CSW Industrials (CSW) reported $232.99 million in revenue for the quarter ended December 2025, representing a year-over-year increase of 20.3%. EPS of $1.42 for the same period compares to $1.48 a year ago.The reported revenue represents a surprise of -6.56% over the Zacks Consensus Estimate of $249.36 million. With the consensus EPS estimate being $1.93, the EPS surprise was -26.43%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to ...

Core Viewpoint - CSW Industrials reported quarterly earnings of $1.42 per share, missing the Zacks Consensus Estimate of $1.93 per share, representing a -26.43% earnings surprise [1]. Financial Performance - The company posted revenues of $232.99 million for the quarter ended December 2025, missing the Zacks Consensus Estimate by 6.56%, compared to $193.65 million in revenues a year ago [2]. - Over the last four quarters, CSW Industrials has surpassed consensus EPS estimates three times [2]. Stock Performance - CSW Industrials shares have increased by approximately 2.2% since the beginning of the year, outperforming the S&P 500's gain of 1.9% [3]. - The current consensus EPS estimate for the upcoming quarter is $2.67, with expected revenues of $285.73 million, and for the current fiscal year, the estimate is $10.36 on $1.08 billion in revenues [7]. Industry Outlook - The Zacks Industry Rank for Chemical - Specialty is currently in the bottom 21% of over 250 Zacks industries, indicating potential challenges for stock performance [8]. - The performance of CSW Industrials may be influenced by the overall outlook for the industry, as empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions [5][8].

CSW Industrials Reports Record Results for Fiscal 2026 Third Quarter DALLAS, January 29, 2026 (GLOBE NEWSWIRE) - CSW Industrials, Inc. (NYSE: CSW or the "Company") today reported results for the fiscal 2026 third quarter period ended December 31, 2025. Fiscal 2026 Third Quarter Highlights (comparisons to fiscal 2025 third quarter) Fiscal 2026 Year-to-Date Highlights (comparisons to fiscal 2025 year-to-date period) Comments from the Chairman, President, and Chief Executive Officer Joseph B. Armes, CSW Indust ...

Revenue Growth - Net revenues for the three months ended December 31, 2025 increased by $39.3 million, or 20.3%, compared to the same period in 2024, primarily due to acquisitions contributing $45.0 million [129]. - For the nine months ended December 31, 2025, net revenues increased by $125.8 million, or 19.4%, primarily due to acquisitions contributing $150.6 million [130]. - For the three months ended December 31, 2025, net revenues increased by $35.8 million, or 27.1%, compared to the same period in 2024, primarily due to acquisitions [149]. - For the nine months ended December 31, 2025, net revenues increased by $121.8 million, or 27.0%, compared to the same period in 2024, mainly driven by acquisitions [150]. - The Specialized Reliability Solutions segment's net revenues for the three months ended December 31, 2025, increased by $3.7 million, or 10.8%, compared to the same period in 2024 [155]. - The Engineered Building Solutions segment's net revenues for the three months ended December 31, 2025, decreased by $0.4 million, or 1.3%, compared to the same period in 2024 [160]. Profitability - Gross profit for the three months ended December 31, 2025 increased by $12.3 million, or 15.4%, but the gross profit margin decreased to 39.7% from 41.4% due to increased tariffs and material costs [131]. - Gross profit for the nine months ended December 31, 2025 increased by $35.6 million, or 12.2%, with a gross profit margin of 42.3%, down from 45.0% [132]. - Operating income for the three months ended December 31, 2025 decreased by $12.3 million, or 41.4%, due to higher operating expenses despite increased gross profit [135]. - Operating income for the nine months ended December 31, 2025 decreased by $7.2 million, or 5.3%, despite an increase in gross profit [136]. - Operating income for the three months ended December 31, 2025, decreased by $10.0 million, or 37.2%, compared to the same period in 2024, attributed to increased tariffs and acquisition-related costs [151]. - The Contractor Solutions segment's operating margin for the three months ended December 31, 2025, was 10.0%, down from 20.2% in the same period in 2024 [151]. - Operating income for the Specialized Reliability Solutions segment for the three months ended December 31, 2025, decreased by $0.7 million, or 13.7%, compared to the same period in 2024 [157]. Operating Expenses - Operating expenses for the three months ended December 31, 2025 rose by $24.6 million, or 48.7%, attributed to the inclusion of recent acquisitions and related expenses, leading to an increase in operating expenses as a percentage of revenues to 32.2% [133]. - Operating expenses for the nine months ended December 31, 2025 increased by $42.9 million, or 27.6%, with operating expenses as a percentage of revenues rising to 25.6% [134]. Cash Flow and Investments - Cash provided by operating activities for the nine months ended December 31, 2025, was $151.3 million, compared to $141.1 million for the same period in 2024 [166]. - Cash flows used in investing activities for the nine months ended December 31, 2025 were $1,012.1 million, a significant increase from $97.5 million for the same period in 2024 [167]. - Cash flows provided by financing activities during the nine months ended December 31, 2025 were $675.5 million, compared to $148.9 million in 2024 [168]. - Capital expenditures for the nine months ended December 31, 2025 were $12.1 million, slightly up from $11.7 million in 2024, focusing on capacity expansion and new product introductions [169]. - The company acquired MARS Parts for $667.5 million, including $650.0 million in cash, during the nine months ended December 31, 2025 [169]. - The company also acquired Aspen Manufacturing for $327.6 million, including $313.5 million in cash, during the same period [169]. - Net borrowings on the Revolving Credit Facility and TLA were $800.1 million for the nine months ended December 31, 2025, compared to $(166.0) million in 2024 [175]. - Share repurchases amounted to $92.6 million during the nine months ended December 31, 2025, up from $13.7 million in 2024 [175]. Tax and Compliance - The effective tax rate for the three months ended December 31, 2025 was (34.2)%, with net income tax benefits of $2.7 million recognized from operations before taxes of $7.9 million [139]. - The company expects $6.4 million of reserves for unrecognized tax positions (UTPs) to either be settled or expire within the next 12 months [143]. - As of December 31, 2025, the UTP accrual related to TRUaire's pre-acquisition tax periods was $8.5 million, including penalties and interests accrued post-acquisition [140]. - The company remains compliant with all covenants related to its indebtedness as of December 31, 2025 [171]. Foreign Currency Impact - The company recognized a foreign currency transaction net gain of $0.8 million for the nine months ended December 31, 2025, compared to $0.1 million in 2024 [183]. - A 10% change in foreign currency exchange rates would have impacted net earnings by approximately 5% for the nine months ended December 31, 2025 [184].

