CSW Industrials Inc.
10/29/2026 | Press release | Distributed by Public on 10/29/2026 04:33
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2026 (the "Quarterly Report"), as well as our consolidated financial statements and related notes for the fiscal year ended March 31, 2026 included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026 (the "Annual Report"). This discussion and analysis contains forward-looking statements based on current expectations relating to future events and our future performance that involve risks and uncertainties. See "Cautionary Note Regarding Forward-Looking Statements" below. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those risk factors set forth in our Annual Report and in this Quarterly Report.
Overview
CSW Industrials, Inc. (the "Company," "CSW," "we," "our" or "us") is a diversified industrial growth company with a strategic focus on providing niche, value-added products in the end markets we serve. We operate in three business segments: Contractor Solutions, Specialized Reliability Solutions and Engineered Building Solutions. Our products include mechanical products for heating, ventilation, air conditioning and refrigeration ("HVAC/R"), plumbing products, grilles, registers and diffusers, building safety solutions and high-performance specialty lubricants and sealants. End markets that we serve include HVAC/R, architecturally-specified building products, plumbing, general industrial, energy, rail transportation, mining and electrical. Our manufacturing operations are concentrated in the United States ("U.S."), Vietnam and Canada, and we have distribution operations in the U.S., Australia, Canada and the United Kingdom ("U.K."). Our products are sold directly to end users or through designated channels in over 100 countries around the world, primarily including the U.S., Canada, the U.K. and Australia.
Drawing on our innovative and proven technologies, we seek to deliver solutions primarily to contractors that place a premium on superior performance and reliability. We believe our brands are well-known in the specific end markets we serve and have a reputation for high quality. We rely on both organic growth and inorganic growth through acquisitions to provide an increasingly broad portfolio of performance optimizing solutions that meet our customers' ever-changing needs. We have a successful record of making attractive and synergistic acquisitions in support of this objective, and we remain focused on identifying additional acquisition opportunities in our core end markets.
Many of our products are used to protect the capital assets of our customers that are expensive to repair or replace and are critical to their operations. We have a source of recurring revenue from the maintenance, repair and overhaul and consumable nature of many of our products. We also provide some custom engineered products that strengthen and enhance our customer relationships. The reputation of our product portfolio is built on more than 100 well-respected brand names, such as AC Guard®, Air Sentry®, Amrad®, Aspen ManufacturingTM, Balco®, Cover Guard®, Deacon®, Drain Guard®, Duckt-Strip®, Dust Free®, Falcon®, Greco®, Hydrotex®, Jet-Lube®, Kopr-Kote®, Leak Freeze®, MARS®, Metacaulk®, No. 5®, OilSafe®, PF WaterWorksTM, ProAction Fluids®, PSP ProductsTM, RectorSeal®, Safe-T-Switch®, Shoemaker Manufacturing®, Smoke Guard®, TRUaire® and Whitmore®.
The ongoing conflict in the Middle East, including active military operations in Iran that began February 28, 2026, has contributed to disruptions in global shipping lanes, particularly through the Strait of Hormuz and the broader Persian Gulf region. While we do not source materials directly from Iran or the Persian Gulf region, the conflict has contributed to elevated crude oil prices, ocean and domestic freight and certain commodity costs, and it has extended lead times from Asian suppliers as carriers reroute through alternative passages including the Cape of Good Hope. We are continuing to work with our logistics partners to mitigate these impacts and do not currently believe they will have a material adverse effect on our ability to meet customer demand, though we continue to monitor the situation closely.
Our Outlook
We expect to maintain a strong balance sheet in fiscal year 2027, which provides us with access to capital through our cash on hand, internally-generated cash flow, and availability under our Revolving Credit Facility ("RCF"). Our capital allocation strategy continues to guide our investing decisions, with a priority to direct capital to the highest risk adjusted return opportunities, within the categories of organic growth, strategic acquisitions and the return of cash to shareholders through our share repurchase and dividend programs. With the strength of our financial position, we will continue to invest in financially and strategically attractive expanded product offerings, key elements of our long-term strategy of targeting long-term profitable growth. We will continue to invest our capital in maintaining our facilities and in continuous improvement initiatives. We recognize the importance of, and remain committed to, continuing to drive organic growth, as well as investing additional
capital in opportunities with attractive risk-adjusted returns, driving increased penetration in the end markets we serve. We remain disciplined in our approach to acquisitions, particularly as it relates to our assessment of valuation, prospective synergies, diligence, cultural fit and ease of integration, especially in light of economic conditions.
