|
61,931 |
|
|
|
40,220 |
|
Provision for income taxes |
|
|
(2,068 |
) |
|
|
(710 |
) |
|
|
(14,592 |
) |
|
|
(9,560 |
) |
Net income |
|
|
8,769 |
|
|
|
2,346 |
|
|
|
47,339 |
|
|
|
30,660 |
|
Less: Income attributable to redeemable noncontrolling
interest |
|
|
(458 |
) |
|
|
— |
|
|
|
(985 |
) |
|
|
— |
|
Net income attributable to CSW Industrials, Inc. |
|
$ |
8,311 |
|
|
$ |
2,346 |
|
|
$ |
46,354 |
|
|
$ |
30,660 |
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to CSW Industrials, Inc. |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.53 |
|
|
$ |
0.16 |
|
|
$ |
2.94 |
|
|
$ |
2.07 |
|
Diluted |
|
$ |
0.52 |
|
|
$ |
0.16 |
|
|
$ |
2.93 |
|
|
$ |
2.06 |
|
CSW INDUSTRIALS,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited)
|
|
December 31,2021 |
|
|
March 31,2021 |
|
(Amounts in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
16,184 |
|
|
$ |
10,088 |
|
Accounts receivable, net of allowance for expected credit losses of
$1,021 and $915, respectively |
|
|
90,737 |
|
|
|
96,695 |
|
Inventories, net |
|
|
127,442 |
|
|
|
98,086 |
|
Prepaid expenses and other current assets |
|
|
16,355 |
|
|
|
9,684 |
|
Total current assets |
|
|
250,718 |
|
|
|
214,553 |
|
Property, plant and equipment, net of accumulated depreciation of
$78,510 and $72,944, respectively |
|
|
82,557 |
|
|
|
82,554 |
|
Goodwill |
|
|
237,985 |
|
|
|
218,795 |
|
Intangible assets, net |
|
|
295,149 |
|
|
|
283,060 |
|
Other assets |
|
|
83,636 |
|
|
|
75,995 |
|
Total assets |
|
$ |
950,045 |
|
|
$ |
874,957 |
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
39,530 |
|
|
$ |
32,444 |
|
Accrued and other current liabilities |
|
|
58,335 |
|
|
|
49,743 |
|
Current portion of long-term debt |
|
|
561 |
|
|
|
561 |
|
Total current liabilities |
|
|
98,426 |
|
|
|
82,748 |
|
Long-term debt |
|
|
230,355 |
|
|
|
241,776 |
|
Retirement benefits payable |
|
|
1,706 |
|
|
|
1,695 |
|
Other long-term liabilities |
|
|
145,444 |
|
|
|
136,725 |
|
Total liabilities |
|
|
475,931 |
|
|
|
462,944 |
|
Commitments and contingencies (See Note 14) |
|
|
|
|
Redeemable noncontrolling interest |
|
|
15,376 |
|
|
|
— |
|
Equity: |
|
|
|
|
Common shares, $0.01 par value |
|
|
162 |
|
|
|
161 |
|
Shares authorized – 50,000 |
|
|
|
|
Shares issued – 16,284 and 16,162, respectively |
|
|
|
|
Preferred shares, $0.01 par value |
|
|
— |
|
|
|
— |
|
Shares authorized (10,000) and issued (0) |
|
|
|
|
Additional paid-in capital |
|
|
110,790 |
|
|
|
104,689 |
|
Treasury shares, at cost (454 and 511 shares, respectively) |
|
|
(32,604 |
) |
|
|
(34,075 |
) |
Retained earnings |
|
|
386,448 |
|
|
|
347,234 |
|
Accumulated other comprehensive loss |
|
|
(6,058 |
) |
|
|
(5,996 |
) |
Total equity |
|
|
458,738 |
|
|
|
412,013 |
|
Total liabilities, redeemable noncontrolling interest and
equity |
|
$ |
950,045 |
|
|
$ |
874,957 |
|
CSW INDUSTRIALS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)
(Amounts in thousands) |
|
Nine Months EndedDecember 31, |
|
|
|
2021 |
|
|
|
2020 |
|
Cash flows from operating activities: |
