CSW Industrials(CSWI) - 2025 Q3 - Quarterly Report

Revenue Growth - Net revenues for the three months ended December 31, 2024 increased by $18.7 million, or 10.7$65.8 million, or 11.3%, with $34.1 million attributed to acquisitions[110]. - For the three months ended December 31, 2024, the company reported net revenues of$132.2 million, an increase of $16.7 million or 14.5$451.4 million for the nine months ended December 31, 2024, an increase of $56.1 million or 14.2$92.4 million[143]. Profitability - Gross profit for the three months ended December 31, 2024 increased by $6.1 million, or 8.3$34.3 million, or 13.3%, with the gross profit margin improving to 45.0% from 44.2%[113]. - Operating income for the three months ended December 31, 2024 increased by $2.0 million, or 7.3$21.4 million, or 18.7%, with an operating margin of 21.0%[117]. - The Specialized Reliability Solutions segment's operating income for the three months ended December 31, 2024 increased by 40.1% to $5.2 million compared to the same period in 2023[138]. Cash Flow and Capital Management - Cash provided by operating activities for the nine months ended December 31, 2024 was$141.1 million, slightly down from $141.9 million in the same period of 2023[148]. - The company’s cash balance at December 31, 2024 was$213.8 million, significantly up from $22.2 million at March 31, 2024[147]. - Capital expenditures during the nine months ended December 31, 2024, were$11.7 million, focused on capacity expansion and new product introductions[150]. - Cash flows provided by financing activities during the nine months ended December 31, 2024, were $149.9 million, compared to$(119.5) million in 2023[151]. - Net repayments on the Revolving Credit Facility were $166.0 million during the nine months ended December 31, 2024[156]. Tax and Interest - The effective tax rate for the three months ended December 31, 2024 was 13.8$4.3 million on earnings of $31.3 million[121]. - The effective tax rate for the three months ended December 31, 2023 was 43.2$6.2 million of reserves for unrecognized tax positions (UTPs) to either be settled or expire within the next 12 months[126]. - Net interest income for the three months ended December 31, 2024 improved by $4.7 million compared to the same period in 2023, resulting in net interest income of$2.0 million[118]. Acquisitions - The company remains focused on identifying additional acquisition opportunities in core end markets to drive organic and inorganic growth[104]. - Acquired PF WaterWorks for an estimated purchase price of $43.2 million, including$40.0 million in cash consideration[150]. - Acquired PSP for an estimated purchase price of $47.1 million, including$32.5 million in cash consideration at closing[150]. Shareholder Returns - The capital allocation strategy prioritizes investments in organic growth, strategic acquisitions, and returning cash to shareholders through share repurchase and dividend programs[106]. - Share repurchases amounted to $13.7 million during the nine months ended December 31, 2024, compared to$5.8 million in 2023[156]. - Received proceeds of $347.4 million from a follow-on equity offering in September 2024[156]. Working Capital - Working capital used cash for the nine months ended December 31, 2024, due to higher inventories of$42.5 million and higher prepaid expenses of $17.2 million[150]. Foreign Currency Impact - Foreign currency transaction net gain (loss) was$0.1 million for the nine months ended December 31, 2024[163]. - A 10% change in foreign currency exchange rates would have impacted net earnings by approximately 3%[164].