NASDAQ:CSWI CSW Industrials Q4 2025 Earnings Report $300.91 -1.25 (-0.41%) Closing price 05/23/2025 04:00 PM EasternExtended Trading$300.70 -0.22 (-0.07%) As of 05/23/2025 04:09 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast CSW Industrials EPS ResultsActual EPS$2.24Consensus EPS $2.23Beat/MissBeat by +$0.01One Year Ago EPS$2.04CSW Industrials Revenue ResultsActual Revenue$230.55 millionExpected Revenue$232.82 millionBeat/MissMissed by -$2.27 millionYoY Revenue GrowthN/ACSW Industrials Announcement DetailsQuarterQ4 2025Date5/22/2025TimeBefore Market OpensConference Call DateThursday, May 22, 2025Conference Call Time10:00AM ETUpcoming EarningsCSW Industrials' Q1 2026 earnings is scheduled for Wednesday, July 30, 2025, with a conference call scheduled at 10:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (10-K)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by CSW Industrials Q4 2025 Earnings Call TranscriptProvided by QuartrMay 22, 2025 ShareLink copied to clipboard.PresentationSkip to Participants Operator00:00:00Greetings. Welcome to CSW Industrials Incorporated Fourth Quarter and Full Year Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Operator00:00:21It is now my pleasure to introduce Alexa Hirta, Vice President of Investor Relations and Treasurer. Thank you. You may begin. Alexa HuertaVP of Investor Relations & Treasurer at CSW Industrials00:00:30Thank you, Sherry. Good morning, everyone, and welcome to the CSW Industrials' fiscal twenty twenty five fourth quarter and full year earnings call. Joining me today on the call is Joseph Arms, Chairman, Chief Executive Officer and President of CSW Industrials and James Perry, Executive Vice President and Chief Financial Officer. We issued our earnings release, updated investor relations presentation and Form 10 ks prior to the market's opening today, all of which are available on the Investors portion of our website at www.cswindustrials.com. This call is being webcast and information on accessing the replay is included in the earnings release. Alexa HuertaVP of Investor Relations & Treasurer at CSW Industrials00:01:21During this call, we will make forward looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Actual results could materially differ because of factors discussed today in our earnings release and the comments made during this call as well as the risk factors identified in our annual report on Form 10 ks and other filings with the SEC. We do not undertake any duty to update any forward looking statements. I will now turn the call over to Joe. Joseph ArmesChairman, President & CEO at CSW Industrials00:01:57Thank you, Alexa. Good morning, everyone. It is my pleasure to report that once again, our team has delivered record results for revenue, adjusted EBITDA, adjusted earnings per diluted share and adjusted net income for the fourth quarter of fiscal year twenty twenty five. This morning, we reported fiscal fourth quarter revenue of $231,000,000 as well as fiscal fourth quarter adjusted EBITDA of $60,000,000 adjusted earnings per diluted share of $2.24 and adjusted net income of $38,000,000 I'm also proud to note that the team delivered record results for the full fiscal year 2025 for revenue, adjusted EBITDA, adjusted earnings per diluted share, adjusted net income and cash flow from operations. We reported full year revenue of $878,000,000 adjusted EBITDA of two twenty eight million dollars including margin expansion of 70 basis points to 25.9%. Joseph ArmesChairman, President & CEO at CSW Industrials00:03:11Adjusted earnings per diluted share of $8.41 adjusted net income of $137,000,000 and cash flow from operations of $168,000,000 Our resilient business segments have focused on our customers and on operational excellence. And as a result, we have outperformed the end markets we serve. James will provide further details of the performance of each of the three business segments for the last quarter of fiscal twenty twenty five. During the fiscal fourth quarter, we announced a definitive agreement to acquire Aspen Manufacturing for $313,500,000 and we were pleased to consummate this accretive and synergistic acquisition on 05/01/2025. The Aspen acquisition is the second largest acquisition our company has made and Aspen will expand our HVACR product offering with the addition of market leading evaporator coils and air handlers. Joseph ArmesChairman, President & CEO at CSW Industrials00:04:20Before I turn the call over, I'd like to thank our team for delivering solid growth for the fiscal full year 2025. Our impressive results, strong balance sheet and capital allocation discipline have continued to fuel our success. We will be celebrating our ten year anniversary as a public company later this year. And in anticipation of this milestone, we announced in late April that the company will be moving to the New York Stock Exchange on June 9. We believe this strategic move to the world's largest stock exchange will be beneficial to all shareholders and provide additional liquidity. Joseph ArmesChairman, President & CEO at CSW Industrials00:05:02And our team looks forward to joining the other outstanding industrial companies on the NYSE. I also wanted to share a few longer term metrics that demonstrate the execution and commitment of our dedicated team. Our revenue compound annual growth rate or CAGR since the spin off in October of twenty fifteen is 14.1%. This average annual growth rate for the last nine point five years has outpaced the markets we serve by a wide margin. Our adjusted EBITDA CAGR over the same period is 16.5%, which denotes that the team has delivered operating leverage on the revenue growth despite our already having industry leading margins when we went public in 2015. Joseph ArmesChairman, President & CEO at CSW Industrials00:05:54In less than ten years, we have grown our market cap over 1000% and total shareholder return is also over 1000%. While I am pleased with the results that we have delivered and the value we have created for our shareholders over this past decade, I am equally optimistic as I look forward to what the company can accomplish over the next ten years. At this time, I'll turn the call over to James for a closer look at our results. And following those comments, I'll return and conclude our prepared remarks. James PerryEVP & CFO at CSW Industrials00:06:27Thank you, Joe, and good morning, everyone. James PerryEVP & CFO at CSW Industrials00:06:30As Joe mentioned, during fiscal twenty twenty five, we delivered record revenue of $878,000,000 representing growth of 11%. Thirty eight million dollars of the growth was organic with the remaining $48,000,000 of growth coming from the acquisitions of Dust Free, PSP Products and Water Works that we completed since February 2024. Operating leverage on this revenue drove 14% growth in adjusted EBITDA along with 70 basis points of margin expansion and over 20% growth in adjusted earnings per diluted share. Our consolidated revenue during fiscal fourth quarter of twenty twenty five was a record $231,000,000 a $20,000,000 or 9% increase when compared to the prior year period. Dollars 13,500,000.0 of the revenue growth came from the aforementioned acquisitions. James PerryEVP & CFO at CSW Industrials00:07:25The remaining growth was organic, primarily due to higher volumes and pricing actions in Contractor Solutions, offset somewhat by declines in the other two segments. Consolidated gross profit in the fiscal fourth quarter was $102,000,000 representing 9% growth over the prior year period. Our gross profit margin remained relatively flat at 44.2% compared to 44.4% in the prior year period. The slight decrease from the prior year was primarily driven by decreased gross profit margins in both specialized reliability solutions and engineered building solutions, mostly offset by growth in contractor solutions. Our consolidated adjusted EBITDA during the fiscal fourth quarter increased by $4,000,000 to a fiscal fourth quarter record of $60,000,000 which was 7% growth when compared to the prior year period. James PerryEVP & CFO at CSW Industrials00:08:22Our adjusted EBITDA margin declined by 60 basis points to 25.9% compared to 26.5% in the prior year quarter. As we had additional expenses related to our recently acquired companies, including investments to support their successful integration, as well as inbound increased freight expense. Adjusted net income attributable to CSW in the quarter was a fiscal fourth quarter record of $38,000,000 with a record $2.24 of adjusted earnings per diluted share compared to $32,000,000 or $2.4 respectively in the prior year period, representing 19% growth in adjusted net income and 10% growth in adjusted EPS. The lower EPS growth as compared to net income was due to the higher share count from the successful follow on equity offering in September, in which we issued an additional 1,265,000.000 shares for $347,000,000 in proceeds net of fees. This growth came as a result of the aforementioned performance in adjusted EBITDA and lower interest expense, which turned to interest income in the fiscal second quarter after the full repayment of our revolver balance with the proceeds from our follow on equity offering. James PerryEVP & CFO at CSW Industrials00:09:39There were two non recurring adjusting items to EBITDA, net income and EPS in the fiscal fourth quarter. The $2,100,000 increase in the expected earn out consideration for the PSP Products acquisition due to revenue outperformance since the acquisition and $1,400,000 of transaction expenses incurred during the quarter for the Aspen Manufacturing acquisition. Both of these adjusted items occurred in our Contractor Solutions segment. During the fourth quarter, our Contractor Solutions segment with $166,000,000 in revenue accounted for 71% of our consolidated revenue and delivered $24,700,000 or 17.5% growth when compared to the prior year quarter. Of the revenue growth in the quarter, dollars 13,500,000.0 or 9.5% came from our recent acquisitions, while the remaining $11,200,000 or 8% was driven by organic volume growth and pricing actions. James PerryEVP & CFO at CSW Industrials00:10:40This solid organic growth is in line with our stated mid to high single digit growth target in the Contractor Solutions segment. During the quarter, we had growth in the HVACR and electrical end markets. Adjusted EBITDA for the segment was $56,000,000 or 33.7 percent of revenue compared to $47,000,000 or 33.5% of revenue in the prior year period. The slight increase in adjusted EBITDA margin came from higher gross margins due to pricing actions, which offset increased freight expense, combined with a decrease in operating expenses as a percent of revenue. Our specialized reliability solutions segment revenue decreased by 9% to $38,000,000 as compared to the prior period. James PerryEVP & CFO at CSW Industrials00:11:25Revenue increased in the general industrial end market, but declined in the energy, rail transportation, and mining end markets. The lower revenue was driven primarily by softer market demand most pronounced early in the fourth quarter, which drove a decline in unit volumes versus the prior period and also due to a stronger prior year fourth quarter due to a catch up from shipping issues at the end of the third quarter of the prior fiscal year. The segment EBITDA of $5,800,000 in the fourth quarter represented a decrease of 30% from $8,200,000 in the prior year period. The EBITDA margin contracted four fifty basis points to 15.3% in the current period, driven primarily by a decrease in gross margins due to the lower volume, more growth coming from lower margin products, and higher freight expenses related to the strategic management of international inventory ahead of tariffs. Our Engineered Building Solutions segment revenue decreased by 4% to 28,700,000 compared to $30,100,000 in the prior year period, driven simply by the timing of projects converting to revenue from backlog. James PerryEVP & CFO at CSW Industrials00:12:36I'll note that the prior year period had a large project completed that will not recur this year. Bidding and booking trends remained solid during the fiscal fourth quarter, which was one of the segment's highest booking quarters in our history. And our book to bill ratio for the