RESULTS OF OPERATIONS
The following discussion provides an analysis of our consolidated results of operations and results for each of our segments.
All acquisitions are described in Note 2 to our consolidated financial statements included in this Quarterly Report. Duckt-Strip activity has been included in our results within our Contractor Solutions segment since the March 12, 2026 acquisition date. ProAction Fluids activity has been included in our results within our Specialized Reliability Solutions segment since the November 20, 2025 acquisition date. Hydrotex activity has been included in our results within our Specialized Reliability Solutions segment since the November 5, 2025 acquisition date. MARS Parts activity has been included in our results within our Contractor Solutions segment since the November 4, 2025 acquisition date. Aspen Manufacturing activity has been included in our results within our Contractor Solutions segment since the May 1, 2025 acquisition date.
Revenues, net
| Three Months Ended September 30, | ||||||||||||||
| (Amounts in thousands) | 2026 | 2025 | ||||||||||||
| Revenues, net | $ | 361,435 | $ | 276,951 | ||||||||||
| Six Months Ended September 30, | ||||||||||||||
| (Amounts in thousands) | 2026 | 2025 | ||||||||||||
| Revenues, net | $ | 712,085 | $ | 540,597 | ||||||||||
Net revenues for the three months ended September 30, 2026 increased $84.5 million, or 30.5%, as compared with the three months ended September 30, 2025. The increase was primarily due to the acquisitions of MARS Parts, Hydrotex, and ProAction Fluids ($56.3 million or 20.3%). Organic revenue increased $28.2 million, or 10.2%, driven by higher unit volumes and pricing actions. Net revenue increased in the HVAC/R, plumbing, general industrial, energy, mining, rail transportation, and electrical end markets.
Net revenues for the six months ended September 30, 2026 increased $171.5 million, or 31.7%, as compared with the six months ended September 30, 2025. The increase was primarily due to the acquisitions of MARS Parts, Aspen Manufacturing, Hydrotex, and ProAction Fluids ($129.3 million or 23.9%). Organic revenue increased $42.2 million, or 7.8%, driven by higher unit volumes and pricing actions. Net revenue increased in the HVAC/R, general industrial, plumbing, mining, energy, and rail transportation end markets and decreased in the architecturally-specified building products end market.
Gross Profit and Gross Profit Margin
| Three Months Ended September 30, | ||||||||||||||
| (Amounts in thousands, except percentages) | 2026 | 2025 | ||||||||||||
| Gross profit | $ | 151,924 | $ | 119,185 | ||||||||||
| Gross profit margin | 42.0 | % | 43.0 | % | ||||||||||
| Six Months Ended September 30, | ||||||||||||||
| (Amounts in thousands, except percentages) | 2026 | 2025 | ||||||||||||
| Gross profit | $ | 309,285 | $ | 234,627 | ||||||||||
| Gross profit margin | 43.4 | % | 43.4 | % | ||||||||||
Gross profit for the three months ended September 30, 2026 increased $32.7 million, or 27.5%, as compared with the three months ended September 30, 2025. The increase was primarily a result of increased revenue, partially offset by increases in materials and freight costs. Gross profit margin of 42.0% for the three months ended September 30, 2026 decreased as compared to 43.0% for the three months ended September 30, 2025. The decrease was driven by increases in materials and freight costs and the inclusion of the MARS Parts acquisition, partially offset by pricing actions.
Gross profit for the six months ended September 30, 2026 increased $74.7 million, or 31.8%, as compared with the six months ended September 30, 2025. The increase was primarily a result of increased revenue, partially offset by increases in materials and freight costs. Gross profit margin of 43.4% for the six months ended September 30, 2026 is comparable to the six months ended September 30, 2025.