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Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with CSW Industrials identified as a strong candidate due to its favorable growth metrics and Zacks Rank [1][2]. Group 1: Earnings Growth - CSW Industrials has a historical EPS growth rate of 24.8%, with projected EPS growth of 23.7% for the current year, significantly outperforming the industry average of 6.4% [4]. Group 2: Cash Flow Growth - The company exhibits a year-over-year cash flow growth of 22.8%, surpassing many peers and the industry average of 6.1% [5]. - Over the past 3-5 years, CSW Industrials has maintained an annualized cash flow growth rate of 23.2%, compared to the industry average of 5.9% [6]. Group 3: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for CSW Industrials, with the Zacks Consensus Estimate for the current year increasing by 0.5% over the past month [7]. Group 4: Overall Positioning - CSW Industrials holds a Growth Score of B and a Zacks Rank of 2, indicating strong potential for outperformance in the growth stock category [8][9].

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, particularly in the financial sector, to achieve exceptional returns, although identifying such stocks can be challenging due to inherent volatility and risks [1] Group 1: Company Overview - CSW Industrials is currently highlighted as a recommended growth stock by the Zacks Growth Style Score system, which evaluates a company's genuine growth prospects beyond traditional metrics [2] - The company has a favorable Growth Score and a top Zacks Rank, indicating strong potential for growth [2] Group 2: Earnings Growth - CSW Industrials has a historical EPS growth rate of 24.8%, with projected EPS growth of 23.7% for the current year, significantly outperforming the industry average of 6% [4] Group 3: Cash Flow Growth - The year-over-year cash flow growth for CSW Industrials stands at 22.8%, which is substantially higher than the industry average of 6% [5] - Over the past 3-5 years, the company's annualized cash flow growth rate has been 23.2%, compared to the industry average of 5.3% [6] Group 4: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for CSW Industrials, with the current-year earnings estimates increasing by 0.5% over the past month [7] Group 5: Investment Positioning - CSW Industrials has achieved a Growth Score of B and a Zacks Rank of 2, positioning it well for potential outperformance in the growth stock category [8]

