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CI

CSW INDUSTRIALS, INC. (CSWI)·Q4 2025 Earnings Summary

Executive Summary

  • Record Q4 results: revenue $230.5M (+9.3% y/y), adjusted EPS $2.24 (+9.8% y/y), adjusted EBITDA $59.8M (+7.1% y/y); gross margin 44.2% (-20 bps y/y) and adjusted EBITDA margin 25.9% (-60 bps y/y) .
  • Contractor Solutions drove the quarter (+17.5% y/y; 8.0% organic), while Specialized Reliability Solutions (-9.2% y/y) and Engineered Building Solutions (-4.5% y/y) were softer on mix, timing, and a nonrecurring gain in the prior year .
  • Strategic updates: closed Aspen Manufacturing ($313.5M) on May 1; revolver upsized to $700M; dividend raised to $0.27; transferring listing to NYSE June 9 under “CSW” .
  • FY26 outlook: Aspen EBITDA margin ~24%; Contractor Solutions adjusted EBITDA margin “low 30s” (vs recent mid-30s) given tariffs and acquisitions; tax rate ~26%; net interest expense ≈$5.3M; amortization +$9.5M; expect revolver paydown by FY26 year-end absent further M&A .

What Went Well and What Went Wrong

What Went Well

  • “Record results for revenue, adjusted EBITDA, adjusted earnings per diluted share and adjusted net income” in Q4, with full-year records across revenue, margins, and cash from operations .
  • Contractor Solutions: +17.5% y/y revenue; 8.0% organic growth on volume and pricing; adjusted EBITDA $56.0M (33.7% margin), demonstrating pricing power and operating leverage .
  • Strong bookings at EBS: one of the highest booking quarters in segment history; backlog quality improving and book-to-bill at 1:1 over trailing eight quarters .

Quoted management:

  • CEO: “Our impressive 9% plus revenue growth included both inorganic growth … and strong organic volume in Contractor Solutions.”
  • CFO: “We have taken broad-based action on pricing … to offset the new tariffs… our approach… is to prioritize protecting margin dollars.”

What Went Wrong

  • Margin compression: adjusted EBITDA margin down 60 bps to 25.9% on integration investments and inbound freight cost increases .
  • SRS: revenue -9.2% y/y; EBITDA margin contracted 450 bps to 15.3% due to lower volumes, product mix, and higher freight tied to international inventory positioning ahead of tariffs .
  • EBS: revenue -4.5% y/y; EBITDA margin 14.5% (down from 20.5% y/y) largely due to a $1.2M prior-year property sale gain not recurring and higher opex as % revenue .

Financial Results

Consolidated Performance vs prior year and prior quarters

MetricQ4 2024Q2 2025Q3 2025Q4 2025
Revenue ($M)$210.9 $227.9 $193.6 $230.5
Diluted EPS (GAAP)$2.04 $2.26 $1.60 $2.08
Adjusted EPS$2.04 n/a$1.48 $2.24
Gross Margin %44.4% 45.6% 41.4% 44.2%
Operating Income ($M)$44.3 $51.5 $29.6 $45.0
Operating Margin %21.0% 22.6% 15.3% 19.5%
Adjusted EBITDA ($M)$55.8 $60.8 $42.0 $59.8
Adjusted EBITDA Margin %26.5% 26.7% 21.7% 25.9%

Notes: Adjusted EPS not disclosed in Q2 materials; Q3/Q4 adjusted EPS shown per reconciliations .

Segment Breakdown

SegmentQ2 2025 Revenue ($M)Q2 2025 EBITDA ($M)Q3 2025 Revenue ($M)Q3 2025 Adj. EBITDA ($M)Q4 2025 Revenue ($M)Q4 2025 Adj. EBITDA ($M)
Contractor Solutions$158.8 $53.7 $132.2 $37.5 $165.9 $56.0
Specialized Reliability Solutions$38.5 $7.1 $34.6 $6.6 $37.7 $5.8
Engineered Building Solutions$32.7 $6.6 $28.8 $4.1 $28.7 $4.2

Segment EBITDA margins: Q4 2025 CS 33.7%, SRS 15.3%, EBS 14.5% .

KPIs

KPIQ2 2025Q3 2025Q4 2025
Cash from Operations ($M)$66.8 $11.6 $27.3
Free Cash Flow ($M)$61.3 $8.45 $22.8
Free Cash Flow per Share ($)$3.85 $0.50 $1.35
Cash & Equivalents ($M)$273.2 $213.8 $225.8
Effective Tax Rate (GAAP / Adjusted)26.1% 13.8% / 24.5% 24.6% / 24.7%
Net Interest (Income/Expense) ($M)$(1.34) expense $1.98 income $1.62 income