Operating Expenses
| Three Months Ended September 30, | ||||||||||||||
| (Amounts in thousands, except percentages) | 2026 | 2025 | ||||||||||||
| Operating expenses | $ | 76,392 | $ | 62,405 | ||||||||||
| Operating expenses as a percentage of revenues, net | 21.1 | % | 22.5 | % | ||||||||||
| Six Months Ended September 30, | ||||||||||||||
| (Amounts in thousands, except percentages) | 2026 | 2025 | ||||||||||||
| Operating expenses | $ | 153,899 | $ | 122,971 | ||||||||||
| Operating expenses as a percentage of revenues, net | 21.6 | % | 22.7 | % | ||||||||||
Operating expenses for the three months ended September 30, 2026 increased $14.0 million, or 22.4%, as compared with the three months ended September 30, 2025. The increase was primarily due to added expenses related to the inclusion of MARS Parts, Hydrotex and ProAction Fluids in the current period, including amortization of intangible assets and the acquisition-related integration expenses. The decrease in operating expenses as a percentage of revenues was attributable to the revenue growing faster than the operating expenses, resulting from successful operating expense leverage from recent acquisitions and organic revenue growth.
Operating expenses for the six months ended September 30, 2026 increased $30.9 million, or 25.2%, as compared with the six months ended September 30, 2025. The increase was primarily due to added expenses related to the inclusion of MARS Parts, Aspen Manufacturing, Hydrotex and ProAction Fluids in the current period, including amortization of intangible assets and the acquisition-related integration expenses. The decrease in operating expenses as a percentage of revenues was attributable to the revenue growing faster than the operating expenses, resulting from successful operating expense leverage from recent acquisitions and organic revenue growth.
Operating Income
| Three Months Ended September 30, | ||||||||||||||
| (Amounts in thousands, except percentages) | 2026 | 2025 | ||||||||||||
| Operating income | $ | 75,532 | $ | 56,780 | ||||||||||
| Operating margin | 20.9 | % | 20.5 | % | ||||||||||
| Six Months Ended September 30, | ||||||||||||||
| (Amounts in thousands, except percentages) | 2026 | 2025 | ||||||||||||
| Operating income | $ | 155,386 | $ | 111,656 | ||||||||||
| Operating margin | 21.8 | % | 20.7 | % | ||||||||||
Operating income for the three months ended September 30, 2026 increased $18.8 million, or 33.0%, as compared with the three months ended September 30, 2025, as the result of the increase in gross profit, partially offset by the increase in operating expenses, as discussed above. Operating margin of 20.9% for the three months ended September 30, 2026 increased as compared to 20.5% for the three months ended September 30, 2025. The increase was driven by the decrease in operating expenses as a percentage of revenue, partially offset by the aforementioned decrease in gross profit margin.
Operating income for the six months ended September 30, 2026 increased $43.7 million, or 39.2%, as compared with the six months ended September 30, 2025, as the result of the increase in gross profit, partially offset by the increase in operating expenses, as discussed above. Operating margin of 21.8% for the six months ended September 30, 2026 increased as compared to 20.7% for the six months ended September 30, 2025. The increase was driven by the aforementioned decrease in operating expenses as a percentage of revenue.
Other Income and Expense
Net interest expense of $12.5 million for the three months ended September 30, 2026 increased $11.1 million as compared to net interest expense of $1.3 million for the three months ended September 30, 2025. Net interest expense of $25.2 million for the six months ended September 30, 2026 increased $22.9 million as compared to net interest expense of $2.3 million for the six months ended September 30, 2025. The increase in the three and six months ended September 30, 2026 was due to the increased average borrowing under our RCF and TLA to fund the acquisitions (discussed in Note 2) and share repurchasing activities (discussed in Note 12), as well as elevated interest rate.
Other income, net was less than $0.1 million for each of the three months ended September 30, 2026 and 2025. Other expense, net of $0.2 million for the six months ended September 30, 2026 changed $0.7 million, as compared to the other income, net of $0.5 million for the six months ended September 30, 2025. The change in the six months ended September 30, 2026 was primarily due to the foreign currency gains/losses related to transactions in currencies other than functional currencies, as well as a non-cash $0.3 million tax indemnification asset related to the Falcon acquisition that was released and recognized in other expense during the six months ended September 30, 2026.
Provision for Income Taxes and Effective Tax Rate
For the three months ended September 30, 2026, we earned $63.1 million from operations before taxes and recognized income tax expenses of $15.2 million, resulting in an effective tax rate of 24.1%. For the six months ended September 30, 2026, we earned $130.0 million from operations before taxes and recognized income tax expenses of $32.3 million, resulting in an effective tax rate of 24.9%. The provision for income taxes differed from the statutory rate for the three and six months ended September 30, 2026 primarily due to state income tax (net of federal benefit), executive compensation limitations, and Net Controlled Foreign Corporation Tested Income ("NCTI"); offset by benefits of discounts on purchased energy tax credits, foreign tax credits, foreign-derived deduction-eligible income ("FDDEI"), and excess tax deductions related to equity compensation.