Core Insights - CSW Industrials reported quarterly earnings of $2.96 per share, exceeding the Zacks Consensus Estimate of $2.73 per share, and showing an increase from $2.26 per share a year ago, resulting in an earnings surprise of +8.42% [1] - The company achieved revenues of $276.95 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.19% and up from $227.93 million year-over-year [2] Earnings Performance - CSW Industrials has surpassed consensus EPS estimates in all four of the last quarters [2] - The company has topped consensus revenue estimates two times over the last four quarters [2] Stock Performance - CSW Industrials shares have declined approximately 30.8% since the beginning of the year, contrasting with the S&P 500's gain of 17.2% [3] Future Outlook - The company's earnings outlook will be crucial for assessing future stock performance, including current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the next quarter is $2.36 on revenues of $252 million, and for the current fiscal year, it is $10.35 on revenues of $1.05 billion [7] Industry Context - The Chemical - Specialty industry, to which CSW Industrials belongs, is currently ranked in the bottom 34% of over 250 Zacks industries, indicating potential challenges ahead [8]

Financial Performance - Total revenue for fiscal 2026 second quarter reached a record $277.0 million, a 21.5% increase compared to the prior year period[5] - Net income attributable to CSW for the second quarter was $40.7 million, reflecting a 12.8% increase from $36.1 million in the prior year[5] - Adjusted EBITDA for the second quarter grew 19.9% to a record $72.9 million, with an adjusted EBITDA margin of 26.3%[12] - Total revenue for the first half of fiscal 2026 was $540.6 million, representing a 19.0% growth from $454.1 million in the prior year[23] - Adjusted EPS for the second quarter increased 15.2% to $2.96 per diluted share, compared to $2.57 in the prior year[11] - Operating income for the second quarter was $56.8 million, with an operating income margin of 20.5%[9] - Total revenues for the six months ended September 30, 2025, were $540.6 million, compared to $454.1 million for the same period in 2024, reflecting a growth of 19.0%[49] - Net income attributable to CSW Industrials, Inc. for the six months ended September 30, 2025, was $81.6 million, compared to $74.6 million in the prior year, an increase of 9.5%[49] - The diluted earnings per share for the six months ended September 30, 2025, was $4.84, compared to $4.73 in 2024, reflecting a 2.3% increase[59] Segment Performance - Contractor Solutions segment revenue increased by $86.0 million or 26.9% to $405.2 million, with inorganic growth from acquisitions contributing $105.6 million or 33.1% of this growth[33] - Segment operating income for Contractor Solutions was $106.1 million, with an adjusted operating income of $107.7 million, compared to $96.1 million in the prior year[33] - Specialized Reliability Solutions segment revenue grew to $75.6 million, a slight increase of $0.3 million or 0.4% from the prior year[34] - Segment operating income for Specialized Reliability Solutions decreased to $10.3 million, representing 13.7% of revenue, down from 17.2% in the prior year[34] - Engineered Building Solutions segment revenue was $63.8 million, a $0.2 million or 0.4% increase, while operating income decreased by 25.2% to $8.8 million[36] - The Contractor Solutions Segment reported revenue of $208,468,000 for the three months ended September 30, 2025, a 31.3% increase from $158,834,000 in 2024[64] Cash Flow and Investments - Cash flows from operations for the second quarter were $61.8 million, a decrease from $67.4 million in the prior year[13] - Cash flows from operating activities for the six months ended September 30, 2025, totaled $122,467,000, slightly down from $130,169,000 in 2024[54] - The company reported a net cash used in investing activities of $331,439,000 for the six months ended September 30, 2025, compared to $41,349,000 in 2024, primarily due to cash paid for acquisitions[54] - The company’s cash and cash equivalents at the end of the period were $31,471,000, a significant decrease from $273,220,000 at the end of the same period in 2024[54] Debt and Taxation - The company paid down $35.0 million of debt in the quarter, resulting in a net leverage ratio of 0.12x[5] - The effective tax rate for the fiscal second quarter was 26.4%, slightly up from 26.1% in the prior year[16] - The company’s effective tax rate for the six months ended September 30, 2025, was 25.4%, consistent with 26.2% in 2024[61] Capital Expenditures and Depreciation - Capital expenditures for the six months ended September 30, 2025, were $5,984,000, down from $8,587,000 in 2024[54] - Depreciation and amortization for the three months ended September 30, 2025, totaled $14,392,000, compared to $9,951,000 in the same period of 2024[69] Acquisition Activity - The company announced a definitive agreement to acquire MARS Parts for $650 million, expected to close in November 2025[17] Adjusted Metrics - Adjusted net income attributable to CSW for the six months ended September 30, 2025, was $97,883,000, up 15.9% from $84,304,000 in 2024[59] - Adjusted EBITDA for the six months ended September 30, 2025, reached $141,681,000, representing a 12.3% increase from $126,075,000 in 2024[66] - Adjusted EBITDA for Contractor Solutions was $132.6 million, or 32.7% of revenue, down from $112.0 million or 35.1% in the prior year[33] - Adjusted free cash flow for the three months ended September 30, 2025, was $58,746,000, which is 80.5% of adjusted EBITDA[73]