trailing eight quarters remained at one to one. The backlog increased sequentially during the quarter with projects that will deliver favorable margin mix in future quarters as they convert to revenue. Segment EBITDA was 33% lower than the prior year period at $4,200,000 or a 14.5% EBITDA margin compared to $6,200,000 and 20.5% in the prior year period. James PerryEVP & CFO at CSW Industrials00:13:17The contraction in EBITDA margin in the current period was primarily due to a $1,200,000 gain in the prior year period on the sale of an operating property that did not recur, which reduced gross margin during the current reporting period as well as operating expenses as a higher percentage of revenue. Transitioning to our strong balance sheet and cash flow, we ended our fiscal fourth quarter twenty twenty five with $226,000,000 of cash and reported cash flow from operations of $27,000,000 in the quarter, up compared to twenty two million dollars in the same quarter last year driven by increased net income. For the full fiscal year 2025, the company had a record cash flow from operations of $168,000,000 or 2% growth compared to $164,000,000 in the prior fiscal year. Our free cash flow defined as cash flow from operations minus capital expenditures was $22,800,000 in the fiscal fourth quarter as compared to $17,500,000 in the same period a year ago. This resulted in free cash flow per share of $1.35 in the fiscal fourth quarter as compared to $1.12 in the same period a year ago, which was even more impressive when considering the additional shares included in this year's quarter from the follow on equity offering. James PerryEVP & CFO at CSW Industrials00:14:42Our free cash flow for the full fiscal year was $152,100,000 as compared to $147,800,000 in the prior fiscal year. That resulted in free cash flow per share of $9.32 for fiscal twenty twenty five as compared to $9.48 in the prior fiscal year. The reduction of free cash flow per share on the higher free cash flow was due to the additional shares from the follow on equity offering. As discussed last quarter, we repaid all of our borrowings under the revolver in September of twenty twenty four, utilizing the cash received from our follow on equity offering. As a result, the company was able to eliminate most of our interest expense and invest the net proceeds from the follow on equity offering in money market accounts to generate interest income. James PerryEVP & CFO at CSW Industrials00:15:33As Joe mentioned, in the fiscal fourth quarter, we announced a definitive agreement to acquire Aspen Manufacturing for $313,500,000 We completed the acquisition subsequent to year end on 05/01/2025. We used most of our cash on hand at that time and borrowed $135,000,000 from our revolving credit facility to fund the transaction. I would also like to highlight that subsequent to the end of fiscal twenty twenty five, the company renewed, extended and upsized our revolving credit facility to $700,000,000 earlier this month. The renewal of our revolver provides us with access to additional capital, allowing us to be nimble and opportunistic on growth opportunities. We are grateful to our banking partners for their support. James PerryEVP & CFO at CSW Industrials00:16:24Our effective tax rate for the fiscal fourth quarter was 24.6% on a GAAP basis and 24.7% when adjusted. As mentioned in this morning's earnings release, as we look into fiscal twenty twenty six, we anticipate delivering full year growth in revenue and adjusted EBITDA for each segment, as well as consolidated EPS growth and even stronger growth in operating cash flow than in fiscal year twenty twenty five. We expect Aspen's fiscal twenty twenty six revenue to grow in the high single to low double digits off their trailing twelve month revenue of $125,000,000 through our fiscal twenty twenty five year end. Note that Aspen's quarterly revenue sequencing is weighted more heavily to our first and second fiscal quarters due to the nature of their products. As such, we expect the contractor solutions go forward quarterly revenue seasonality will be more pronounced than we've experienced in the past. James PerryEVP & CFO at CSW Industrials00:17:27We expect Aspen's EBITDA margin to be approximately 24% for the full fiscal year 2026 as we begin our work to improve the Aspen margins over time. The Aspen margin will vary from this full year level from quarter to quarter due to the seasonality of the business. As a reminder, Aspen will only be included in our results for eleven months during fiscal year twenty twenty six and two months in our fiscal first quarter due to the May 1 acquisition date. As I previously mentioned, the company borrowed $135,000,000 from our revolving line of credit and used the remainder of our cash on hand from the follow on equity offering to fund the Aspirin acquisition on May 1. So we are no longer forecasting quarterly net interest income. James PerryEVP & CFO at CSW Industrials00:18:15Beginning in May, the company will begin incurring interest expense on our revolver borrowings. We anticipate paying off our current borrowings outstanding by the end of fiscal year twenty twenty six if the company does not have further acquisitions throughout fiscal year twenty twenty six. Note that we continue to actively seek acquisitions, but do not include that in our forecast. With that context, we currently anticipate approximately $5,300,000 in net interest expense for the full year with the second fiscal quarter being the highest level. Our amortization of intangible assets will increase significantly over the prior year due to our acquisitions, most prominently from the Aspen acquisition. James PerryEVP & CFO at CSW Industrials00:19:00We currently expect that the Aspen acquisition will add approximately $9,500,000 of amortization expense in fiscal year twenty twenty six. This is a preliminary internal estimate and will be finalized during the fiscal year. In our first quarter ten Q, we will provide the initial results of our purchase price allocation. Note that this forward looking outlook was included in the quarterly investor presentation that we posted to our website this morning. We expect Contractor Solutions' overall adjusted EBITDA margin for the full fiscal year 2026 to be in the low 30s versus the recent margins closer to the mid-30s as we layer in our acquisitions and the expected impact of tariffs. James PerryEVP & CFO at CSW Industrials00:19:47We are anticipating an overall cost of goods sold impact from increased tariffs, and we will update you each quarter as warranted on this highly fluid situation. We have taken broad based action on pricing for our Contractor Solutions products to offset the new tariffs. Our approach as always is to prioritize protecting margin dollars, and we know that this approach can result in some margin compression. And we continue to make strategic changes to our global supply chain to minimize the impact of tariffs and other potential disruptions. We also remain highly focused on cost discipline across the company, especially in the current economic environment. James PerryEVP & CFO at CSW Industrials00:20:29During fiscal year twenty twenty six, specialized reliability solutions and engineered building solutions are each expected to have higher full year EBITDA margin on higher revenues in the prior year. We expect to see EPS growth in fiscal twenty twenty six, although the company does not anticipate EPS to grow as a percentage as much as revenue and EBITDA due to the additional shares outstanding from the follow on equity offering, increased interest expense and the increased intangible amortization from recent acquisitions. Thus, we continue to focus on EBITDA as the best comparable measure of our profitability growth over time. We currently forecast our fiscal twenty twenty six tax rate to be 26%, which may vary from quarter to quarter due to specific items. With that, I'll now turn the call back to Joe for his closing remarks. Joseph ArmesChairman, President & CEO at CSW Industrials00:21:24Thank you, James. To summarize, during the fiscal fourth quarter of twenty twenty five, we posted record quarterly results for revenue, adjusted EBITDA, adjusted earnings per share and adjusted net income. Our impressive 9% plus revenue growth included both inorganic growth from our recent acquisitions and strong organic volume growth in Contractor Solutions. Looking ahead to the full fiscal year of 2026, we will continue to focus on delivering sustainable growth that exceeds the markets we serve. We will continue to identify and pursue accretive acquisitions of innovative companies and products that are synergistic to our existing portfolio. Joseph ArmesChairman, President & CEO at CSW Industrials00:22:17I'd like to take a moment to welcome the most recent group of employees to join the CSW family in connection with our acquisition of Aspen Manufacturing. Aspen Manufacturing is one of the largest independent evaporator coil and air handler manufacturers for the HVACR industry and is a recognized leader in product quality and indoor comfort. All of Aspen's products are designed, engineered and assembled in The U. S. Bringing this line of HVACR equipment and the Aspen team under the CSW umbrella will expand our current product offering and allow us to distribute these products through our existing distribution centers across The U. Joseph ArmesChairman, President & CEO at CSW Industrials00:23:09S. At CSW, we are committed to an employee centric culture where we focus on recruiting and retaining great talent, offering rewarding careers and recognizing team members who excel while providing them the opportunity to earn a safe, secure and dignified retirement. I could not be more proud to announce that CSW Industrials has recently been certified as a great place to work for the third year in a row. This recognition is a testament to our focus on core values such as accountability, citizenship, teamwork, respect, integrity, stewardship, and excellence. How we succeed matters and our success is shaped by the collaborative efforts of our team members. Joseph ArmesChairman, President & CEO at CSW Industrials00:24:03It's my pleasure to also announce that our board has recently approved a profit sharing ESOP contribution fiscal twenty twenty five equaled 6% of each U. S. Employee's salary, as well as an additional profit sharing four zero one ks contribution of 3% for fiscal twenty twenty five, which is in addition to our already healthy 6% match. As always, to close my prepared remarks, I just want to thank the dedicated team here at CSW Industrials who collectively own approximately 4% of our company through the employee stock ownership plan, as well as all of our shareholders for your continued interest in and support of CSW Industrials. So operator, we're now ready for questions. Operator00:24:55Thank Our first question is from John Tanwanteng with CJS Securities. Please proceed. Jonathan TanwantengManaging Director at CJS Securities00:25:26Thank you for taking Jonathan TanwantengManaging Director at CJS Securities00:25:27my questions and congrats on a nice quarter. I was wondering if you could go over a little more detail the impact of tariffs on your COGS, maybe you saw on a trailing basis, if any, and what your assumptions are by segment going forward with Vietnam especially in focus? James PerryEVP & CFO at CSW Industrials00:25:44Sure, John. Good morning. It's James. Thanks for being on as always. Appreciate your coverage. James PerryEVP & CFO at CSW Industrials00:25:48Tariffs is obviously very dynamic. There's not a lot of trailing impact yet, just given the lag of that and when tariffs came into play. As you may recall, in our fiscal third quarter, we brought in extra inventory as well as early in the fourth quarter to get ahead of any potential tariffs. So we've been working through that inventory the last couple of months. So there's not much trailing impact. James PerryEVP & CFO at CSW Industrials00:26:07As we go forward, as a reminder, despite the current pause on tariffs, there's still a 10% tariff everywhere and 30% plus in China. And as you know, we do have some of our product that comes out of China. We expect for fiscal twenty six for that number to be at or a little less than 10%. As