|
|
|
|
Net income |
|
$ |
47,339 |
|
|
$ |
30,660 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation |
|
|
8,731 |
|
|
|
6,079 |
|
Amortization of intangible and other assets |
|
|
19,765 |
|
|
|
5,698 |
|
Provision for inventory reserves |
|
|
3,519 |
|
|
|
1,169 |
|
Provision for doubtful accounts |
|
|
1,146 |
|
|
|
227 |
|
Share-based and other executive compensation |
|
|
6,223 |
|
|
|
3,945 |
|
Net gain on disposals of property, plant and equipment |
|
|
(9 |
) |
|
|
(42 |
) |
Net pension benefit |
|
|
269 |
|
|
|
121 |
|
Net deferred taxes |
|
|
1,757 |
|
|
|
456 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
5,621 |
|
|
|
14,115 |
|
Inventories |
|
|
(33,250 |
) |
|
|
(1,581 |
) |
Prepaid expenses and other current assets |
|
|
(4,827 |
) |
|
|
(4,494 |
) |
Other assets |
|
|
378 |
|
|
|
(340 |
) |
Accounts payable and other current liabilities |
|
|
12,032 |
|
|
|
(1,787 |
) |
Retirement benefits payable and other liabilities |
|
|
778 |
|
|
|
(180 |
) |
Net cash provided by operating activities |
|
|
69,472 |
|
|
|
54,046 |
|
Cash flows from investing activities: |
|
|
|
|
Capital expenditures |
|
|
(8,356 |
) |
|
|
(6,886 |
) |
Proceeds from sale of assets |
|
|
21 |
|
|
|
604 |
|
Cash paid for acquisitions |
|
|
(36,427 |
) |
|
|
(278,680 |
) |
Net cash used in investing activities |
|
|
(44,762 |
) |
|
|
(284,962 |
) |
Cash flows from financing activities: |
|
|
|
|
Borrowings on line of credit |
|
|
52,513 |
|
|
|
255,000 |
|
Repayments of line of credit and term loan |
|
|
(63,934 |
) |
|
|
(10,421 |
) |
Purchase of treasury shares |
|
|
(5,356 |
) |
|
|
(10,488 |
) |
Payments of deferred loan costs |
|
|
(2,327 |
) |
|
|
(149 |
) |
Proceeds from stock option activity |
|
|
1,326 |
|
|
|
1,331 |
|
Proceeds from acquisition of redeemable noncontrolling interest
shareholder |
|
|
6,293 |
|
|
|
— |
|
Dividends |
|
|
(7,084 |
) |
|
|
(5,970 |
) |
Net cash provided by (used in) financing activities |
|
|
(18,569 |
) |
|
|
229,303 |
|
Effect of exchange rate changes on cash and equivalents |
|
|
(45 |
) |
|
|
1,535 |
|
Net change in cash and cash equivalents |
|
|
6,096 |
|
|
|
(78 |
) |
Cash and cash equivalents, beginning of period |
|
|
10,088 |
|
|
|
18,338 |
|
Cash and cash equivalents, end of period |
|
$ |
16,184 |
|
|
$ |
18,260 |
|
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 EndedDecember 31, |
|
Nine Months EndedDecember 31, |
(Amounts in thousands, except share data) |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
GAAP Net income attributable to CSWI |
|
$ |
8,311 |
|
$ |
2,346 |
|
$ |
46,354 |
|
$ |
30,660 |
|
|
|
|
|
|
|
|
|
Adjusting items, net of tax: |
|
|
|
|
|
|
|
|
Transaction costs and other professional fees |
|
|
— |
|
|
6,499 |
|
|
— |
|
|
6,499 |
Purchase accounting effect |
|
|
— |
|
|
— |
|
|
2,959 |
|
|
— |
Adjusted Net Income |
|
$ |
8,311 |
|
$ |
8,845 |
|
$ |
49,313 |
|
$ |
37,159 |
|
|
|
|
|
|
|
|
|
GAAP Net Income attributable to CSW Industrials, Inc. per diluted
common share |
|
$ |
0.52 |
|
$ |
0.16 |
|