For the three months ended September 30, 2025, we earned $55.5 million from operations before taxes and recognized income tax expenses of $14.7 million, resulting in an effective tax rate of 26.4%. For the six months ended September 30, 2025, we earned $109.9 million from operations before taxes and recognized income tax expenses of $27.9 million, resulting in an effective tax rate of 25.4%. The provision for income taxes differed from the statutory rate for the three and six months ended September 30, 2025 primarily due to state income tax (net of federal benefit), executive compensation limitations, and NCTI; offset by adjustment to tax payable, foreign tax credits, excess tax deductions related to equity compensation and FDDEI.
The Company expects $6.3 million of reserves for uncertain tax positions to either be settled or expire within the next 12 months as the statutes of limitations expire. We are under examination by the state of New York for the fiscal years ended March 31, 2024 through March 31, 2025. We have not been notified of any material adjustments.
Business Segments
We conduct our operations through three business segments based on how we manage the business. We evaluate segment performance and allocate resources based on each segment's operating income. The key operating results for our three segments are discussed below.
Contractor Solutions Segment Results
The Contractor Solutions segment manufactures efficiency and performance enhancing products predominantly for residential and commercial HVAC/R, plumbing and electrical applications, which are designed primarily for professional end-use customers.
| Three Months Ended September 30, | ||||||||||||||
| (Amounts in thousands) | 2026 | 2025 | ||||||||||||
| Revenues, net | $ | 285,790 | $ | 208,468 | ||||||||||
| Operating income | 69,692 | 53,375 | ||||||||||||
| Operating margin | 24.4 | % | 25.6 | % | ||||||||||
| Six Months Ended September 30, | ||||||||||||||
| (Amounts in thousands) | 2026 | 2025 | ||||||||||||
| Revenues, net | $ | 561,798 | $ | 405,208 | ||||||||||
| Operating income | 144,708 | 106,133 | ||||||||||||
| Operating margin | 25.8 | % | 26.2 | % | ||||||||||
Net revenues for the three months ended September 30, 2026 increased $77.3 million, or 37.1%, as compared with the three months ended September 30, 2025. The increase was primarily due to the MARS Parts acquisition ($50.5 million or 24.2%). Organic revenue increased $26.8 million, or 12.9%, due to higher unit volumes and pricing actions. Net revenue increased in the HVAC/R, plumbing, architecturally-specified building product, and electrical end markets.
Net revenues for the six months ended September 30, 2026 increased $156.6 million, or 38.6%, as compared with the six months ended September 30, 2025. The increase was primarily due to the acquisitions of MARS Parts and Aspen Manufacturing ($118.2 million or 29.2%). Organic revenue increased $38.4 million, or 9.5%, due to higher unit volumes and pricing actions. Net revenue increased in the HVAC/R, plumbing, and architecturally-specified building product end markets.
Operating income for the three months ended September 30, 2026 increased $16.3 million, or 30.6%, as compared with the three months ended September 30, 2025. The increase was primarily due to the increased revenue, which more than offset higher materials and freight costs and incremental spend related to the integration of completed acquisitions. Operating income margin of 24.4% for the three months ended September 30, 2026 decreased as compared to 25.6% for the three months ended September 30, 2025. This decrease was due to higher materials and freight costs partially offset by pricing actions, acquisition integration costs, and the inclusion of the MARS Parts acquisition.
Operating income for the six months ended September 30, 2026 increased $38.6 million, or 36.3%, as compared with the six months ended September 30, 2025. The increase was primarily due to the increased revenue, which more than offset higher materials and freight costs and incremental spend related to the integration of completed acquisitions. Operating income margin of 25.8% for the six months ended September 30, 2026 decreased as compared to 26.2% for the six months ended September 30, 2025. This decrease was due to higher materials and freight costs partially offset by pricing actions, as well as acquisition integration costs and the inclusion of recent acquisitions.