I mentioned, we've been working hard to strategically move things around. The addition of Aspen, which is fully United States based helps that percentage as well. James PerryEVP & CFO at CSW Industrials00:26:34Vietnam continues to be important to us with our facility there. We have no owned facilities internationally outside of in Vietnam. Vietnam is in the 30s now as result. So we're watching the tariffs very closely. Obviously, the current pause is helpful in the near term. James PerryEVP & CFO at CSW Industrials00:26:50And as I mentioned, we've had some broad based pricing action on certain products that have been impacted and that's a product by product type conversation. So we do expect that there's going be an impact. We do expect that we'll weather that well, working closely with our customers on that. And again, as we continue to strategically work our way out of areas like China into other areas that have less impact there, I think we're going to come out of other end in really good shape. Jonathan TanwantengManaging Director at CJS Securities00:27:17Okay. Great. Thank you. And then, in regards to the M and A pipeline, you mentioned being able to pay off your debt, your revolver by the year end. You're increasing the size of your revolver. Jonathan TanwantengManaging Director at CJS Securities00:27:29Is there more in the pipeline that would utilize that capacity or is that more of just in case as you can move forward? Joseph ArmesChairman, President & CEO at CSW Industrials00:27:36Well, John, this is Joe. As you know, I mean, we have been acquisitive since the beginning. And so we will continue to do that. We take a very disciplined approach. And so we never forecast acquisitions. Joseph ArmesChairman, President & CEO at CSW Industrials00:27:51We have said, since the equity offering that we feel like we can fund the typical strategic product line extension type acquisitions that are smaller through our free cash flow that we generate through operations, the revolving line of credit is available for chunkier, sizable acquisitions like Aspen Manufacturing that we just closed and like TruAir that we did several years ago. The revolver is there so that we can be opportunistic and we think that the target list for acquisitions is very, very robust and strong and there's still a lot of consolidation and a lot of innovation that we can acquire over the next few years. I would say that there seems to be a bit of a sorting out. As we sit here today, we would likely wait for some of the uncertainty to settle down before we did anything with international manufacturing. But domestic manufacturing, like the Aspen manufacturing acquisition, would still be very, very actionable in the short term. Jonathan TanwantengManaging Director at CJS Securities00:29:04Got it. Jonathan TanwantengManaging Director at CJS Securities00:29:05Thank you. And then just one last question Do you believe that to be accretive to your margins over the longer term? What's the upside there as you bring it into your distribution and try to do your product improvements on the business? James PerryEVP & CFO at CSW Industrials00:29:17Yes, John, think given where the margins are now at 24%, I think accretion to consolidated margin is a goal of ours in the kind of near to midterm. We're a couple of points from that. Accretive to the Contractor Solutions margins in the 30s, that's a stronger bar to higher bar to get over. Given the nature of that product being more in the equipment space and the accessory space, the margins just aren't quite as opportunistic there. But we do think there's a good path to see accretion in the near term to the consolidated margin. James PerryEVP & CFO at CSW Industrials00:29:49I will also say, as I mentioned in my script, that we're really highly focused on the EBITDA from that acquisition. You're going to have intangible amortization as I detailed and it's in the investor deck online. You've got interest expense for a little while, those kind of things. But from an EBITDA accretion perspective, it's accretive day one from a dollar perspective. The margins on consolidated, we think we will get there in the near to mid term. Jonathan TanwantengManaging Director at CJS Securities00:30:14Got it. Thank you. James PerryEVP & CFO at CSW Industrials00:30:15Thanks, John. Operator00:30:18Our next question is from Susan Maklari with Goldman Sachs. Please proceed. Susan MaklariSenior Equity Research Analyst at Goldman Sachs00:30:26Thank you. Good morning, everyone. Joseph ArmesChairman, President & CEO at CSW Industrials00:30:29Good morning, Susan. Susan MaklariSenior Equity Research Analyst at Goldman Sachs00:30:30Good morning. My first question is, I just want to follow-up on the answers that you gave to the prior question with the 10% or less that will come from China in fiscal twenty six. Is that as a percent of the COGS or as a percent of the portfolio sales? How should we think about what that number is exactly referring to? James PerryEVP & CFO at CSW Industrials00:30:48Sure, Susan. Thanks for asking. This is James. That's on COGS and that is specific to Contractor Solutions. The other two segments, which last quarter were less than 30%, it will be even less now with Aspen coming in, have virtually nothing that comes from overseas, little, little bit here and there. James PerryEVP & CFO at CSW Industrials00:31:06But I'm referring to Contractor Solutions cost of goods sold for fiscal twenty twenty six. Susan MaklariSenior Equity Research Analyst at Goldman Sachs00:31:11Okay. All right. That's helpful. And then just following up on the pricing, can you give us some sense about how we should think about the magnitude and perhaps the timing of those prices that pricing action coming through and the implications that we could see to the margins as we move through fiscal twenty twenty six? James PerryEVP & CFO at CSW Industrials00:31:28Yes, we're still working through some of that. As you recall in Contractor Solutions, we had a price increase January 1 with the increased freight expenses from last year. So that's been in effect all through the fiscal fourth quarter and now into the fiscal first quarter of twenty twenty six. The price increase that I mentioned earlier, kind of broad based and it's targeted by specific products based on their country of origin, certain customers, those kind of things. That's something that will take place likely during this quarter. James PerryEVP & CFO at CSW Industrials00:31:58We worked through that with our customers. Obviously, that's very dynamic with all the changes that we see. So in terms of margin impact, you're starting to see the tariff cost come through, but we think we're matching that pretty well with pricing as we need to as we go through this quarter and through the fiscal year. Susan MaklariSenior Equity Research Analyst at Goldman Sachs00:32:15Okay. That's helpful. And then one last question. As you think about the setup into the busy spring and summer season, how are you thinking about the inventory on the ground? Are you seeing that your customers and the contractors have started to kind of focus perhaps more on some of these products as they've moved past the changes in the regulations on the refrigeration side? Susan MaklariSenior Equity Research Analyst at Goldman Sachs00:32:38Did you see any pull forward or actions in response to the tariffs have been announced by your customers or in turn in the field? James PerryEVP & CFO at CSW Industrials00:32:47I don't think we've seen anything terribly unusual. We had a nice fiscal fourth quarter with 8% organic growth in Contractor Solutions. We were really happy with the performance of that team on the ground. It's been a little later hot season. If you look at cooling days across the country so far, I think people have taken a bit of a wait and see approach at the very beginning of the quarter. James PerryEVP & CFO at CSW Industrials00:33:09But overall, things feel relatively normal. I think what you saw the pull forward on the equipment from the OEMs was probably more pronounced with the refrigeration change to be sure they had the new equipment as well as the old equipment. As we've said all along, that just hasn't affected us a whole lot. I think our normal seasonality and pattern of purchasing from our customers for the parts and accessories, and now with Aspen, the evaporator coils, which are more of a replacement part, has been pretty normal. Susan MaklariSenior Equity Research Analyst at Goldman Sachs00:33:38Okay. Alright. Thanks for all the color, and good luck. James PerryEVP & CFO at CSW Industrials00:33:41Thanks, Susan. Operator00:33:44Our next question is from Sam Reid with Wells Fargo. Please proceed. Sam ReidAnalyst at Wells Fargo00:33:50Awesome. Thanks so much. Really appreciate all the context on Aspen, the detail you gave on the margin profile. Wanted to drill down a little bit on the swings in margins inter quarter just for modeling purposes. Sounds like overall margins running at around 24%. Sam ReidAnalyst at Wells Fargo00:34:09But maybe just give us some bands around that 24% just so we have some guardrails for modeling. James PerryEVP & CFO at CSW Industrials00:34:16Yes, Sam, this is James. That's hard. I think we'll be able to give you more clarity as we go through this first couple of quarters of owning Aspen. Obviously, we're looking to make improvements where we can. It's several hundred basis points either side of that 24%, I can safely say that. James PerryEVP & CFO at CSW Industrials00:34:31How many hundreds of basis of points it is, I think we're going to we'll learn as we get through this first year because obviously, we'll get them into our accounting system and our operations and those kind of things. So I think it's early to get beyond that. We wanted to give you what we could and at least give you a sense of that 24%, give you some sense of revenue. But being able to get detailed on the swings quarter to quarter is a little premature for us. Sam ReidAnalyst at Wells Fargo00:34:55No, that's fair. And then just another quick one on Aspen. Just historically, has Aspen taken pricing kind of in line with the industry? Has taken pricing ahead of the industry? And just maybe any context on price gaps versus some of the competitors in the air handler evaporator coil space? James PerryEVP & CFO at CSW Industrials00:35:16Yeah, I think Aspen has done a good job obviously as they become part of our environment now May 1 and we're working with them on that. Couldn't really do anything before that and working with them of course, but Aspen has done a good job of that. And I think that you'll see them react like the competitors do, them react as they need to. But again, Aspen doesn't have the tariff impact necessarily given that it's U. S. James PerryEVP & CFO at CSW Industrials00:35:37Based. So as we compete with evaporator coils and air handlers that have either components or the full system coming in from overseas, you have an opportunity there. But in in general, asthma is doing a good job with pricing, and they'll they'll fall under the same discipline that we do from a cost perspective and a pricing perspective with the rest of contractor solutions. Sam ReidAnalyst at Wells Fargo00:35:58No, that's helpful. Then maybe if I could just squeeze one more in here. Tariff pricing, you sell into multiple channels. You sell into distributors. You sell into retailers. Sam ReidAnalyst at Wells Fargo00:36:09Talk to kind of how those pricing discussions have worked by channel. And then are you finding it easier to push pricing through on the distribution side versus say some of the home centers? James PerryEVP & CFO at CSW Industrials00:36:21Yeah. I don't think we bifurcate quite that much. Obviously, each customer is a little bit different. You know, we've always said where we are in the supply chain is important. So our ability to to to push pricing and that working its way through the system, we feel comfortable with. James PerryEVP & CFO at CSW Industrials00:36:33But, you know, I think it's it's it's early and I don't think we get so precise to bifurcate, you know, retail versus distribution. We are heavily weighted towards distribution. Retail plays a role in some of the products, of course, but our ability to look at pricing and