DALLAS, Jan. 30, 2025 (GLOBE NEWSWIRE) — CSW Industrials, Inc. (Nasdaq: CSWI or the “Company”) today reported record results for the fiscal 2025 third quarter period ended December 31, 2024.
Fiscal 2025 Third Quarter Highlights (comparisons to fiscal 2024 third quarter)
Total revenue increased 10.7% to a third quarter record of $193.6 million, driven by inorganic growth of 8.7% from the recent acquisitions of Dust Free, PSP Products, and PF WaterWorks, and organic growth of 1.9%Net income attributable to CSWI of $26.9 million, or $24.9 million adjusted, increased 48.9% to a third quarter record, compared to $16.7 millionEarnings per diluted share (“EPS”) of $1.60, or $1.48 adjusted, increased 38.2% to a third quarter record, compared to $1.07Adjusted EBITDA grew 14.2% to a third quarter record of $42.0 million, including margin expansion for the third quarter of 70 bps to 21.7%
Fiscal 2025 Year-to-Date Highlights (comparisons to fiscal 2024 year-to-date period)
Total revenue increased 11.3% to $647.8 million, of which $34.1 million, or 5.9%, was inorganic growth from recent acquisitions, and 5.5%, or $31.7 million was organic growthNet income attributable to CSWI of $101.6 million, or $99.5 million adjusted, increased 28.6% as compared to $77.4 millionEPS of $6.30, or $6.17 adjusted, improved 24.2% compared to $4.97Adjusted EBITDA increased 16.6% to $168.1 million, including margin expansion of 120 bps to 26.0%Invested $84.5 million in acquisitions and $11.7 million in organic capital expenditures, while returning total cash of $24.3 million to shareholders through share repurchases of $13.7 million and dividends of $10.6 million
Comments from the Chairman, President, and Chief Executive Officer
Joseph B. Armes, CSW Industrials’ Chairman, President, and Chief Executive Officer, commented, “I am very pleased to announce record revenue for the fiscal third quarter driven by the strategic acquisitions of Dust Free, PSP Products, and PF WaterWorks during the last twelve months as well as organic volume growth. Impressively, the team also achieved record net income, adjusted earnings per diluted share, and adjusted EBITDA for the fiscal third quarter.”
Armes continued, “During the quarter, our disciplined allocation of capital continued with the acquisition of PF WaterWorks, bringing innovative, eco-friendly drain management solutions within the profitable plumbing end market to the CSWI family. The addition of these new products to our current portfolio fuels inorganic growth, additional organic growth over time, and increased market share.”
Fiscal 2025 Third Quarter Consolidated Results
Fiscal third quarter revenue was $193.6 million, a $18.7 million or 10.7% increase over the prior year period. Total revenue growth included $15.3 million or 8.7% inorganic growth contributed by the Dust Free, PSP, and PF WaterWorks acquisitions, which are all reported within the Contractor Solutions segment, with the remaining $3.4 million or 1.9% related to organic growth contributed from all three operating segments.
Gross profit in the fiscal third quarter was $80.1 million, representing 8.3% growth over $74.0 million in the prior year period. Gross margin contracted 90 bps to 41.4%, compared to 42.3% in the prior year period. The gross margin decrease was primarily a result of increased freight expense.
Operating expenses as a percentage of revenue were 26.1% or 25.6% adjusted to exclude the $0.9 million acquisition broker fee in the current period, which was lower than the prior year period of 26.5%. Operating expenses were $50.5 million or $49.7 million adjusted in the current year period, compared to $46.4 million in the prior year period, with leverage of revenue growth through the absorption of expenses related to recent acquisitions, additional spend on acquisition integration, and investments in team members to support ongoing revenue growth.
Operating income in the current period was $29.6 million or $30.5 million adjusted to exclude the acquisition broker fee, compared to $27.6 million in the prior year period. Operating income as a percentage of revenue was 15.3% or 15.7% adjusted, compared to 15.8% in the prior year period. The main driver of the slight decrease in operating margin was a result of the previously mentioned contraction in the gross margin, which was partially offset by improved leverage on operating expenses.