Specialized Reliability Solutions Segment Results
The Specialized Reliability Solutions segment provides products for increasing reliability, efficiency, performance and lifespan of industrial assets and solving equipment maintenance challenges.
| Three Months Ended September 30, | ||||||||||||||
| (Amounts in thousands) | 2026 | 2025 | ||||||||||||
| Revenues, net | $ | 49,509 | $ | 38,806 | ||||||||||
| Operating income | 8,927 | 5,093 | ||||||||||||
| Operating margin | 18.0 | % | 13.1 | % | ||||||||||
| Six Months Ended September 30, | ||||||||||||||
| (Amounts in thousands) | 2026 | 2025 | ||||||||||||
| Revenues, net | $ | 97,703 | $ | 75,613 | ||||||||||
| Operating income | 16,980 | 10,336 | ||||||||||||
| Operating margin | 17.4 | % | 13.7 | % | ||||||||||
Net revenues for the three months ended September 30, 2026 increased $10.7 million, or 27.6%, as compared to the three months ended September 30, 2025. The increase was primarily due to the acquisitions of Hydrotex and ProAction Fluids ($5.8 million or 14.9%). Organic revenue increased $4.9 million, or 12.7% due to higher unit volume and pricing actions. Net revenue increased in the general industrial, energy, mining, and rail transportation end markets.
Net revenues for the six months ended September 30, 2026 increased $22.1 million, or 29.2%, as compared to the six months ended September 30, 2025. The increase was primarily due to the acquisitions of Hydrotex and ProAction Fluids ($11.1 million or 14.7%). Organic revenue increased $11.0 million, or 14.5% due to higher unit volume and pricing actions. Net revenue increased in the general industrial, mining, energy, and rail transportation end markets.
Operating income for the three months ended September 30, 2026 increased $3.8 million or 75.3% as compared to the three months ended September 30, 2025. The increase was primarily due to the increased revenue, which more than offset higher freight, materials costs and acquisition integration expenses. Operating income margin of 18.0% for the three months ended September 30, 2026 increased as compared to 13.1% for the three months ended September 30, 2025, benefiting from improved operating leverage from the recent acquisitions and higher organic volume, pricing actions and a mix shift toward higher-margin products, partially offset by higher freight and materials costs and acquisition integration expenses.
Operating income for the six months ended September 30, 2026 increased $6.6 million or 64.3% as compared to the six months ended September 30, 2025. The increase was primarily due to the increased revenue, which more than offset higher freight and materials costs and acquisition integration expenses. Operating income margin of 17.4% for the six months ended September 30, 2026 increased as compared to 13.7% for the six months ended September 30, 2025, benefiting from improved operating leverage from the recent acquisitions and higher organic volume, pricing actions and a mix shift toward higher-margin products, partially offset by higher freight and materials costs and acquisition integration expenses.
Engineered Building Solutions Segment Results
The Engineered Building Solutions segment provides primarily code-driven, life-safety products that are engineered to provide aesthetically-pleasing solutions for the construction, refurbishment and modernization of commercial, institutional and multi-family residential buildings.
| Three Months Ended September 30, | ||||||||||||||
| (Amounts in thousands) | 2026 | 2025 | ||||||||||||
| Revenues, net | $ | 28,373 | $ | 31,914 | ||||||||||
| Operating income | 3,418 | 4,831 | ||||||||||||
| Operating margin | 12.0 | % | 15.1 | % | ||||||||||
| Six Months Ended September 30, | ||||||||||||||
| (Amounts in thousands) | 2026 | 2025 | ||||||||||||
| Revenues, net | $ | 57,311 | $ | 63,809 | ||||||||||
| Operating income | 7,992 | 8,830 | ||||||||||||
| Operating margin | 13.9 | % | 13.8 | % | ||||||||||
Net revenues for the three months ended September 30, 2026 decreased $3.5 million or 11.1% as compared to the three months ended September 30, 2025 due to lower business activity while the exit of the Greco businesses is in progress ("Greco Exit"), partially offset by pricing and slight volume growth in the remaining business.
Net revenues for the six months ended September 30, 2026 decreased $6.5 million or 10.2% as compared to the six months ended September 30, 2025 due to lower business activity during the Greco Exit, partially offset by volume growth and pricing in the remaining business.
Operating income for the three months ended September 30, 2026 decreased $1.4 million, or 29.3%, as compared with the three months ended September 30, 2025. Operating income margin of 12.0% for the three months ended September 30, 2026 decreased as compared to 15.1% for the three months ended September 30, 2025. The decreases in operating income and operating income margin are due to the aforementioned decrease in business activity during the Greco Exit.