have good relationships and always think about the long term with distributors is very important to us. As I mentioned, we're focused on the dollars, not the margin as much. So you may see a little bit of compression. James PerryEVP & CFO at CSW Industrials00:37:02We saw that saying you weren't with us at the time, but we saw that during COVID and we recovered that over time as some of those costs came back down. But again, we continue to focus on the distribution customers where we have relationships with retailers. We're having good discussions there as well. Sam ReidAnalyst at Wells Fargo00:37:17Awesome. Thanks so much. I'll pass it on. James PerryEVP & CFO at CSW Industrials00:37:20Thanks, Sam. Operator00:37:22Our next question is from Jamie Cook with Truist Securities. Please proceed. Jamie CookManaging Director - Equity Research at Truist Securities00:37:28Hi, good morning. I guess two questions. One, just on we're in May and your quarter ended March. Just wondering if there was any change in demand as we entered into April in May across the portfolio? And then my second question on Contractor Solutions, it sounds like organic growth is still expected to be healthy in 2026. Jamie CookManaging Director - Equity Research at Truist Securities00:37:50Obviously, you're putting through price increases because of tariffs. Do you assume volumes are still healthy or do you assume to what degree does higher pricing sort of have a negative impact on volumes? And then my last actually, why don't you my last question is sorry, just on Engineered Building Solutions. Organic growth was obviously negative, but you posted a strong book to bill and your bookings were up 18%. So just wondering when we should see that translate into positive organic growth for EDS? Jamie CookManaging Director - Equity Research at Truist Securities00:38:18Thank you. James PerryEVP & CFO at CSW Industrials00:38:19Yes, Jamie, thanks. And if I miss some of that, circle back, please. I'll start at the end. Engineered Building Solutions, again, we want to highlight historically strong booking quarter for us. And given things like the ABI Index and those kind of things, we're really proud of the team. James PerryEVP & CFO at CSW Industrials00:38:34We're focused on the direct sales of those smoke curtains. We're focused on the right projects that are still getting built and getting permitted. One thing that our leadership team has told us they're seeing a higher number of rebiddings, which means projects are getting very close to getting done instead of just kind of that initial bid they throw out, but don't turn into a booking. So we had a really nice fourth quarter across the board. They're really bucking some of the industry trends based on the team's hard work there and the commercial sales efforts. James PerryEVP & CFO at CSW Industrials00:39:02And we think we're going to have a nice booking year in fiscal twenty twenty six as well. In terms of when that turns into revenue, obviously, some of it's rather near term, things like smoke curtains can be near term depending on when bid and booked. Some of those are eighteen to twenty four months out, but we do expect good top line growth as well as EBITDA and margin growth at EBS. Within Specialized Reliability Solutions, going back to your demand question again, we had a soft fourth quarter. January, February were soft. James PerryEVP & CFO at CSW Industrials00:39:31As we exited March, April and now into May, we've seen things pick up some. You still have a little bit of softness in the energy markets, for example, but the team is doing a good job finding opportunities. So I think that they're that they're back to a nice order booking level and a nice sales level. And again, we expect revenue and EBITDA with margin growth in that segment as well. In contractor solutions, as I mentioned, 8% organic growth in the fiscal fourth quarter. James PerryEVP & CFO at CSW Industrials00:39:59We do expect kind of single or mid to high single digit growth as we go mid and long term in that business. That's going to vary a little bit quarter to quarter. We feel good about it. As I mentioned to one of the earlier questions, Jamie, you know, it's been a slow, hot season so far, but the the group is still doing a great job of getting our product in customers' hands so they have what they need as soon as it heats up. We do a great job of getting things out very near term. James PerryEVP & CFO at CSW Industrials00:40:26Obviously, fact that some of it comes from overseas, have to plan accordingly. So we strategically place the right inventory. So we feel good about the organic growth prospects there as well. And I'll mention, on top of introducing new products to the acquisitions we have, product innovation with those acquisitions, and we will always include as part of our organic growth expectations, market share growth. The team is highly focused on continuing to offer more and more of the contractor solutions products to our customers. James PerryEVP & CFO at CSW Industrials00:40:55And the more products we can offer our distribution customers, the more they want to do business with us. We make it easy to do business with technology, with shipments, with invoicing, one point of contact, so we're picking up share as we continue to add products. Jamie CookManaging Director - Equity Research at Truist Securities00:41:11Thank you. James PerryEVP & CFO at CSW Industrials00:41:12Hopefully, I covered it all, Jamie. Jamie CookManaging Director - Equity Research at Truist Securities00:41:15Yep. You did. Thank you. Operator00:41:18Our next question is from Andrew Kaplowitz with Citigroup. Please proceed. Natalia BakEquity Research Senior Associate at Citigroup00:41:32Hi. Good morning. This is Natalia Bock on behalf of, Andy Kaplowitz. James PerryEVP & CFO at CSW Industrials00:41:36Hi, Natalia. Operator00:41:37Hi, Natalia. Natalia BakEquity Research Senior Associate at Citigroup00:41:39First question I wanna ask, just in engineering or engineered building solutions. Last quarter, you reiterated a 20% EBITDA margin target in the intermediate term. So as backlog quality improves, what's the timeline to approach that goal? Like, there any key hurdles like cost, scale or pricing you need to overcome to get there? James PerryEVP & CFO at CSW Industrials00:41:59Yes, Natalia, great question. We still target that as the midterm hurdle, whether we're there each and every quarter that will bounce around as it has. The only thing I would say that's a little in the face of that is there's a minimal tariff impact there as they do import some products, motors, for example, those kind of things. We've seen a little cost and it's a little harder to get pricing through that business because you bid projects. So we're working on that. James PerryEVP & CFO at CSW Industrials00:42:21Obviously, a little tariff relief is helpful. So we're going to bring in all the products we can at a little bit lower tariff than we thought we might have. But 20% is still the intermediate term hurdle. Are we there for the full year fiscal twenty six? Probably a little early to say that necessarily, but we're approaching it here as we go through quarter to quarter, yes. Natalia BakEquity Research Senior Associate at Citigroup00:42:39Helpful. And then just in SRS, like margins compressed this quarter, but what specific factors contributed to the poor performance? But more importantly, what strategies are in place to address these challenges? Like I saw in the presentation, there's a mention of new product introductions and new deals in process. So maybe if you could expand on those points. James PerryEVP & CFO at CSW Industrials00:42:57Yeah. Sure, Natalia. The biggest factor for specialized reliability solutions as we've talked about is volume. And it was a soft January and February. Certainly, compared to the prior year, we had some catch up last year from some shipments we missed. James PerryEVP & CFO at CSW Industrials00:43:13Volume matters in that business. And the volume was soft in January and February, and that's just going to hit margins. Your absorptions aren't strong with your overhead. It's a pretty high fixed cost base there. Also, as we went through the mix in the quarter, we had a few more products that sold that were just lower margin products. James PerryEVP & CFO at CSW Industrials00:43:28That's going to vary quarter to quarter. So nothing is wrong with that business. Nothing intuitively tells us that that's the new hurdle. We've talked about that being a 20% margin business as well. They've hit it several times. James PerryEVP & CFO at CSW Industrials00:43:39So I think more than anything, it's making sure we have the volume. One thing that's a little under the radar, we've mentioned just in passing to folks, we relocated a facility from Pennsylvania down to our main facility here Texas. And that's our highest margin group of products. And so, a, we eliminate a little bit of cost by moving that down here. But secondly, we've got more eyes on those products now. James PerryEVP & CFO at CSW Industrials00:44:01We're doing better with product development there, having it right here in the same lab, in the same facility. And so we're doing things like that structurally that will continue to push top line and bottom line growth and help those margins. Natalia BakEquity Research Senior Associate at Citigroup00:44:14Got it. Helpful. That's all my questions. Congrats on the quarter. Joseph ArmesChairman, President & CEO at CSW Industrials00:44:18Thanks, Natalia. Operator00:44:21There are no further questions at this time. I would like to turn the conference back over to Joe Arms for closing remarks. Joseph ArmesChairman, President & CEO at CSW Industrials00:44:28Thank you. And we just want to thank everyone for joining us for this fourth quarter and full year conference call. Appreciate your support and look forward to the next time we'll be in contact. Thank you. Operator00:44:41Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.Read moreParticipantsExecutivesAlexa HuertaVP of Investor Relations & TreasurerJoseph ArmesChairman, President & CEOJames PerryEVP & CFOAnalystsJonathan TanwantengManaging Director at CJS SecuritiesSusan MaklariSenior Equity Research Analyst at Goldman SachsSam ReidAnalyst at Wells FargoJamie CookManaging Director - Equity Research at Truist SecuritiesNatalia BakEquity Research Senior Associate at CitigroupPowered by Key Takeaways Record Q4 and FY25 results with Q4 revenue of $231 M and full-year revenue of $878 M, adjusted EBITDA margins up 70 bps to 25.9%, and record operating cash flow of $168 M. Adjusted EPS was $2.24 in Q4 and $8.41 for FY25. Acquired Aspen Manufacturing for $313.5 M on May 1, expanding our HVACR portfolio with evaporator coils and air handlers and integrating distribution through existing U.S. centers. Guidance for FY26 calls for growth in revenue, adjusted EBITDA, EPS, and operating cash flow, while incorporating higher interest expense, increased amortization, and anticipated 10% tariff headwinds. Expect ~10% of Contractor Solutions’ COGS subject to tariffs, driving targeted price increases and supply-chain shifts that may result in some margin compression. Specialized Reliability Solutions saw a 9% revenue decline and 450 bps EBITDA margin contraction in Q4 on softer volumes, while Engineered Building Solutions revenue fell 4% with margins pressured by the absence of a prior-year nonrecurring gain. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallCSW Industrials Q4 202500:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipants Earnings DocumentsSlide DeckPress Release(8-K)Annual report(10-K) CSW Industrials Earnings HeadlinesCSW Industrials, Inc. (NASDAQ:CSWI) Q4 2025 Earnings Call TranscriptMay 23 at 11:26 AM | msn.comCSWI Reports Record Fiscal Q4 Earnings GrowthMay 22 at 1:29 PM | msn.comVladimir Lenin was right…The Magnificent 7 could be in for a world of pain… And the insiders know it. It’s why Jeff Bezos just sold $3 billion of Amazon… it’s why Nvidia’s CEO just sold $713 million... and it’s why Zuckerberg just sold $1.3 billion in Meta stock. The financial establishment doesn’t want you to know about this… but a controversial new documentary just pulled back the curtain and exposed what’s really going on. It’s called The Final Frontier.May 24, 2025 | Porter & Company (Ad)CSW Industrials, Inc. (CSWI) Q4 2025 Earnings Call TranscriptMay 22 at 1:15 PM | seekingalpha.comCSW Industrials, Inc. 2025 Q4 - Results - Earnings Call PresentationMay 22 at 12:45 PM | seekingalpha.comCSW Industrials reports in-line Q4 earnings, revenue missesMay 22 at 8:28 AM | ca.investing.comSee More CSW Industrials Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like CSW Industrials? Sign up for Earnings360's daily newsletter to receive timely earnings updates on CSW Industrials and other key companies, straight to your email. Email Address About CSW IndustrialsCSW Industrials (NASDAQ:CSWI) operates as a diversified industrial company in the United States and internationally. It operates through three segments: Contractor Solutions, Engineered Building Solutions, and Specialized Reliability Solutions. The Contractor Solutions segment provides condensate pads, pans, pumps, switches, and traps; cements, diffusers, grilles, registers, solvents, thread sealants, and vents; line set covers; refrigerant caps; wire pulling head tools; electrical protection, chemical maintenance, and installation supplies for HVAC; ductless mini-split systems installation support tools and accessories; and drain waste and vent system products for use in HVAC/R, plumbing, general industrial, architecturally specified building products. The Engineered Building Solutions segment offers architectural railings and associated services; fire and smoke protection solutions; and pre-engineered and custom architectural building components for use in architecturally specified building products. The Specialized Reliability Solutions segment provides compounds, lubricants, lubricant management products, and sealants; desiccant breather filtration products; and contamination control, industrial maintenance and repair, rail friction modifiers, sealants, and operations solutions for use in energy, general industrial, mining, and rail transportation. The company was incorporated in 2014 and is headquartered in Dallas, Texas.View CSW Industrials ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Booz Allen Hamilton Earnings: 3 Bullish Signals for BAH StockAdvance Auto Parts Jumps on Surprise Earnings BeatAlibaba's Earnings Just Changed Everything for the StockCisco Stock Eyes New Highs in 2025 on AI, Earnings, UpgradesSymbotic Gets Big Earnings Lift: Is the Stock Investable Again?D-Wave Pushes Back on Short Seller Case With Strong EarningsAppLovin Surges on Earnings: What's Next for This Tech Standout? Upcoming Earnings PDD (5/27/2025)AutoZone (5/27/2025)Bank of Nova Scotia (5/27/2025)NVIDIA (5/28/2025)Synopsys (5/28/2025)Bank of Montreal (5/28/2025)Salesforce (5/28/2025)Haleon (5/28/2025)Costco Wholesale (5/29/2025)Marvell Technology (5/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
PresentationSkip to Participants Operator00:00:00Greetings. Welcome to CSW Industrials Incorporated Fourth Quarter and Full Year Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Operator00:00:21It is now my pleasure to introduce Alexa Hirta, Vice President of Investor Relations and Treasurer. Thank you. You may begin. Alexa HuertaVP of Investor Relations & Treasurer at CSW Industrials00:00:30Thank you, Sherry. Good morning, everyone, and welcome to the CSW Industrials' fiscal twenty twenty five fourth quarter and full year earnings call. Joining me today on the call is Joseph Arms, Chairman, Chief Executive Officer and President of CSW Industrials and James Perry, Executive Vice President and Chief Financial Officer. We issued our earnings release, updated investor relations presentation and Form 10 ks prior to the market's opening today, all of which are available on the Investors portion of our website at www.cswindustrials.com. This call is being webcast and information on accessing the replay is included in the earnings release. Alexa HuertaVP of Investor Relations & Treasurer at CSW Industrials00:01:21During this call, we will make forward looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Actual results could materially differ because of factors discussed today in our earnings release and the comments made during this call as well as the risk factors identified in our annual report on Form 10 ks and other filings with the SEC. We do not undertake any duty to update any forward looking statements. I will now turn the call over to Joe. Joseph ArmesChairman, President & CEO at CSW Industrials00:01:57Thank you, Alexa. Good morning, everyone. It is my pleasure to report that once again, our team has delivered record results for revenue, adjusted EBITDA, adjusted earnings per diluted share and adjusted net income for the fourth quarter of fiscal year twenty twenty five. This morning, we reported fiscal fourth quarter revenue of $231,000,000 as well as fiscal fourth quarter adjusted EBITDA of $60,000,000 adjusted earnings per diluted share of $2.24 and adjusted net income of $38,000,000 I'm also proud to note that the team delivered record results for the full fiscal year 2025 for revenue, adjusted EBITDA, adjusted earnings per diluted share, adjusted net income and cash flow from operations. We reported full year revenue of $878,000,000 adjusted EBITDA of two twenty eight million dollars including margin expansion of 70 basis points to 25.9%. Joseph ArmesChairman, President & CEO at CSW Industrials00:03:11Adjusted earnings per diluted share of $8.41 adjusted net income of $137,000,000 and cash flow from operations of $168,000,000 Our resilient business segments have focused on our customers and on operational excellence. And as a result, we have outperformed the end markets we serve. James will provide further details of the performance of each of the three business segments for the last quarter of fiscal twenty twenty five. During the fiscal fourth quarter, we announced a definitive agreement to acquire Aspen Manufacturing for $313,500,000 and we were pleased to consummate this accretive and synergistic acquisition on 05/01/2025. The Aspen acquisition is the second largest acquisition our company has made and Aspen will expand our HVACR product offering with the addition of market leading evaporator coils and air handlers. Joseph ArmesChairman, President & CEO at CSW Industrials00:04:20Before I turn the call over, I'd like to thank our team for delivering solid growth for the fiscal full year 2025. Our impressive results, strong balance sheet and capital allocation discipline have continued to fuel our success. We will be celebrating our ten year anniversary as a public company later this year. And in anticipation of this milestone, we announced in late April that the company will be moving to the New York Stock Exchange on June 9. We believe this strategic move to the world's largest stock exchange will be beneficial to all shareholders and provide additional liquidity. Joseph ArmesChairman, President & CEO at CSW Industrials00:05:02And our team looks forward to joining the other outstanding industrial companies on the NYSE. I also wanted to share a few longer term metrics that demonstrate the execution and commitment of our dedicated team. Our revenue compound annual growth rate or CAGR since the spin off in October of twenty fifteen is 14.1%. This average annual growth rate for the last nine point five years has outpaced the markets we serve by a wide margin. Our adjusted EBITDA CAGR over the same period is 16.5%, which denotes that the team has delivered operating leverage on the revenue growth despite our already having industry leading margins when we went public in 2015. Joseph ArmesChairman, President & CEO at CSW Industrials00:05:54In less than ten years, we have grown our market cap over 1000% and total shareholder return is also over 1000%. While I am pleased with the results that we have delivered and the value we have created for our shareholders over this past decade, I am equally optimistic as I look forward to what the company can accomplish over the next ten years. At this time, I'll turn the call over to James for a closer look at our results. And following those comments, I'll return and conclude our prepared remarks. James PerryEVP & CFO at CSW Industrials00:06:27Thank you, Joe, and good morning, everyone. James PerryEVP & CFO at CSW Industrials00:06:30As Joe mentioned, during fiscal twenty twenty five, we delivered record revenue of $878,000,000 representing growth of 11%. Thirty eight million dollars of the growth was organic with the remaining $48,000,000 of growth coming from the acquisitions of Dust Free, PSP Products and Water Works that we completed since February 2024. Operating leverage on this revenue drove 14% growth in adjusted EBITDA along with 70 basis points of margin expansion and over 20% growth in adjusted earnings per diluted share. Our consolidated revenue during fiscal fourth quarter of twenty twenty five was a record $231,000,000 a $20,000,000 or 9% increase when compared to the prior year period. Dollars 13,500,000.0 of the revenue growth came from the aforementioned acquisitions. James PerryEVP & CFO at CSW Industrials00:07:25The remaining growth was organic, primarily due to higher volumes and pricing actions in Contractor Solutions, offset somewhat by declines in the other two segments. Consolidated gross profit in the fiscal fourth quarter was $102,000,000 representing 9% growth over the prior year period. Our gross profit margin remained relatively flat at 44.2% compared to 44.4% in the prior year period. The slight decrease from the prior year was primarily driven by decreased gross profit margins in both specialized reliability solutions and engineered building solutions, mostly offset by growth in contractor solutions. Our consolidated adjusted EBITDA during the fiscal fourth quarter increased by $4,000,000 to a fiscal fourth quarter record of $60,000,000 which was 7% growth when compared to the prior year period. James PerryEVP & CFO at CSW Industrials00:08:22Our adjusted EBITDA margin declined by 60 basis points to 25.9% compared to 26.5% in the prior year quarter. As we had additional expenses related to our recently acquired companies, including investments to support their successful integration, as well as inbound increased freight expense. Adjusted net income attributable to CSW in the quarter was a fiscal fourth quarter record of $38,000,000 with a record $2.24 of adjusted earnings per diluted share compared to $32,000,000 or $2.4 respectively in the prior year period, representing 19% growth in adjusted net income and 10% growth in adjusted EPS. The lower EPS growth as compared to net income was due to the higher share count from the successful follow on equity offering in September, in which we issued an additional 1,265,000.000 shares for $347,000,000 in proceeds net of fees. This growth came as a result of the aforementioned performance in adjusted EBITDA and lower interest expense, which turned to interest income in the fiscal second quarter after the full repayment of our revolver balance with the proceeds from our follow on equity offering. James PerryEVP & CFO at CSW Industrials00:09:39There were two non recurring adjusting items to EBITDA, net income and EPS in the fiscal fourth quarter. The $2,100,000 increase in the expected earn out consideration for the PSP Products acquisition due to revenue outperformance since the acquisition and $1,400,000 of transaction expenses incurred during the quarter for the Aspen Manufacturing acquisition. Both of these adjusted items occurred in our Contractor Solutions segment. During the fourth quarter, our Contractor Solutions segment with $166,000,000 in revenue accounted for 71% of our consolidated revenue and delivered $24,700,000 or 17.5% growth when compared to the prior year quarter. Of the revenue growth in the quarter, dollars 13,500,000.0 or 9.5% came from our recent acquisitions, while the remaining $11,200,000 or 8% was driven by organic volume growth and pricing actions. James PerryEVP & CFO at CSW Industrials00:10:40This solid organic growth is in line with our stated mid to high single digit growth target in the Contractor Solutions segment. During the quarter, we had growth in the HVACR and electrical end markets. Adjusted EBITDA for the segment was $56,000,000 or 33.7 percent of revenue