Interest income was $2.0 million, compared to interest expense of $2.8 million in the prior year period. The $4.8 million shift from interest expense to interest income was a result of having no debt outstanding during the quarter, as the outstanding balance on our revolver was fully repaid in second fiscal quarter 2025, augmented by interest income earned on the balance of net proceeds from the equity offering closed in the second fiscal quarter 2025.
Other expense was $0.3 million, compared to other expense of $8.4 million in the prior year period. A $0.9 million tax indemnification asset was released in the current period, as compared to $8.5 million of tax indemnification assets released in the prior year period.
Net income attributable to CSWI (net of non-controlling interest in the joint venture) increased to $26.9 million, compared to the prior year period of $9.2 million. Adjusted to exclude the release of the tax indemnification assets and uncertain tax position accruals in the current and prior periods, as well as the acquisition broker fee in the current period, adjusted net income was $24.9 million and adjusted EPS of $1.48 vs. $16.7 million and $1.07, an increase over the prior year period of 48.9% and 38.2%, respectively.
Fiscal 2025 third quarter adjusted EBITDA increased 14.2% to $42.0 million, up from $36.8 million in the prior year period. Adjusted EBITDA margin expanded 70 bps to 21.7%, compared to 21.0% in the prior year period.
The quarterly cash flows from operations of $11.6 million, compared to $47.0 million in the prior year period, were lower primarily due to a previously disclosed $16.8 million tax payment deferral from fiscal first half 2025 to fiscal third quarter 2025 under a temporary federal tax relief related to the severe storms and flooding in Texas in early calendar 2024. Additionally, increased investment in inventory during the third fiscal quarter 2025, compared to the prior year period, resulted from actions taken to mitigate certain supply chain issues that were expected to potentially arise in the first calendar quarter of 2025.
Following quarter-end, the Company announced its twenty-fourth consecutive regular quarterly cash dividend in the amount of $0.24 per share, which will be paid on February 14, 2025, to shareholders of record on January 31, 2025.
The Company’s effective tax rate for the fiscal third quarter was 13.8%, or 24.5% adjusted, as compared to 43.2% or 32.5% adjusted in the prior year period, when adjusted to exclude the previously disclosed release of tax indemnification assets and the uncertain tax position accruals for acquisitions in both periods, as well as the acquisition broker fee and related tax impact in the current period. The decrease in the adjusted tax rate was driven by a favorable foreign currency rate impact on the cumulative unrepatriated foreign earnings and an increased benefit related to vesting of employee equity awards.
Fiscal 2025 Third Quarter Segment Results
Contractor Solutions segment revenue was $132.2 million, a $16.7 million or 14.5% increase over the prior year period, comprised of inorganic growth of $15.3 million from the recent acquisitions of Dust Free, PSP Products, and PF WaterWorks (91.4% of the $16.7 million growth) and organic growth of $1.4 million from increased organic unit volumes. As compared to the prior year period, net revenue growth was driven by the HVAC/R, plumbing, and electrical end markets. Segment operating income improved to $26.8 million or $27.6 million adjusted to exclude the $0.9 million acquisition broker fee, compared to $25.8 million in the prior year period. The incremental profit resulted from revenue growth and the inclusion of recently acquired businesses and was partially offset by increased freight, including a freight expense alignment in the quarter and increased spending on business integrations. Segment operating income margin in the fiscal third quarter was 20.2% or 20.9% adjusted, compared to 22.3% in the prior year period. Segment adjusted EBITDA in the fiscal third quarter was $37.5 million, or 28.4% of revenue, compared to $33.0 million, or 28.6% of revenue in the prior year period.
Specialized Reliability Solutions segment revenue was $34.6 million, a $0.9 million or 2.5% increase from the prior year period. The increased net revenue was driven by growth in the general industrial and rail end markets. Segment operating income improved to $5.2 million, as compared to $3.7 million in the prior year period, an increase of 40.1%. Segment operating income margin for the fiscal third quarter improved to 15.2%, compared to the prior year period of 11.1% as a result of manufacturing efficiencies and management of operating expenses. Segment EBITDA improved by 26.5% to $6.6 million in the fiscal third quarter, with an EBITDA margin of 19.1% as compared to 15.4% in the prior year period.