Operating income for the six months ended September 30, 2026 decreased $0.8 million, or 9.5%, as compared with the six months ended September 30, 2025. The decrease was due to the aforementioned decrease in business activity during the Greco Exit, partially offset by the improvement in the Smoke Guard business, reflecting successful execution of materials sourcing strategies and improved quality control that eliminated certain warranty costs incurred in prior period. Operating income margin of 13.9% for the six months ended September 30, 2026 increased slightly as compared to 13.8% for the six months ended September 30, 2025 as the aforementioned Smoke Guard strategies and mix shift toward the higher-margin Smoke Guard business, mostly offset by the impact from the Greco Exit.
LIQUIDITY AND CAPITAL RESOURCES
General
Existing cash on hand, cash generated by operations and borrowings available under our RCF ("Revolver Borrowings") are our primary sources of short-term liquidity. Our ability to consistently generate strong cash flow from our operations is one of our most significant financial strengths: it enables us to invest in our people and our brands, make capital investments and strategic acquisitions, provide a cash dividend program, and from time-to-time, repurchase shares of our common stock. Additionally, we use our Revolver Borrowings to support our working capital requirements, capital expenditures and strategic acquisitions. We seek to maintain adequate liquidity to meet working capital requirements, fund capital expenditures, make scheduled interest payments on debt and meet our contingent consideration obligations. Absent a material deterioration of market conditions, we believe that cash flows from operating activities and financing activities (which would primarily consist of Revolver Borrowings), will provide adequate resources to satisfy our working capital, scheduled interest and principal payments on debt, anticipated dividend payments, periodic share repurchases, contingent consideration obligations and anticipated capital expenditure requirements for both our short-term and long-term needs.
Cash Flow Analysis
| Six Months Ended September 30, | ||||||||||||||
| (Amounts in thousands) | 2026 | 2025 | ||||||||||||
| Net cash provided by operating activities | $ | 171,049 | $ | 122,467 | ||||||||||
| Net cash used in investing activities | (9,878) | (331,439) | ||||||||||||
| Net cash (used in) provided by financing activities | (157,204) | 15,141 | ||||||||||||
Our cash balance (including cash and cash equivalents) at September 30, 2026 was $37.2 million, as compared with $33.8 million at March 31, 2026.
For the six months ended September 30, 2026, our cash provided by operating activities was $171.0 million, as compared with $122.5 million for six months ended September 30, 2025.
•Working capital provided cash for the six months ended September 30, 2026 due to higher accounts payable and other current liabilities ($43.7 million), partially offset by higher inventory ($11.0 million), higher prepaid expenses and other current assets ($7.9 million) and higher accounts receivable ($6.6 million).
•Working capital provided cash for the six months ended September 30, 2025 due to lower accounts receivable ($11.7 million) and higher accounts payable and other current liabilities ($7.3 million), partially offset by higher inventories ($10.1 million) and higher prepaid and other current assets ($5.7 million).
Cash flows used in investing activities during the six months ended September 30, 2026 were $9.9 million, as compared with $331.4 million used in investing activities for the six months ended September 30, 2025.
•Capital expenditures during the six months ended September 30, 2026 and 2025 were $9.5 million and $6.0 million, respectively. Our capital expenditures have been focused on capacity expansion (including $0.7 million and $0.6 million during the current and prior year periods for the Whitmore JV), new product introductions, continuous improvement and automation of manufacturing facilities and enterprise resource planning systems.
•During the six months ended September 30, 2026, $0.6 million was paid for a product acquisition with an additional $2.7 million in deferred consideration.
•During the six months ended September 30, 2025, we acquired Aspen Manufacturing for an aggregate purchase price of $327.6 million, including $313.5 million in cash consideration and a working capital adjustment of $14.1 million, as discussed in Note 2 to our consolidated financial statements included in this Quarterly Report.
Cash flows (used in) provided by financing activities during the six months ended September 30, 2026 and 2025 were $(157.2) million and $15.1 million, respectively.
•Net borrowings (repayments) on our RCF and TLA (as discussed in Note 8 to our consolidated financial statements included in this Quarterly Report) of $(105.0) million and $60.0 million during the six months ended September 30, 2026 and 2025, respectively.
•As discussed in Note 12 to our consolidated financial statements included in this Quarterly Report, repurchases of shares under our share repurchase program of $29.3 million and $23.0 million during the six months ended September 30, 2026 and 2025, respectively.
•In connection with the vesting of equity awards under our Long Term Incentive Plan, $10.9 million and $4.4 million were tendered by employees to satisfy minimum tax withholding requirements during the six months ended September 30, 2026 and 2025, respectively.