Revenue and Acquisitions - Net revenues for the three months ended September 30, 2025 increased by $49.0 million, or 21.5%, compared to the same period in 2024, primarily due to acquisitions[112] - Acquisitions of Aspen Manufacturing, PSP Products, and PF WaterWorks contributed $61.9 million, or 27.2%, to the revenue increase for the three months ended September 30, 2025[112] - Net revenues for the three months ended September 30, 2025 increased by $49.6 million, or 31.2%, compared to the same period in 2024, primarily driven by acquisitions[129] - The Contractor Solutions segment reported net revenues of $405.2 million for the six months ended September 30, 2025, up from $319.3 million in 2024, reflecting a 26.9% increase[130] Profitability and Operating Income - Gross profit for the three months ended September 30, 2025 increased by $15.3 million, or 14.7%, with a gross profit margin of 43.0%, down from 45.6% in the same period of 2024[114] - Operating income for the three months ended September 30, 2025 was $51.5 million, with an operating margin of 20.5%, compared to 22.6% in the same period of 2024[118] - Operating income for the three months ended September 30, 2025 increased by $7.1 million, or 15.4%, but the operating margin decreased to 25.6% from 29.1% due to increased tariffs and recent acquisitions[131] - The Specialized Reliability Solutions segment's operating income for the six months ended September 30, 2025 decreased by $2.6 million, or 20.3%, compared to the same period in 2024[138] - The Engineered Building Solutions segment's operating income for the six months ended September 30, 2025 decreased by $3.0 million, or 25.2%, due to increased material costs and warranty expenses[143] Expenses and Cash Flow - Operating expenses for the three months ended September 30, 2025 rose by $10.1 million, or 19.2%, primarily due to the inclusion of recent acquisitions[116] - Cash provided by operating activities for the six months ended September 30, 2025 was $122.5 million, a decrease from $130.2 million in the same period of 2024[146] - Cash flows used in investing activities increased significantly to $331.4 million for the six months ended September 30, 2025, compared to $41.3 million in 2024, primarily due to the acquisition of Aspen Manufacturing[147] - Dividend payments increased to $9.1 million for the six months ended September 30, 2025, compared to $6.5 million in 2024[150] Tax and Financial Position - The effective tax rate for the three months ended September 30, 2025 was 26.4%, with income taxes provided amounting to $14.7 million on earnings of $55.5 million before taxes[122] - The company expects to maintain a strong balance sheet in fiscal year 2026, focusing on organic growth, strategic acquisitions, and returning cash to shareholders[109] - The company has a history of successful acquisitions and remains focused on identifying additional opportunities in core end markets[106] Market Risks and Currency Exposure - The company is actively assessing and implementing mitigation options in response to increased tariffs and geopolitical tensions affecting its operations[107] - The company has $60.0 million in unhedged variable rate indebtedness with an average interest rate of 5.4%[160] - A quarter point change in interest rates would result in a change of approximately $0.2 million in annual interest expense[160] - The company recognized a foreign currency transaction net gain of $0.6 million for the six months ended September 30, 2025[163] - A 10% change in foreign currency exchange rates would have impacted net earnings by approximately 4%[164] - The company realized a net loss associated with foreign currency translation of $(0.6) million for the six months ended September 30, 2024[163] - The company conducts an immaterial portion of operations outside the U.S., primarily in local currencies such as the Australian dollar and British pound[163] - The company entered into an interest rate swap to hedge $100.0 million borrowing under its Revolving Credit Facility[160] - The company is exposed to market risks from changes in interest rates and foreign currency exchange rates[159] Regulatory and Forward-Looking Statements - The company monitors domestic and international regulatory developments relevant to its manufacturing and distribution operations[165] - The company assumes no obligation to update or revise forward-looking statements except as required by law[158] Stock Listing - The company transferred its common stock listing from Nasdaq to the New York Stock Exchange on June 9, 2025[108]