Engineered Building Solutions segment revenue was $28.8 million, a 3.4% increase compared to $27.9 million in the prior year period. Segment operating income was $3.6 million, or 12.6% of revenue, as compared to the prior year period of $3.5 million, or 12.7% of revenue. Segment EBITDA and EBITDA margin improved slightly to $4.1 million and 14.2%, respectively, in the fiscal third quarter, compared to $4.0 million and 14.2%, respectively, in the prior year period.
Fiscal 2025 Year-to-Date Consolidated Results
Fiscal year-to-date revenue was $647.8 million, representing 11.3% growth over $582.0 million in the prior year period, with growth in all three reporting segments. Of the $65.8 million total growth, $31.7 million (5.5% of the 11.3% total growth) resulted from organic growth, with the remainder ($34.1 million) contributed by the Dust Free, PSP Products, and PF WaterWorks acquisitions.
Gross profit in the fiscal year-to-date period was $291.4 million, representing $34.3 million or 13.3% growth from $257.1 million in the prior year period, with the incremental profit resulting predominantly from revenue growth driven by increased organic unit volumes, a slight increase from pricing actions, and the recent acquisitions. Gross margin was 45.0%, compared to 44.2% in the prior year period. The gross margin improvement was a result of leveraging the volume increase, favorable product mix, and a slight favorable impact from pricing actions.
Operating expenses as a percentage of revenue were 24.0% or 23.8% adjusted, compared to 24.5% in the prior year period, as the increase in revenue growth outpaced the increase in operating expenses. Operating expenses in the current year period were $155.2 million or $154.4 million adjusted to exclude the $0.9 million acquisition broker fee, compared to $142.3 million in the prior year period. The additional expenses were related to employee compensation and recent acquisition expenses including amortization of intangible assets, business development expenses, and integration costs.
In the current period, operating income was $136.2 million or $137.1 million adjusted, compared to $114.8 million in the prior year period. The incremental operating income resulted from the gross profit increase, partially offset by the operating expense increase detailed above. Operating income margin in the current period improved to 21.0% or 21.2% adjusted, compared to the prior year period of 19.7%. During the comparative periods, the strengthened operating margin was due to the improvement in gross margin combined with the management of operating expenses.
Interest expense was $1.9 million, compared to interest expense of $10.1 million in the prior year period. The decrease of $8.2 million was a result of a lower debt balance throughout the first half of the year, then fully repaying the outstanding balance borrowed against our revolver during the second fiscal quarter 2025. Additionally, during the second and third fiscal quarters, the Company recognized interest income earned from the remaining net proceeds of the equity offering that closed in second fiscal quarter 2025.
Other expense was $0.7 million, compared to $6.2 million in the prior year period. The change in other expense of $5.5 million was primarily due to a $0.9 million tax indemnification asset was released in the current period, as compared to $8.5 million of tax indemnification assets released in the prior period, in addition to a gain of $1.4 million reported in the prior year period in connection with the sale of a property previously held for investment that did not recur. The remaining variance is a result of foreign currency impact related to transactions in currencies other than functional currencies.
In the current period, reported net income attributable to CSWI improved 45.4% to $101.6 million, or $6.30 per diluted share. Adjusted net income attributable to CSWI was $99.5 million, or $6.17 per diluted share. In the prior year period, adjusted net income attributable to CSWI was $77.4 million, or $4.97 per diluted share.
Fiscal 2025 year-to-date adjusted EBITDA increased 16.6% to $168.1 million from $144.2 million in the prior year period. Adjusted EBITDA as a percentage of revenue improved 120 bps to 26.0%, compared to 24.8%, in the prior year period.
Net cash provided by operating activities for the fiscal 2025 year-to-date period was $141.1 million, compared to $141.9 million in the prior year-to-date period, a 0.6% decrease compared to the prior year period. The Company paid down all $166.0 million of debt in the first half utilizing our record cash flow from operations and net proceeds from the follow-on equity offering, while also returning a total of $24.3 million in cash to shareholders through $10.6 million in dividends and $13.7 million in share repurchases utilizing our outstanding cash flow from operations.