•Payments of $2.8 million of underwriting discounts and fees in connection with our Third Amended and Restated Credit Agreement during the six months ended September 30, 2025, as discussed in Note 8 to our consolidated financial statements included in this Quarterly Report.
•Dividend payments of $9.8 million and $9.1 million during the six months ended September 30, 2026 and 2025, respectively.
Acquisitions and Dispositions
We regularly evaluate acquisition opportunities of various sizes. The cost and terms of any financing to be raised in conjunction with any acquisition, including our ability to raise capital, is a critical consideration in any such evaluation. Note 2 to our consolidated financial statements included in this Quarterly Report contains a discussion of the recent acquisitions.
Financing
Credit Facilities
See Note 8 to our consolidated financial statements included in this Quarterly Report for a discussion of our indebtedness. We were in compliance with all covenants as of September 30, 2026. See Note 10 to our consolidated financial statements included in this Quarterly Report for a discussion of our interest rate swaps.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management's discussion and analysis of financial condition and results of operations are based on our consolidated financial statements and related footnotes contained within this Quarterly Report. Our critical accounting policies used in the preparation of our consolidated financial statements were discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report. No significant changes to these policies, as described in our Annual Report, have occurred in the six months ended September 30, 2026.
The process of preparing consolidated financial statements in conformity with U.S. generally accepted accounting principles requires the use of estimates and assumptions to determine certain of the assets, liabilities, revenues and expenses. These estimates and assumptions are based upon what we believe is the best information available at the time of the estimates or assumptions. The estimates and assumptions could change materially as conditions within and beyond our control change. Accordingly, actual results could differ materially from those estimates.
Based on an assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, we believe that our consolidated financial statements provide a meaningful and fair perspective of our consolidated financial condition and results of operations. This is not to suggest that other general risk factors, such as changes in worldwide demand, changes in materials costs, performance of acquired businesses and others, could not adversely impact our consolidated financial condition, results of operations and cash flows in future periods. See "Cautionary Note Regarding Forward-Looking Statements" below.
ACCOUNTING DEVELOPMENTS
We have presented the information about pronouncements not yet implemented in Note 1 to our consolidated financial statements included in this Quarterly Report.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements appearing in this Quarterly Report constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include expected restructuring charges and the results of the restructuring, financial projections, statements of plans and objectives for future operations, statements of future economic performance, and statements of assumptions relating thereto. In some cases, forward-looking statements can be identified by the use of terminology such as "may," "expects," "plans," "anticipates," "estimates," "believes," "potential," "projects," "forecasts," "intends," or the negative thereof or other comparable terminology. Forward-looking statements may include, but are not limited to, statements that relate to, or statements that are subject to risks, contingencies or uncertainties that relate to:
•our business strategy;
•changes in local political, economic, social and labor conditions;
•potential disruptions from wars and military conflicts, including geopolitical uncertainty due to the conflicts in the Middle East and Ukraine;
•future levels of revenues, operating margins, income from operations, net income or earnings per share;
•the ability to respond to inflationary pressure, including reductions on consumer discretionary income and our ability to pass along rising costs through increased selling prices;
•anticipated levels of demand for our products and services;
•the actual impact to supply, production levels and costs from global supply chain logistics and transportation challenges;
•future levels of research and development, capital, environmental or maintenance expenditures;
•our beliefs regarding the timing and effects on our business of health and safety, tax, environmental or other legislation, rules and regulations;
•the success or timing of completion of ongoing or anticipated capital, restructuring or maintenance projects;
•expectations regarding the acquisition or divestiture of assets and businesses;
•our ability to obtain appropriate insurance and indemnities;
•the potential effects of judicial or other proceedings, including tax audits, on our business, financial condition, results of operations and cash flows;
•the anticipated effects of actions of third parties such as competitors, or federal, foreign, state or local regulatory authorities, or plaintiffs in litigation;
•the expected impact of accounting pronouncements;
•changes in global trade policies and tariffs; and
•the other factors listed under "Risk Factors" in our Annual Report and other filings with the SEC.
Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements for a number of important factors, including those listed under "Risk Factors" in our Annual Report and in this Quarterly Report. You should not put undue reliance on any forward-looking statements in this Quarterly Report. We assume no obligation to update or revise these forward-looking statements, except as required by law.
CSW Industrials Inc. published this content on October 29, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 29, 2026 at 10:39 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]