compared to $47,000,000 or 33.5% of revenue in the prior year period. The slight increase in adjusted EBITDA margin came from higher gross margins due to pricing actions, which offset increased freight expense, combined with a decrease in operating expenses as a percent of revenue. Our specialized reliability solutions segment revenue decreased by 9% to $38,000,000 as compared to the prior period. James PerryEVP & CFO at CSW Industrials00:11:25Revenue increased in the general industrial end market, but declined in the energy, rail transportation, and mining end markets. The lower revenue was driven primarily by softer market demand most pronounced early in the fourth quarter, which drove a decline in unit volumes versus the prior period and also due to a stronger prior year fourth quarter due to a catch up from shipping issues at the end of the third quarter of the prior fiscal year. The segment EBITDA of $5,800,000 in the fourth quarter represented a decrease of 30% from $8,200,000 in the prior year period. The EBITDA margin contracted four fifty basis points to 15.3% in the current period, driven primarily by a decrease in gross margins due to the lower volume, more growth coming from lower margin products, and higher freight expenses related to the strategic management of international inventory ahead of tariffs. Our Engineered Building Solutions segment revenue decreased by 4% to 28,700,000 compared to $30,100,000 in the prior year period, driven simply by the timing of projects converting to revenue from backlog. James PerryEVP & CFO at CSW Industrials00:12:36I'll note that the prior year period had a large project completed that will not recur this year. Bidding and booking trends remained solid during the fiscal fourth quarter, which was one of the segment's highest booking quarters in our history. And our book to bill ratio for the trailing eight quarters remained at one to one. The backlog increased sequentially during the quarter with projects that will deliver favorable margin mix in future quarters as they convert to revenue. Segment EBITDA was 33% lower than the prior year period at $4,200,000 or a 14.5% EBITDA margin compared to $6,200,000 and 20.5% in the prior year period. James PerryEVP & CFO at CSW Industrials00:13:17The contraction in EBITDA margin in the current period was primarily due to a $1,200,000 gain in the prior year period on the sale of an operating property that did not recur, which reduced gross margin during the current reporting period as well as operating expenses as a higher percentage of revenue. Transitioning to our strong balance sheet and cash flow, we ended our fiscal fourth quarter twenty twenty five with $226,000,000 of cash and reported cash flow from operations of $27,000,000 in the quarter, up compared to twenty two million dollars in the same quarter last year driven by increased net income. For the full fiscal year 2025, the company had a record cash flow from operations of $168,000,000 or 2% growth compared to $164,000,000 in the prior fiscal year. Our free cash flow defined as cash flow from operations minus capital expenditures was $22,800,000 in the fiscal fourth quarter as compared to $17,500,000 in the same period a year ago. This resulted in free cash flow per share of $1.35 in the fiscal fourth quarter as compared to $1.12 in the same period a year ago, which was even more impressive when considering the additional shares included in this year's quarter from the follow on equity offering. James PerryEVP & CFO at CSW Industrials00:14:42Our free cash flow for the full fiscal year was $152,100,000 as compared to $147,800,000 in the prior fiscal year. That resulted in free cash flow per share of $9.32 for fiscal twenty twenty five as compared to $9.48 in the prior fiscal year. The reduction of free cash flow per share on the higher free cash flow was due to the additional shares from the follow on equity offering. As discussed last quarter, we repaid all of our borrowings under the revolver in September of twenty twenty four, utilizing the cash received from our follow on equity offering. As a result, the company was able to eliminate most of our interest expense and invest the net proceeds from the follow on equity offering in money market accounts to generate interest income. James PerryEVP & CFO at CSW Industrials00:15:33As Joe mentioned, in the fiscal fourth quarter, we announced a definitive agreement to acquire Aspen Manufacturing for $313,500,000 We completed the acquisition subsequent to year end on 05/01/2025. We used most of our cash on hand at that time and borrowed $135,000,000 from our revolving credit facility to fund the transaction. I would also like to highlight that subsequent to the end of fiscal twenty twenty five, the company renewed, extended and upsized our revolving credit facility to $700,000,000 earlier this month. The renewal of our revolver provides us with access to additional capital, allowing us to be nimble and opportunistic on growth opportunities. We are grateful to our banking partners for their support. James PerryEVP & CFO at CSW Industrials00:16:24Our effective tax rate for the fiscal fourth quarter was 24.6% on a GAAP basis and 24.7% when adjusted. As mentioned in this morning's earnings release, as we look into fiscal twenty twenty six, we anticipate delivering full year growth in revenue and adjusted EBITDA for each segment, as well as consolidated EPS growth and even stronger growth in operating cash flow than in fiscal year twenty twenty five. We expect Aspen's fiscal twenty twenty six revenue to grow in the high single to low double digits off their trailing twelve month revenue of $125,000,000 through our fiscal twenty twenty five year end. Note that Aspen's quarterly revenue sequencing is weighted more heavily to our first and second fiscal quarters due to the nature of their products. As such, we expect the contractor solutions go forward quarterly revenue seasonality will be more pronounced than we've experienced in the past. James PerryEVP & CFO at CSW Industrials00:17:27We expect Aspen's EBITDA margin to be approximately 24% for the full fiscal year 2026 as we begin our work to improve the Aspen margins over time. The Aspen margin will vary from this full year level from quarter to quarter due to the seasonality of the business. As a reminder, Aspen will only be included in our results for eleven months during fiscal year twenty twenty six and two months in our fiscal first quarter due to the May 1 acquisition date. As I previously mentioned, the company borrowed $135,000,000 from our revolving line of credit and used the remainder of our cash on hand from the follow on equity offering to fund the Aspirin acquisition on May 1. So we are no longer forecasting quarterly net interest income. James PerryEVP & CFO at CSW Industrials00:18:15Beginning in May, the company will begin incurring interest expense on our revolver borrowings. We anticipate paying off our current borrowings outstanding by the end of fiscal year twenty twenty six if the company does not have further acquisitions throughout fiscal year twenty twenty six. Note that we continue to actively seek acquisitions, but do not include that in our forecast. With that context, we currently anticipate approximately $5,300,000 in net interest expense for the full year with the second fiscal quarter being the highest level. Our amortization of intangible assets will increase significantly over the prior year due to our acquisitions, most prominently from the Aspen acquisition. James PerryEVP & CFO at CSW Industrials00:19:00We currently expect that the Aspen acquisition will add approximately $9,500,000 of amortization expense in fiscal year twenty twenty six. This is a preliminary internal estimate and will be finalized during the fiscal year. In our first quarter ten Q, we will provide the initial results of our purchase price allocation. Note that this forward looking outlook was included in the quarterly investor presentation that we posted to our website this morning. We expect Contractor Solutions' overall adjusted EBITDA margin for the full fiscal year 2026 to be in the low 30s versus the recent margins closer to the mid-30s as we layer in our acquisitions and the expected impact of tariffs. James PerryEVP & CFO at CSW Industrials00:19:47We are anticipating an overall cost of goods sold impact from increased tariffs, and we will update you each quarter as warranted on this highly fluid situation. We have taken broad based action on pricing for our Contractor Solutions products to offset the new tariffs. Our approach as always is to prioritize protecting margin dollars, and we know that this approach can result in some margin compression. And we continue to make strategic changes to our global supply chain to minimize the impact of tariffs and other potential disruptions. We also remain highly focused on cost discipline across the company, especially in the current economic environment. James PerryEVP & CFO at CSW Industrials00:20:29During fiscal year twenty twenty six, specialized reliability solutions and engineered building solutions are each expected to have higher full year EBITDA margin on higher revenues in the prior year. We expect to see EPS growth in fiscal twenty twenty six, although the company does not anticipate EPS to grow as a percentage as much as revenue and EBITDA due to the additional shares outstanding from the follow on equity offering, increased interest expense and the increased intangible amortization from recent acquisitions. Thus, we continue to focus on EBITDA as the best comparable measure of our profitability growth over time. We currently forecast our fiscal twenty twenty six tax rate to be 26%, which may vary from quarter to quarter due to specific items. With that, I'll now turn the call back to Joe for his closing remarks. Joseph ArmesChairman, President & CEO at CSW Industrials00:21:24Thank you, James. To summarize, during the fiscal fourth quarter of twenty twenty five, we posted record quarterly results for revenue, adjusted EBITDA, adjusted earnings per share and adjusted net income. Our impressive 9% plus revenue growth included both inorganic growth from our recent acquisitions and strong organic volume growth in Contractor Solutions. Looking ahead to the full fiscal year of 2026, we will continue to focus on delivering sustainable growth that exceeds the markets we serve. We will continue to identify and pursue accretive acquisitions of innovative companies and products that are synergistic to our existing portfolio. Joseph ArmesChairman, President & CEO at CSW Industrials00:22:17I'd like to take a moment to welcome the most recent group of employees to join the CSW family in connection with our acquisition of Aspen Manufacturing. Aspen Manufacturing is one of the largest independent evaporator coil and air handler manufacturers for the HVACR industry and is a recognized leader in product quality and indoor comfort. All of Aspen's products are designed, engineered and assembled in The U. S. Bringing this line of HVACR equipment and the Aspen team under the CSW umbrella will expand our current product offering and allow us to distribute these products through our existing distribution centers across The U. Joseph ArmesChairman, President & CEO at CSW Industrials00:23:09S. At CSW, we are committed to an employee centric culture where we focus on recruiting and retaining great talent, offering rewarding careers and recognizing team members who excel while providing them the opportunity to earn a safe, secure and dignified retirement. I could not be more proud to announce that CSW Industrials has recently been certified as a great place to work for the third year in a row. This recognition is a testament to our focus on core values such as accountability, citizenship, teamwork, respect, integrity, stewardship, and excellence. How we succeed matters and our success is shaped by the collaborative efforts of our team members. Joseph ArmesChairman, President & CEO at CSW Industrials00:24:03It's my pleasure to also announce that our board has recently approved a profit sharing ESOP contribution fiscal twenty twenty five equaled 6% of each U. S. Employee's salary, as well as an additional profit sharing four zero one ks contribution of 3% for