The Company’s effective tax rate for the fiscal year-to-date period was 23.3% on a GAAP basis, and 25.8% as adjusted.
Fiscal 2025 Year-to-Date Segment Results
Contractor Solutions segment revenue was $451.4 million, a $56.1 million or 14.2% increase from the prior year period. Revenue growth was comprised of inorganic growth from Dust Free, PSP Products, and PF WaterWorks acquisitions ($34.1 million, or 8.6%, of the total growth), and organic growth of $22.1 million (5.6% of the total 14.2% growth) due to increased unit volumes and a slight increase from pricing actions. As compared to the prior year period, net revenue growth was driven primarily by the HVAC/R, plumbing, and electrical end markets. Segment operating income in the current year period was $122.9 million or $123.8 million adjusted to exclude the $0.9 million acquisition broker fee, compared to $104.4 million in the prior year period. The incremental profit resulted from the increased unit volumes, favorable product mix, pricing actions, and the inclusion of recent acquisitions. This growth was partially offset by increased freight expense, increased employee compensation expense, and business integration costs as the segment builds out the infrastructure to support continued growth, and increased expenses related to the inclusion of Dust Free, PSP Products, and PF WaterWorks in the current period, including amortization of intangible assets.
Contractor Solutions segment operating income margin was 27.2% or 27.4% adjusted, compared to 26.4% in the prior year period, an increase of 80 bps, driven primarily by increased operating leverage from the additional volume, favorable product mix and pricing actions, combined with the management of operating expenses. Segment adjusted EBITDA in the current period was $149.4 million, or 33.1% of revenue, compared to $126.4 million, or 32.0% of revenue in the prior year period.
Specialized Reliability Solutions segment revenue grew to $109.9 million, a $1.9 million or 1.7% increase over the prior year period of $108.0 million, primarily due to increased unit volumes, with growth in the rail transportation and industrial end markets offset by a decrease in mining and energy end markets. In the current year period, segment operating income improved by 17.2% to $18.2 million, or 16.6% of revenue, compared to the prior year period of $15.5 million, or 14.4% of revenue. Improved segment operating income was primarily a result of a favorable inventory adjustment as well as the increased volume. Segment EBITDA in the current period was $22.2 million, or 20.2% of revenue, compared to $19.9 million, or 18.5% of revenue in the prior year period.
Engineered Building Solutions segment revenue was $92.4 million, a $7.7 million or 9.1% increase over the prior year period, primarily due to the conversion of backlog into revenue and market expansion. Segment operating income increased 18.6% to $15.5 million, or 16.7% of revenue, compared to the prior year period of $13.0 million, or 15.4% of revenue, due to the increased net revenue and improved operating leverage, offset by increased employee expenses to support revenue growth. Segment EBITDA in the current period was $16.9 million, or 18.3% of revenue, compared to $14.4 million, or 17.0% of revenue in the prior year period.
All percentages are calculated based upon the attached financial statements. Share count used in determining the diluted EPS is based on a weighted average of outstanding shares throughout the reporting period.
Conference Call Information
The Company will host a conference call today at 10:00 a.m. ET to discuss the results, followed by a question-and-answer session for the investment community. A live webcast of the call can be accessed at https://cswindustrials.gcs-web.com/. To access the call, participants may dial 1-877-407-0784, 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 13, 2025. Participants may access the replay at 1-844-512-2921, international callers may use 1-412-317-6671 and enter access code 13750887. 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 diluted earnings per share attributable to CSWI, adjusted net income attributable to CSWI, adjusted effective tax rate, adjusted operating income and free cash flows, 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, amortization and impairment, 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 diversified industrial growth company with industry-leading operations in three segments: Contractor Solutions, Specialized Reliability Solutions, and Engineered Building Solutions. CSWI provides niche, value-added products with two essential commonalities: performance and reliability. The primary end markets we serve with our well-known brands include: HVAC/R, plumbing, electrical, general industrial, architecturally-specified building products, energy, mining, and rail transportation. For more information, please visit www.cswindustrials.com.