$ |
2.93 |
|
$ |
2.06 |
|
|
|
|
|
|
|
|
|
Adjusting items, per diluted common share: |
|
|
|
|
|
|
|
|
Transaction costs and other professional fees |
|
|
— |
|
|
0.43 |
|
|
— |
|
|
0.44 |
Purchase accounting effect |
|
|
— |
|
|
— |
|
|
0.19 |
|
|
— |
Adjusted Net Income attributable to CSW Industrials, Inc. per
diluted common share |
|
$ |
0.52 |
|
$ |
0.59 |
|
$ |
3.12 |
|
$ |
2.49 |
CSW INDUSTRIALS, INC. |
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO CSWI TO
ADJUSTED EBITDA |
(Unaudited) |
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
GAAP Net Income attributable to CSWI |
|
$ |
8,311 |
|
|
$ |
2,346 |
|
|
$ |
46,354 |
|
|
$ |
30,660 |
|
Plus: Income attributable to redeemable noncontrolling
interest |
|
|
458 |
|
|
|
— |
|
|
|
985 |
|
|
|
— |
|
GAAP Net Income |
|
$ |
8,769 |
|
|
$ |
2,346 |
|
|
$ |
47,339 |
|
|
$ |
30,660 |
|
|
|
|
|
|
|
|
|
|
Adjusting Items: |
|
|
|
|
|
|
|
|
Interest Expense |
|
|
1,184 |
|
|
|
469 |
|
|
|
4,151 |
|
|
|
1,071 |
|
Income Tax Expense |
|
|
2,068 |
|
|
|
709 |
|
|
|
14,591 |
|
|
|
9,560 |
|
Depreciation & Amortization |
|
|
7,890 |
|
|
|
4,392 |
|
|
|
28,120 |
|
|
|
11,461 |
|
EBITDA |
|
$ |
19,912 |
|
|
$ |
7,917 |
|
|
$ |
94,202 |
|
|
$ |
52,751 |
|
|
|
|
|
|
|
|
|
|
Adjusting Items: |
|
|
|
|
|
|
|
|
Transaction Expenses |
|
|
— |
|
|
|
7,960 |
|
|
|
— |
|
|
|
7,960 |
|
Adjusted EBITDA |
|
$ |
19,912 |
|
|
$ |
15,877 |
|
|
$ |
94,202 |
|
|
$ |
60,711 |
|
EBITDA % Revenue |
|
|
14.6 |
% |
|
|
17.7 |
% |
|
|
20.8 |
% |
|
|
21.2 |
% |
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 December 31, 2021 |
|
|
Engineered |
Specialized |
|
|
|
Contractor |
Building |
Reliability |
Corporate |
Consolidated |
|
Solutions |
Solutions |
Solutions |
and Other |
Operations |
Revenue, net |
$ |
82,459 |
|
$ |
23,905 |
|
$ |
31,384 |
|
$ |
(1,462 |
) |
$ |
136,286 |
|
|
|
|
|
|
|
GAAP Operating Income |
$ |
10,756 |
|
$ |
3,200 |
|
$ |
2,650 |
|
$ |
(4,459 |
) |
$ |
12,148 |
|
Adjusted Operating Income |
$ |
10,756 |
|
$ |
3,200 |
|
$ |
2,650 |
|
$ |
(4,459 |
) |
$ |
12,148 |
|
% Revenue |
|
13.0 |
% |
|
13.4 |
% |
|
8.4 |
% |
|
|
8.9 |
% |
Adjusting Items: |
|
|
|
|
|
Other Income (Expense) |
|
80 |
|
|
(87 |
) |
|
(78 |
) |
|
(42 |
) |
|
(127 |
) |
Depreciation & Amortization |
|
5,782 |
|
|
498 |
|
|
1,472 |
|
|
138 |
|
|
7,890 |
|
Adjusted EBITDA |
$ |
16,618 |
|
$ |
3,611 |
|
$ |
4,045 |
|
$ |
(4,362 |
) |
$ |
19,912 |
|
% Revenue |
|
20.2 |
% |
|
15.1 |
% |
|
12.9 |
% |
|
|
14.6 |
% |
|
|
|
|
|
|
(Amounts in thousands) |
Three Months Ended December 31, 2020 |
|
|
Engineered |
Specialized |
|
|
|
Contractor |
Building |
Reliability |
Corporate |
Consolidated |
|
Solutions |
Solutions |
Solutions |
and Other |
Operations |
Revenue, net |
$ |
44,439 |
|
$ |
25,700 |
|
$ |
19,874 |
|
$ |
(80 |
) |
$ |
89,932 |
|
|
|
|
|
|
|
GAAP Operating Income |
$ |
2,900 |
|
$ |
4,194 |
|
$ |
619 |
|
$ |
(3,597 |
) |
$ |
4,117 |
|
Adjusting Items: |
|
|
|
|
|
Transaction costs & other professional fees |
|
6,919 |
|
|
— |
|
|
1,041 |
|
|
— |
|
|