fiscal twenty twenty five, which is in addition to our already healthy 6% match. As always, to close my prepared remarks, I just want to thank the dedicated team here at CSW Industrials who collectively own approximately 4% of our company through the employee stock ownership plan, as well as all of our shareholders for your continued interest in and support of CSW Industrials. So operator, we're now ready for questions. Operator00:24:55Thank Our first question is from John Tanwanteng with CJS Securities. Please proceed. Jonathan TanwantengManaging Director at CJS Securities00:25:26Thank you for taking Jonathan TanwantengManaging Director at CJS Securities00:25:27my questions and congrats on a nice quarter. I was wondering if you could go over a little more detail the impact of tariffs on your COGS, maybe you saw on a trailing basis, if any, and what your assumptions are by segment going forward with Vietnam especially in focus? James PerryEVP & CFO at CSW Industrials00:25:44Sure, John. Good morning. It's James. Thanks for being on as always. Appreciate your coverage. James PerryEVP & CFO at CSW Industrials00:25:48Tariffs is obviously very dynamic. There's not a lot of trailing impact yet, just given the lag of that and when tariffs came into play. As you may recall, in our fiscal third quarter, we brought in extra inventory as well as early in the fourth quarter to get ahead of any potential tariffs. So we've been working through that inventory the last couple of months. So there's not much trailing impact. James PerryEVP & CFO at CSW Industrials00:26:07As we go forward, as a reminder, despite the current pause on tariffs, there's still a 10% tariff everywhere and 30% plus in China. And as you know, we do have some of our product that comes out of China. We expect for fiscal twenty six for that number to be at or a little less than 10%. As I mentioned, we've been working hard to strategically move things around. The addition of Aspen, which is fully United States based helps that percentage as well. James PerryEVP & CFO at CSW Industrials00:26:34Vietnam continues to be important to us with our facility there. We have no owned facilities internationally outside of in Vietnam. Vietnam is in the 30s now as result. So we're watching the tariffs very closely. Obviously, the current pause is helpful in the near term. James PerryEVP & CFO at CSW Industrials00:26:50And as I mentioned, we've had some broad based pricing action on certain products that have been impacted and that's a product by product type conversation. So we do expect that there's going be an impact. We do expect that we'll weather that well, working closely with our customers on that. And again, as we continue to strategically work our way out of areas like China into other areas that have less impact there, I think we're going to come out of other end in really good shape. Jonathan TanwantengManaging Director at CJS Securities00:27:17Okay. Great. Thank you. And then, in regards to the M and A pipeline, you mentioned being able to pay off your debt, your revolver by the year end. You're increasing the size of your revolver. Jonathan TanwantengManaging Director at CJS Securities00:27:29Is there more in the pipeline that would utilize that capacity or is that more of just in case as you can move forward? Joseph ArmesChairman, President & CEO at CSW Industrials00:27:36Well, John, this is Joe. As you know, I mean, we have been acquisitive since the beginning. And so we will continue to do that. We take a very disciplined approach. And so we never forecast acquisitions. Joseph ArmesChairman, President & CEO at CSW Industrials00:27:51We have said, since the equity offering that we feel like we can fund the typical strategic product line extension type acquisitions that are smaller through our free cash flow that we generate through operations, the revolving line of credit is available for chunkier, sizable acquisitions like Aspen Manufacturing that we just closed and like TruAir that we did several years ago. The revolver is there so that we can be opportunistic and we think that the target list for acquisitions is very, very robust and strong and there's still a lot of consolidation and a lot of innovation that we can acquire over the next few years. I would say that there seems to be a bit of a sorting out. As we sit here today, we would likely wait for some of the uncertainty to settle down before we did anything with international manufacturing. But domestic manufacturing, like the Aspen manufacturing acquisition, would still be very, very actionable in the short term. Jonathan TanwantengManaging Director at CJS Securities00:29:04Got it. Jonathan TanwantengManaging Director at CJS Securities00:29:05Thank you. And then just one last question Do you believe that to be accretive to your margins over the longer term? What's the upside there as you bring it into your distribution and try to do your product improvements on the business? James PerryEVP & CFO at CSW Industrials00:29:17Yes, John, think given where the margins are now at 24%, I think accretion to consolidated margin is a goal of ours in the kind of near to midterm. We're a couple of points from that. Accretive to the Contractor Solutions margins in the 30s, that's a stronger bar to higher bar to get over. Given the nature of that product being more in the equipment space and the accessory space, the margins just aren't quite as opportunistic there. But we do think there's a good path to see accretion in the near term to the consolidated margin. James PerryEVP & CFO at CSW Industrials00:29:49I will also say, as I mentioned in my script, that we're really highly focused on the EBITDA from that acquisition. You're going to have intangible amortization as I detailed and it's in the investor deck online. You've got interest expense for a little while, those kind of things. But from an EBITDA accretion perspective, it's accretive day one from a dollar perspective. The margins on consolidated, we think we will get there in the near to mid term. Jonathan TanwantengManaging Director at CJS Securities00:30:14Got it. Thank you. James PerryEVP & CFO at CSW Industrials00:30:15Thanks, John. Operator00:30:18Our next question is from Susan Maklari with Goldman Sachs. Please proceed. Susan MaklariSenior Equity Research Analyst at Goldman Sachs00:30:26Thank you. Good morning, everyone. Joseph ArmesChairman, President & CEO at CSW Industrials00:30:29Good morning, Susan. Susan MaklariSenior Equity Research Analyst at Goldman Sachs00:30:30Good morning. My first question is, I just want to follow-up on the answers that you gave to the prior question with the 10% or less that will come from China in fiscal twenty six. Is that as a percent of the COGS or as a percent of the portfolio sales? How should we think about what that number is exactly referring to? James PerryEVP & CFO at CSW Industrials00:30:48Sure, Susan. Thanks for asking. This is James. That's on COGS and that is specific to Contractor Solutions. The other two segments, which last quarter were less than 30%, it will be even less now with Aspen coming in, have virtually nothing that comes from overseas, little, little bit here and there. James PerryEVP & CFO at CSW Industrials00:31:06But I'm referring to Contractor Solutions cost of goods sold for fiscal twenty twenty six. Susan MaklariSenior Equity Research Analyst at Goldman Sachs00:31:11Okay. All right. That's helpful. And then just following up on the pricing, can you give us some sense about how we should think about the magnitude and perhaps the timing of those prices that pricing action coming through and the implications that we could see to the margins as we move through fiscal twenty twenty six? James PerryEVP & CFO at CSW Industrials00:31:28Yes, we're still working through some of that. As you recall in Contractor Solutions, we had a price increase January 1 with the increased freight expenses from last year. So that's been in effect all through the fiscal fourth quarter and now into the fiscal first quarter of twenty twenty six. The price increase that I mentioned earlier, kind of broad based and it's targeted by specific products based on their country of origin, certain customers, those kind of things. That's something that will take place likely during this quarter. James PerryEVP & CFO at CSW Industrials00:31:58We worked through that with our customers. Obviously, that's very dynamic with all the changes that we see. So in terms of margin impact, you're starting to see the tariff cost come through, but we think we're matching that pretty well with pricing as we need to as we go through this quarter and through the fiscal year. Susan MaklariSenior Equity Research Analyst at Goldman Sachs00:32:15Okay. That's helpful. And then one last question. As you think about the setup into the busy spring and summer season, how are you thinking about the inventory on the ground? Are you seeing that your customers and the contractors have started to kind of focus perhaps more on some of these products as they've moved past the changes in the regulations on the refrigeration side? Susan MaklariSenior Equity Research Analyst at Goldman Sachs00:32:38Did you see any pull forward or actions in response to the tariffs have been announced by your customers or in turn in the field? James PerryEVP & CFO at CSW Industrials00:32:47I don't think we've seen anything terribly unusual. We had a nice fiscal fourth quarter with 8% organic growth in Contractor Solutions. We were really happy with the performance of that team on the ground. It's been a little later hot season. If you look at cooling days across the country so far, I think people have taken a bit of a wait and see approach at the very beginning of the quarter. James PerryEVP & CFO at CSW Industrials00:33:09But overall, things feel relatively normal. I think what you saw the pull forward on the equipment from the OEMs was probably more pronounced with the refrigeration change to be sure they had the new equipment as well as the old equipment. As we've said all along, that just hasn't affected us a whole lot. I think our normal seasonality and pattern of purchasing from our customers for the parts and accessories, and now with Aspen, the evaporator coils, which are more of a replacement part, has been pretty normal. Susan MaklariSenior Equity Research Analyst at Goldman Sachs00:33:38Okay. Alright. Thanks for all the color, and good luck. James PerryEVP & CFO at CSW Industrials00:33:41Thanks, Susan. Operator00:33:44Our next question is from Sam Reid with Wells Fargo. Please proceed. Sam ReidAnalyst at Wells Fargo00:33:50Awesome. Thanks so much. Really appreciate all the context on Aspen, the detail you gave on the margin profile. Wanted to drill down a little bit on the swings in margins inter quarter just for modeling purposes. Sounds like overall margins running at around 24%. Sam ReidAnalyst at Wells Fargo00:34:09But maybe just give us some bands around that 24% just so we have some guardrails for modeling. James PerryEVP & CFO at CSW Industrials00:34:16Yes, Sam, this is James. That's hard. I think we'll be able to give you more clarity as we go through this first couple of quarters of owning Aspen. Obviously, we're looking to make improvements where we can. It's several hundred basis points either side of that 24%, I can safely say that. James PerryEVP & CFO at CSW Industrials00:34:31How many hundreds of basis of points it is, I think we're going to we'll learn as we get through this first year because obviously, we'll get them into our accounting system and our operations and those kind of things. So I think it's early to get beyond that. We wanted to give you what we could and at least give you a sense of that 24%, give you some sense of revenue. But being able to get detailed on the swings quarter to quarter is a little premature for us. Sam ReidAnalyst at Wells Fargo00:34:55No, that's fair. And then just another quick one on Aspen. Just historically, has Aspen taken pricing kind of in line with the industry? Has taken pricing ahead of the industry? And just maybe any context on price gaps versus some of the competitors in the air handler evaporator coil space? James PerryEVP & CFO at CSW Industrials00:35:16Yeah, I think Aspen has done a good job obviously as they become part