Investor Relations
Alexa Huerta
Vice President, Investor Relations and Treasurer
214-489-7113
alexa.huerta@cswindustrials.com
CSW INDUSTRIALS, INC.CONSOLIDATED STATEMENTS OF INCOME(unaudited) Three Months Ended
December 31, Nine Months Ended
December 31,(Amounts in thousands, except per share amounts) 2024 2023 2024 2023 Revenues, net $193,649 $174,967 $647,752 $581,980 Cost of revenues (113,543) (100,986) (356,324) (324,873)Gross profit 80,106 73,981 291,428 257,107 Selling, general and administrative expenses (50,511) (46,400) (155,224) (142,327)Operating income 29,595 27,581 136,204 114,780 Interest income (expense), net 1,976 (2,765) (1,884) (10,080)Other expense, net (298) (8,428) (716) (6,188)Income before income taxes 31,273 16,388 133,604 98,512 Provision for income taxes (4,315) (7,083) (31,175) (27,968)Net income 26,958 9,305 102,429 70,544 Less: Income attributable to redeemable noncontrolling interest (10) (83) (839) (655)Net income attributable to CSW Industrials, Inc. $26,948 $9,222 $101,590 $69,889 Net income per share attributable to CSW Industrials, Inc. Basic $1.60 $0.59 $6.32 $4.50 Diluted 1.60 0.59 6.30 4.49 Weighted average number of shares outstanding: Basic 16,792 15,546 16,066 15,537 Diluted 16,872 15,596 16,136 15,578
CSW INDUSTRIALS, INC.CONSOLIDATED BALANCE SHEETS(unaudited) (Amounts in thousands, except for per share amounts) December 31, 2024 March 31, 2024ASSETS Current assets: Cash and cash equivalents $213,754 $22,156 Accounts receivable, net of allowance for expected credit losses of $1,295 and $908, respectively 114,825 142,665 Inventories, net 202,764 150,749 Prepaid expenses and other current assets 32,120 15,840 Total current assets 563,463 331,410 Property, plant and equipment, net of accumulated depreciation of $112,906 and $103,515, respectively 94,208 92,811 Goodwill 266,941 247,191 Intangible assets, net 355,256 318,819 Other assets 70,327 53,095 Total assets $1,350,195 $1,043,326 LIABILITIES AND EQUITY Current liabilities: Accounts payable $52,842 $48,387 Accrued and other current liabilities 81,873 67,449 Total current liabilities 134,715 115,836 Long-term debt — 166,000 Retirement benefits payable 1,082 1,114 Other long-term liabilities 150,181 125,298 Total liabilities 285,978 408,248 Commitments and contingencies (See Note 13) Redeemable noncontrolling interest 20,194 19,355 Equity: Common shares, $0.01 par value 177 164 Additional paid-in capital 497,906 137,253 Treasury shares, at cost (1,005 and 952 shares, respectively) (115,367) (95,643)Retained earnings 674,036 583,075 Accumulated other comprehensive loss (12,729) (9,126)Total equity 1,044,023 615,723 Total liabilities, redeemable noncontrolling interest and equity $1,350,195 $1,043,326
CSW INDUSTRIALS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited) Nine Months Ended
December 31,(Amounts in thousands) 2024 2023 Cash flows from operating activities: Net income $102,429 $70,544 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 10,714 10,077 Amortization of intangible and other assets 20,792 17,584 Provision for inventory reserves 1,779 2,541 Provision for doubtful accounts 946 544 Share-based compensation 10,237 8,555 Net gain on disposals of property, plant and equipment (89) (1,336)Net pension benefit 49 50 Impairment of assets — 90 Net deferred taxes 1,244 2,732 Changes in operating assets and liabilities: Accounts receivable 32,316 17,846 Inventories (42,536) 7,796 Prepaid expenses and other current assets (17,174) (6,720)Other assets 1,565 1,066 Accounts