7,960 |
|
Adjusted Operating Income |
$ |
9,819 |
|
$ |
4,194 |
|
$ |
1,660 |
|
$ |
(3,597 |
) |
$ |
12,077 |
|
% Revenue |
|
22.1 |
% |
|
16.3 |
% |
|
8.4 |
% |
|
|
13.4 |
% |
Adjusting Items: |
|
|
|
|
|
Other Income (Expense) |
|
98 |
|
|
(430 |
) |
|
(128 |
) |
|
(132 |
) |
|
(592 |
) |
Depreciation & Amortization |
|
2,345 |
|
|
472 |
|
|
1,439 |
|
|
136 |
|
|
4,392 |
|
Adjusted EBITDA |
$ |
12,261 |
|
$ |
4,236 |
|
$ |
2,972 |
|
$ |
(3,592 |
) |
$ |
15,877 |
|
% Revenue |
|
27.6 |
% |
|
16.5 |
% |
|
15.0 |
% |
|
|
17.7 |
% |
CSW INDUSTRIALS, INC. |
RECONCILIATION OF SEGMENT OPERATING INCOME TO ADJUSTED
SEGMENT OPERATING INCOME AND TO ADJUSTED SEGMENT
EBITDA |
(Unaudited) |
|
|
|
|
|
|
(Amounts in thousands) |
Nine Months Ended December 31, 2021 |
|
|
Engineered |
Specialized |
|
|
|
Contractor |
Building |
Reliability |
Corporate |
Consolidated |
|
Solutions |
Solutions |
Solutions |
and Other |
Operations |
Revenue, net |
$ |
296,048 |
|
$ |
73,389 |
|
$ |
85,288 |
|
$ |
(1,589 |
) |
$ |
453,136 |
|
|
|
|
|
|
|
GAAP Operating Income |
$ |
67,021 |
|
$ |
9,388 |
|
$ |
3,928 |
|
$ |
(13,823 |
) |
$ |
66,514 |
|
Adjusting Items: |
|
|
|
|
|
Purchase Accounting Effect |
|
3,919 |
|
|
— |
|
|
— |
|
|
— |
|
|
3,919 |
|
Adjusted Operating Income |
$ |
70,940 |
|
$ |
9,388 |
|
$ |
3,928 |
|
$ |
(13,823 |
) |
$ |
70,433 |
|
% Revenue |
|
24.0 |
% |
|
12.8 |
% |
|
4.6 |
% |
|
|
15.5 |
% |
Adjusting Items: |
|
|
|
|
|
Other Income (Expense) |
|
(174 |
) |
|
(66 |
) |
|
(72 |
) |
|
(120 |
) |
|
(432 |
) |
Depreciation & Amortization |
|
21,587 |
|
|
1,565 |
|
|
4,563 |
|
|
404 |
|
|
28,120 |
|
Purchase Accounting Effect |
|
(3,919 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(3,919 |
) |
Adjusted EBITDA |
$ |
88,434 |
|
$ |
10,887 |
|
$ |
8,419 |
|
$ |
(13,539 |
) |
$ |
94,202 |
|
% Revenue |
|
29.9 |
% |
|
14.8 |
% |
|
9.9 |
% |
|
|
20.8 |
% |
|
|
|
|
|
|
(Amounts in thousands) |
Nine Months Ended December 31, 2020 |
|
|
Engineered |
Specialized |
|
|
|
Contractor |
Building |
Reliability |
Corporate |
Consolidated |
|
Solutions |
Solutions |
Solutions |
and Other |
Operations |
Revenue, net |
$ |
157,694 |
|
$ |
71,549 |
|
$ |
56,887 |
|
$ |
(295 |
) |
$ |
285,836 |
|
|
|
|
|
|
|
GAAP Operating Income |
$ |
40,458 |
|
$ |
11,763 |
|
$ |
1,287 |
|
$ |
(10,958 |
) |
$ |
42,550 |
|
Adjusting Items: |
|
|
|
|
|
Transaction costs & other professional fees |
|
6,919 |
|
|
— |
|
|
1,041 |
|
|
— |
|
|
7,960 |
|
Adjusted Operating Income |
$ |
47,377 |
|
$ |
11,763 |
|
$ |
2,328 |
|
$ |
(10,958 |
) |
$ |
50,510 |
|
% Revenue |
|
30.0 |
% |
|
16.4 |
% |
|
4.1 |
% |
|
|
17.7 |
% |
Adjusting Items: |
|
|
|
|
|
Other Income (Expense) |
|
47 |
|
|
(950 |
) |
|
(60 |
) |
|
(296 |
) |
|
(1,259 |
) |
Depreciation & Amortization |
|
5,243 |
|
|
1,511 |
|
|
4,302 |
|
|
404 |
|
|
11,461 |
|
Adjusted EBITDA |
$ |
52,668 |
|
$ |
12,324 |
|
$ |
6,570 |
|
$ |
(10,850 |
) |
$ |
60,711 |
|
% Revenue |
|
33.4 |
% |
|
17.2 |
% |
|
11.5 |
% |
|
|
21.2 |
% |
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