of our environment now May 1 and we're working with them on that. Couldn't really do anything before that and working with them of course, but Aspen has done a good job of that. And I think that you'll see them react like the competitors do, them react as they need to. But again, Aspen doesn't have the tariff impact necessarily given that it's U. S. James PerryEVP & CFO at CSW Industrials00:35:37Based. So as we compete with evaporator coils and air handlers that have either components or the full system coming in from overseas, you have an opportunity there. But in in general, asthma is doing a good job with pricing, and they'll they'll fall under the same discipline that we do from a cost perspective and a pricing perspective with the rest of contractor solutions. Sam ReidAnalyst at Wells Fargo00:35:58No, that's helpful. Then maybe if I could just squeeze one more in here. Tariff pricing, you sell into multiple channels. You sell into distributors. You sell into retailers. Sam ReidAnalyst at Wells Fargo00:36:09Talk to kind of how those pricing discussions have worked by channel. And then are you finding it easier to push pricing through on the distribution side versus say some of the home centers? James PerryEVP & CFO at CSW Industrials00:36:21Yeah. I don't think we bifurcate quite that much. Obviously, each customer is a little bit different. You know, we've always said where we are in the supply chain is important. So our ability to to to push pricing and that working its way through the system, we feel comfortable with. James PerryEVP & CFO at CSW Industrials00:36:33But, you know, I think it's it's it's early and I don't think we get so precise to bifurcate, you know, retail versus distribution. We are heavily weighted towards distribution. Retail plays a role in some of the products, of course, but our ability to look at pricing and have good relationships and always think about the long term with distributors is very important to us. As I mentioned, we're focused on the dollars, not the margin as much. So you may see a little bit of compression. James PerryEVP & CFO at CSW Industrials00:37:02We saw that saying you weren't with us at the time, but we saw that during COVID and we recovered that over time as some of those costs came back down. But again, we continue to focus on the distribution customers where we have relationships with retailers. We're having good discussions there as well. Sam ReidAnalyst at Wells Fargo00:37:17Awesome. Thanks so much. I'll pass it on. James PerryEVP & CFO at CSW Industrials00:37:20Thanks, Sam. Operator00:37:22Our next question is from Jamie Cook with Truist Securities. Please proceed. Jamie CookManaging Director - Equity Research at Truist Securities00:37:28Hi, good morning. I guess two questions. One, just on we're in May and your quarter ended March. Just wondering if there was any change in demand as we entered into April in May across the portfolio? And then my second question on Contractor Solutions, it sounds like organic growth is still expected to be healthy in 2026. Jamie CookManaging Director - Equity Research at Truist Securities00:37:50Obviously, you're putting through price increases because of tariffs. Do you assume volumes are still healthy or do you assume to what degree does higher pricing sort of have a negative impact on volumes? And then my last actually, why don't you my last question is sorry, just on Engineered Building Solutions. Organic growth was obviously negative, but you posted a strong book to bill and your bookings were up 18%. So just wondering when we should see that translate into positive organic growth for EDS? Jamie CookManaging Director - Equity Research at Truist Securities00:38:18Thank you. James PerryEVP & CFO at CSW Industrials00:38:19Yes, Jamie, thanks. And if I miss some of that, circle back, please. I'll start at the end. Engineered Building Solutions, again, we want to highlight historically strong booking quarter for us. And given things like the ABI Index and those kind of things, we're really proud of the team. James PerryEVP & CFO at CSW Industrials00:38:34We're focused on the direct sales of those smoke curtains. We're focused on the right projects that are still getting built and getting permitted. One thing that our leadership team has told us they're seeing a higher number of rebiddings, which means projects are getting very close to getting done instead of just kind of that initial bid they throw out, but don't turn into a booking. So we had a really nice fourth quarter across the board. They're really bucking some of the industry trends based on the team's hard work there and the commercial sales efforts. James PerryEVP & CFO at CSW Industrials00:39:02And we think we're going to have a nice booking year in fiscal twenty twenty six as well. In terms of when that turns into revenue, obviously, some of it's rather near term, things like smoke curtains can be near term depending on when bid and booked. Some of those are eighteen to twenty four months out, but we do expect good top line growth as well as EBITDA and margin growth at EBS. Within Specialized Reliability Solutions, going back to your demand question again, we had a soft fourth quarter. January, February were soft. James PerryEVP & CFO at CSW Industrials00:39:31As we exited March, April and now into May, we've seen things pick up some. You still have a little bit of softness in the energy markets, for example, but the team is doing a good job finding opportunities. So I think that they're that they're back to a nice order booking level and a nice sales level. And again, we expect revenue and EBITDA with margin growth in that segment as well. In contractor solutions, as I mentioned, 8% organic growth in the fiscal fourth quarter. James PerryEVP & CFO at CSW Industrials00:39:59We do expect kind of single or mid to high single digit growth as we go mid and long term in that business. That's going to vary a little bit quarter to quarter. We feel good about it. As I mentioned to one of the earlier questions, Jamie, you know, it's been a slow, hot season so far, but the the group is still doing a great job of getting our product in customers' hands so they have what they need as soon as it heats up. We do a great job of getting things out very near term. James PerryEVP & CFO at CSW Industrials00:40:26Obviously, fact that some of it comes from overseas, have to plan accordingly. So we strategically place the right inventory. So we feel good about the organic growth prospects there as well. And I'll mention, on top of introducing new products to the acquisitions we have, product innovation with those acquisitions, and we will always include as part of our organic growth expectations, market share growth. The team is highly focused on continuing to offer more and more of the contractor solutions products to our customers. James PerryEVP & CFO at CSW Industrials00:40:55And the more products we can offer our distribution customers, the more they want to do business with us. We make it easy to do business with technology, with shipments, with invoicing, one point of contact, so we're picking up share as we continue to add products. Jamie CookManaging Director - Equity Research at Truist Securities00:41:11Thank you. James PerryEVP & CFO at CSW Industrials00:41:12Hopefully, I covered it all, Jamie. Jamie CookManaging Director - Equity Research at Truist Securities00:41:15Yep. You did. Thank you. Operator00:41:18Our next question is from Andrew Kaplowitz with Citigroup. Please proceed. Natalia BakEquity Research Senior Associate at Citigroup00:41:32Hi. Good morning. This is Natalia Bock on behalf of, Andy Kaplowitz. James PerryEVP & CFO at CSW Industrials00:41:36Hi, Natalia. Operator00:41:37Hi, Natalia. Natalia BakEquity Research Senior Associate at Citigroup00:41:39First question I wanna ask, just in engineering or engineered building solutions. Last quarter, you reiterated a 20% EBITDA margin target in the intermediate term. So as backlog quality improves, what's the timeline to approach that goal? Like, there any key hurdles like cost, scale or pricing you need to overcome to get there? James PerryEVP & CFO at CSW Industrials00:41:59Yes, Natalia, great question. We still target that as the midterm hurdle, whether we're there each and every quarter that will bounce around as it has. The only thing I would say that's a little in the face of that is there's a minimal tariff impact there as they do import some products, motors, for example, those kind of things. We've seen a little cost and it's a little harder to get pricing through that business because you bid projects. So we're working on that. James PerryEVP & CFO at CSW Industrials00:42:21Obviously, a little tariff relief is helpful. So we're going to bring in all the products we can at a little bit lower tariff than we thought we might have. But 20% is still the intermediate term hurdle. Are we there for the full year fiscal twenty six? Probably a little early to say that necessarily, but we're approaching it here as we go through quarter to quarter, yes. Natalia BakEquity Research Senior Associate at Citigroup00:42:39Helpful. And then just in SRS, like margins compressed this quarter, but what specific factors contributed to the poor performance? But more importantly, what strategies are in place to address these challenges? Like I saw in the presentation, there's a mention of new product introductions and new deals in process. So maybe if you could expand on those points. James PerryEVP & CFO at CSW Industrials00:42:57Yeah. Sure, Natalia. The biggest factor for specialized reliability solutions as we've talked about is volume. And it was a soft January and February. Certainly, compared to the prior year, we had some catch up last year from some shipments we missed. James PerryEVP & CFO at CSW Industrials00:43:13Volume matters in that business. And the volume was soft in January and February, and that's just going to hit margins. Your absorptions aren't strong with your overhead. It's a pretty high fixed cost base there. Also, as we went through the mix in the quarter, we had a few more products that sold that were just lower margin products. James PerryEVP & CFO at CSW Industrials00:43:28That's going to vary quarter to quarter. So nothing is wrong with that business. Nothing intuitively tells us that that's the new hurdle. We've talked about that being a 20% margin business as well. They've hit it several times. James PerryEVP & CFO at CSW Industrials00:43:39So I think more than anything, it's making sure we have the volume. One thing that's a little under the radar, we've mentioned just in passing to folks, we relocated a facility from Pennsylvania down to our main facility here Texas. And that's our highest margin group of products. And so, a, we eliminate a little bit of cost by moving that down here. But secondly, we've got more eyes on those products now. James PerryEVP & CFO at CSW Industrials00:44:01We're doing better with product development there, having it right here in the same lab, in the same facility. And so we're doing things like that structurally that will continue to push top line and bottom line growth and help those margins. Natalia BakEquity Research Senior Associate at Citigroup00:44:14Got it. Helpful. That's all my questions. Congrats on the quarter. Joseph ArmesChairman, President & CEO at CSW Industrials00:44:18Thanks, Natalia. Operator00:44:21There are no further questions at this time. I would like to turn the conference back over to Joe Arms for closing remarks. Joseph ArmesChairman, President & CEO at CSW Industrials00:44:28Thank you. And we just want to thank everyone for joining us for this fourth quarter and full year conference call. Appreciate your support and look forward to the next time we'll be in contact. Thank you. Operator00:44:41Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.Read moreParticipantsExecutivesAlexa HuertaVP of Investor Relations & TreasurerJoseph ArmesChairman, President & CEOJames PerryEVP & CFOAnalystsJonathan TanwantengManaging Director at CJS SecuritiesSusan MaklariSenior Equity Research Analyst at Goldman SachsSam ReidAnalyst at Wells FargoJamie CookManaging Director - Equity Research at Truist SecuritiesNatalia BakEquity Research Senior Associate at CitigroupPowered by