payable and other current liabilities 21,372 9,601 Retirement benefits payable and other liabilities (2,575) 944 Net cash provided by operating activities 141,069 141,914 Cash flows from investing activities: Capital expenditures (11,735) (11,668)Proceeds from sale of assets held for investment — 1,665 Proceeds from sale of assets 153 157 Cash paid for investments (2,500) — Cash paid for acquisitions (84,491) (5,284)Net cash used in investing activities (98,573) (15,130)Cash flows from financing activities: Borrowings on line of credit 32,723 72,308 Repayments of line of credit and term loan (198,723) (172,308)Purchase of treasury shares (20,935) (10,640)Proceeds from equity issuance 347,407 — Dividends (10,554) (8,855)Net cash provided by (used in) financing activities 149,918 (119,495)Effect of exchange rate changes on cash and equivalents (816) (756)Net change in cash and cash equivalents 191,598 6,533 Cash and cash equivalents, beginning of period 22,156 18,455 Cash and cash equivalents, end of period $213,754 $24,988
Reconciliation of Non-GAAP Measures
We use adjusted earnings per share attributable to CSWI, adjusted net income attributable to CSWI, adjusted operating income, adjusted effective tax rate, 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. Free cash flow is a non-GAAP financial measure and is defined as cash flow from operations less capital expenditures. 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) (Amounts in thousands) Three months ended
December 31, Nine Months ended
December 31, 2024 2023 2024 2023 GAAP net income attributable to CSWI $26,948 $9,222 $101,591 $69,889 Adjusting items, net of tax: Reversal of tax indemnification receivable 858 8,519 858 8,519 Acquisition broker fee 642 — 642 — Uncertain tax position accrual release (3,549) (1,019) (3,549) (1,019)Adjusted net income attributable to CSWI $24,899 $16,722 $99,542 $77,389 Net Income Attributable to CSW Industrials, Inc. per diluted common share $1.60 $0.59 $6.30 $4.49 Adjusting Items, per dilutive common share: Reversal of tax indemnification receivable 0.05 0.55 0.05 0.55 Acquisition broker fee 0.04 — 0.04 — Uncertain tax position accrual release (0.21) (0.07) (0.22) (0.07)Adjusted net income attributable to CSW Industrials, Inc. per dilutive common share $1.48 $1.07 $6.17 $4.97
CSW INDUSTRIALS, INC.RECONCILIATION OF EFFECTIVE TAX RATE TO ADJUSTED EFFECTIVE TAX RATE(Unaudited) (Amounts in thousands) Three months ended
December 31, Nine Months ended
December 31, 2024 2023 2024 2023 GAAP income before tax $31,273 $16,388 $133,604 $98,512 Adjusting items: Reversal of tax indemnification receivable 858 8,519 858 8,519 Acquisition broker fee 860 — 860 — Adjusted income before tax $32,991 $24,907 $135,322 $107,031 GAAP provision for income tax $4,315 $7,083 $31,174 $27,968 Adjusting items: Uncertain tax position accrual release 3,549 1,019 3,549 1,019 Tax impact of acquisition broker fee 218 — 218 — Adjusted provision for income tax $8,082 $8,102 $34,941 $28,987 GAAP effective tax rate 13.8% 43.2% 23.3% 28.4%Adjusted effective tax rate 24.5% 32.5% 25.8% 27.1%
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, 2024 2023 2024 2023 Net Income attributable to CSWI $26,948 $9,222 $101,590 $69,889 Plus: Income attributable to redeemable noncontrolling interest 10 83 838 655 Net Income $26,958 $9,305 $102,429 $70,544 Adjusting Items: Interest expense (income), net (1,976) 2,764 1,884 10,080 Income tax expense 4,315 7,083 31,174 27,968 Depreciation & amortization 11,012 9,134 30,896 27,094 EBITDA $40,309 $28,286 $166,384 $135,686 EBITDA Adjustments: Reversal of tax indemnification receivable 858 8,519 858 8,519 Acquisition broker fee 860 — 860 — Adjusted EBITDA $42,027 $36,805 $168,102 $144,205 Adjusted EBITDA % Revenue 21.7% 21.0% 26.0% 24.8%