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Contractor Solutions adjusted EBITDA marginFY 2026Recent “mid-30s” run rate “Low 30s” for FY26 Lower (compression)
Aspen EBITDA marginFY 2026n/a~24% FY26; seasonally variable; accretive to consolidated margins over time New (established)
Net Interest ExpenseFY 2026Net interest income in FY25 following revolver repayment ≈$5.3M net interest expense FY26; highest in Q2 Higher expense
Intangible AmortizationFY 2026n/aAspen adds ≈$9.5M amortization in FY26 (preliminary) Higher amortization
Effective Tax RateFY 2026n/a~26%; quarterly variability Set level
SeasonalityFY 2026Prior CS seasonalityMore pronounced CS seasonality with Aspen (weighted to Q1–Q2) Increase
Revolving Credit FacilityCurrent$500MRenewed/extended to $700M, 5-year term to May 2030 Upsized
DividendCurrent$0.24 (Q3 paid) $0.27 declared and paid May 9, 2025 Raised
Exchange ListingCurrentNasdaq: CSWINYSE transfer June 9; new ticker “CSW” Change

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Pricing & FreightElevated ocean freight in H2 FY25; price increase effective Jan 1 to offset freight Pricing actions continue to offset tariffs/freight; focus on dollar margins Stabilizing; proactive pricing
Tariffs & Supply ChainLow teens China exposure; Vietnam primary sourcing; watched tariff risks Tariffs paused near-term; plan product/customer-specific pricing; target <10% China COGS in CS for FY26 Manageable; mitigation actions
Inventory & SeasonalityBuilt inventory ahead of port strike/LNY; normal sell-through expected Late start to “hot season”; Aspen skews CS seasonality to Q1–Q2 Seasonality more pronounced
EBS Bookings & Margin TargetEBS reached ~20% margin in Q2; bookings solid Historically strong bookings; intermediate-term 20% EBITDA margin still target Bookings strength; margin path intact
SRS Mix & MarginsQ3 SRS margin improved on ops efficiencies Q4 SRS margin compressed on lower volume/mix and higher freight Mixed; volume-sensitive
M&A PipelineWar chest from equity raise; robust pipeline (PSP; PF WaterWorks) Closed Aspen; revolver upsized; disciplined pipeline continuing Active; disciplined
End-market/regulatoryRefrigerant transition largely neutral to CSWI; repair/parts agnostic Aspen positioned for legacy and new refrigerants; U.S.-based manufacturing Favorable positioning

Management Commentary

  • CEO: “We reported fiscal fourth quarter revenue of $231 million… adjusted EBITDA of $60 million… adjusted EPS of $2.24… and adjusted net income of $38 million” .
  • CEO: “Aspen… expands our HVAC/R product offering… We completed the acquisition on May 1, 2025” .
  • CFO: “We expect Contractor Solutions… adjusted EBITDA margin for the full fiscal year 2026 to be in the low 30s… as we layer in our acquisitions and the expected impact of tariffs” .
  • CFO: “We currently anticipate approximately $5.3 million in net interest expense for the full year… Aspen… will add approximately $9.5 million of amortization expense in fiscal year 2026” .
  • CFO: “We have taken broad-based action on pricing… prioritize protecting margin dollars… this can result in some margin compression” .

Q&A Highlights

  • Tariffs impact and sourcing: FY26 CS COGS from China targeted at ≤10%; Vietnam remains key; Aspen’s U.S. base helps .
  • Aspen accretion and margin guardrails: ~24% EBITDA margin with several-hundred-bps variability intra-year; accretive to consolidated margin over time .
  • Pricing by channel: Heavily weighted to distribution; focus on long-term relationships; pricing pushed where needed, dollars over % margins .
  • Demand/seasonality: Later start to cooling season; normal seasonality expected; CS organic growth mid-to-high single digits over cycle .
  • EBS margin path: 20% EBITDA target remains intermediate-term; tariff effects minimal; pricing on projects harder, but backlog quality improving .

Estimates Context

  • Wall Street consensus (S&P Global) for CSWI Q4 2025 EPS and revenue was unavailable via our feed at this time due to a mapping error; therefore, we cannot provide beat/miss versus SPGI consensus for Q4 2025. We recommend using company-reported results above and revisiting once SPGI mapping is restored. Values retrieved from S&P Global were unavailable.
  • Given y/y growth and segment drivers, estimate revisions may modestly reflect tariff-driven margin compression in Contractor Solutions and Aspen seasonality in H1 FY26, while maintaining positive top-line bias on portfolio breadth .

Key Takeaways for Investors

  • Q4 delivered broad-based records despite modest margin compression from freight/integration; Contractor Solutions momentum and pricing power remain intact .
  • Aspen adds scale, U.S.-manufactured coils/air handlers, and increases CS seasonality to Q1–Q2; expect ~24% Aspen EBITDA margin near term with improvement targeted over time .
  • FY26 set-up: lower CS margins vs recent mid-30s (low 30s guided) given tariffs/acquisitions, but consolidated EBITDA growth expected; tax ~26%; net interest ≈$5.3M; amortization +$9.5M .
  • SRS is volume-sensitive; watch energy/rail/mining demand mix and international freight/tariff dynamics for margin recovery .
  • EBS bookings strong; narrative points to backlog quality and path toward 20% EBITDA margin over the intermediate term .
  • Balance sheet/liquidity robust: $225.8M cash at Q4-end, revolver upsized to $700M, dividend raised, NYSE listing to “CSW” adds potential visibility/liquidity catalyst .
  • Near-term trading: focus on tariff headlines/pricing actions and early Aspen integration updates; medium term, M&A discipline plus portfolio breadth should sustain above-market revenue growth with EBITDA leverage as freight normalizes .