cswi-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________________________________

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File No. 001-37454


CSW INDUSTRIALS, INC. (Exact name of registrant as specified in its charter)


Delaware						47-2266942
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

5420 Lyndon B. Johnson Freeway, Suite 500, Dallas, Texas						75240
(Address of principal executive offices)						(Zip Code)

(214) 884-3777

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol (s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

CSWI

Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒

Accelerated filer ☐

Non-accelerated filer ☐

(Do not check if smaller reporting company)

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of October 30, 2023, there were 15,550,749 shares of the issuer’s common stock outstanding.

CSW INDUSTRIALS, INC.

FORM 10-Q

TABLE OF CONTENTS


		Page No.
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	1
	Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income for the three and six months ended September 30 , 2023 and 2022 (unaudited)	1
	Condensed Consolidated Balance Sheets as of September 30, 2023 and March 31, 2023 (unaudited)	3
	Condensed Consolidated Statements of Equity as of September 30, 2023 and 2022 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2023 and 2022 (unaudited)	6
	Notes to the Condensed Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
SIGNATURES		36

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

CSW INDUSTRIALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



	Three Months Ended September 30,				Six Months Ended September 30, 2023
(Amounts in thousands, except per share amounts)	2023		2022		2023		2022
Revenues, net	$	203,653	$	191,192	$	407,013	$	391,126
Cost of revenues	(112,694)		(110,545)		(223,887)		(224,054)
Gross profit	90,959		80,647		183,126		167,072
Selling, general and administrative expenses	(48,966)		(45,330)		(95,927)		(90,882)

Operating income	41,993		35,317		87,199		76,190
Interest expense, net	(3,306)		(3,106)		(7,315)		(4,891)
Other income, net	1,926		40		2,240		210
Income before income taxes	40,613		32,251		82,124		71,509
Provision for income taxes	(10,431)		(7,936)		(20,885)		(17,557)
Net income	30,182		24,315		61,239		53,952
Less: (Income) Loss attributable to redeemable noncontrolling interest	(127)		16		(572)		(179)

Net income attributable to CSW Industrials, Inc.	$	30,055	$	24,331	$	60,667	$	53,773


Net income per share attributable to CSW Industrials, Inc.
Basic	$	1.93	$	1.58	$	3.91	$	3.46
Diluted	$	1.93	$	1.57	$	3.90	$	3.45

Weighted average number of shares outstanding:
Basic	15,544		15,439		15,532		15,541
Diluted	15,588		15,477		15,568		15,574

See accompanying notes to condensed consolidated financial statements.

CSW INDUSTRIALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended September 30,				Six Months Ended September 30,
(Amounts in thousands)	2023		2022		2023		2022
Net income	$	30,182	$	24,315	$	61,239	$	53,952
Other comprehensive income (loss):
Foreign currency translation adjustments	(2,354)		(3,404)		(1,840)		(5,682)
Cash flow hedging activity, net of taxes of $(128), $(95), $(522) and $(162), respectively	481		356		1,962		609
Pension and other postretirement effects, net of taxes of $0, $(3), $(1) and $(3), respectively	1		10		2		13
Other comprehensive income (loss)	(1,872)		(3,038)		124		(5,060)
Comprehensive income	$	28,310	$	21,277	$	61,363	$	48,892
Less: Comprehensive (income) loss attributable to redeemable noncontrolling interest	(127)		16		(572)		(179)
Comprehensive income attributable to CSW Industrials, Inc.	$	28,183	$	21,293	$	60,791	$	48,713

See accompanying notes to condensed consolidated financial statements.

CSW INDUSTRIALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(Amounts in thousands, except for per share amounts)	September 30, 2023		March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	13,846	$	18,455
Accounts receivable, net of allowance for expected credit losses of $767 and $1,365, respectively	126,320		122,753
Inventories, net	151,203		161,569
Prepaid expenses and other current assets	27,278		20,279

Total current assets	318,647		323,056
Property, plant and equipment, net of accumulated depreciation of $98,926 and $92,703, respectively	88,655		88,235
Goodwill	242,994		242,740
Intangible assets, net	310,145		318,903
Other assets	50,865		70,519

Total assets	$	1,011,306	$	1,043,453

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	47,114	$	40,651
Accrued and other current liabilities	65,588		67,388


Total current liabilities	112,702		108,039
Long-term debt	173,000		253,000
Retirement benefits payable	1,138		1,158
Other long-term liabilities	118,503		137,117

Total liabilities	405,343		499,314
Commitments and contingencies (See Note 13)
Redeemable noncontrolling interest	19,036		18,464
Equity:
Common shares, $0.01 par value	163		163
Shares authorized – 50,000
Shares issued – 16,434 and 16,378, respectively
Preferred shares, $0.01 par value	—		—
Shares authorized (10,000) and issued (0)

SEC Form 10-Q filed by CSW Industrials Inc.