CSW INDUSTRIALS, INC.Reconciliation of Segment Operating Income to Segment Adjusted EBITDA(unaudited) (Amounts in thousands) Three months ended December 31, 2024 Contractor
SolutionsSpecialized
Reliability
SolutionsEngineered
Building
SolutionsCorporate
and OtherConsolidatedRevenue, net $132,150 $34,566 $28,821 $(1,889)$193,649 Operating Income $26,756 $5,238 $3,645 $(6,045)$29,595 Adjusting Items: Acquisition broker fee 860 — — — 860 Adjusted Operating Income $27,616 $5,238 $3,645 $(6,045)$30,455 % Revenue 20.9% 15.2% 12.6% 15.7% Adjusting Items: Other income (expense), net (188) (17) 38 (131) (298)Depreciation & amortization 9,179 1,366 420 48 11,012 Reversal of tax indemnification receivable 858 — — — 858 Adjusted EBITDA $37,466 $6,587 $4,102 $(6,128)$42,027 % Revenue 28.4% 19.1% 14.2% 21.7% (Amounts in thousands) Three months ended December 31, 2023 Contractor
SolutionsSpecialized
Reliability
SolutionsEngineered
Building
SolutionsCorporate
and OtherConsolidatedRevenue, net $115,412 $33,711 $27,861 $(2,017)$174,967 Operating Income $25,751 $3,740 $3,537 $(5,447)$27,581 % Revenue 22.3% 11.1% 12.7% 15.8% Adjusting Items: Other income (expense), net (8,433) (9) (8) 21 (8,428)Depreciation & amortization 7,178 1,477 437 42 9,134 Reversal of tax indemnification receivable 8,519 — — — 8,519 Adjusted EBITDA $33,015 $5,208 $3,966 $(5,383)$36,805 % Revenue 28.6% 15.4% 14.2% 21.0%
CSW INDUSTRIALS, INC.Reconciliation of Segment Operating Income to Segment Adjusted EBITDA(unaudited) (Amounts in thousands) Nine Months ended December 31, 2024 Contractor
SolutionsSpecialized
Reliability
SolutionsEngineered
Building
SolutionsCorporate
and OtherConsolidatedRevenue, net $451,403 $109,893 $92,387 $(5,930)$647,754 Operating Income $122,894 $18,208 $15,451 $(20,348)$136,204 Adjusting Items: Acquisition broker fee 860 — — — 860 Adjusted Operating Income $123,754 $18,208 $15,451 $(20,348)$137,064 % Revenue 27.4% 16.6% 16.7% 21.2% Adjusting Items: Other income (expense), net (335) (200) 18 (200) (716)Depreciation & amortization 25,164 4,198 1,399 135 30,896 Reversal of tax indemnification receivable 858 — — — 858 Adjusted EBITDA $149,442 $22,206 $16,868 $(20,413)$168,102 % Revenue 33.1% 20.2% 18.3% 26.0% (Amounts in thousands) Nine Months ended December 31, 2023 Contractor
SolutionsSpecialized
Reliability
SolutionsEngineered
Building
SolutionsCorporate
and OtherConsolidatedRevenue, net $395,268 $108,037 $84,660 $(5,984)$581,980 Operating Income $104,443 $15,534 $13,029 $(18,227)$114,780 % Revenue 26.4% 14.4% 15.4% 19.7% Adjusting Items: Other income (expense), net (7,686) (100) 2 1,595 (6,188)Depreciation & amortization 21,118 4,512 1,332 132 27,094 Reversal of tax indemnification receivable 8,519 — — — 8,519 Adjusted EBITDA $126,394 $19,947 $14,363 $(16,500)$144,205 % Revenue 32.0% 18.5% 17.0% 24.8%
CSW INDUSTRIALS, INC.Reconciliation of Operating Cash Flow to Free Cash Flow(Unaudited) (Amounts in thousands) Three Months Ended
December 31, Nine Months ended
December 31, 2024 2023 2024 2023 Net cash provided by operating activities $11,600 $46,978 $141,069 $141,914 Less: Capital expenditures (3,148) (3,883) (11,735) (11,668)Free cash flow $8,452 $43,095 $129,334 $130,246 Free cash flow % Adjusted EBITDA 20.1% 117.1% 76.9% 90.3%
