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1. Company Snapshot

1.a. Company Description

CSW Industrials, Inc.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 cements, diffusers, grilles, registers, solvents, thread sealants, traps, and vents for use in HVAC/R, plumbing, general industrial, architecturally, and 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; and contamination control, industrial maintenance and repair, and operations solutions for use in energy, general industrial, mining, and railing markets.


The company was incorporated in 2014 and is headquartered in Dallas, Texas.

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1.b. Last Insights on CSWI

The recent performance of CSW Industrials, Inc. was driven by several factors, including the company's record fiscal Q4 earnings growth, which was fueled by a 9% increase in revenue to $231 million and a 45% rise in adjusted EBITDA to $60 million. The company's adjusted earnings per share (EPS) also hit a record high of $2.24, surpassing the Zacks Consensus Estimate of $2.23 per share. Additionally, CSW Industrials reported record full-year results, with revenue increasing by 12% to $844 million and adjusted EBITDA rising by 53% to $193 million.

1.c. Company Highlights

2. CSW Industrials' Record Quarterly Results Driven by Acquisitions

CSW Industrials reported record quarterly results for revenue, adjusted EBITDA, adjusted net income, and adjusted earnings per diluted share in the fiscal second quarter of 2026. Revenue grew 22% to $277 million, primarily driven by inorganic growth from acquisitions, including Aspen Manufacturing, PSP Products, and PF Waterworks. Adjusted earnings per share came in at $2.47, slightly below estimates of $2.62. The company's adjusted EBITDA margin was impacted by lower gross margins from the Aspen acquisition and unfavorable volume leverage.

Publication Date: Nov -02

📋 Highlights
  • Record Revenue & Adjusted Metrics:: Revenue surged 22% to $277M, with adjusted EBITDA, net income, and EPS hitting records, driven by acquisitions (Aspen, PSP, PF Waterworks).
  • Contractor Solutions Growth & Margin Decline:: Segment revenue grew 31.2% to $49.6M, but EBITDA margin dropped to 32.4% due to Aspen acquisition costs and lower gross margins.
  • Mars Parts Acquisition:: $650M cash deal with $20M potential earnout, expected to add $10M in synergies and align with existing HVACR pricing, targeting 30% EBITDA margins.
  • Free Cash Flow & Liquidity:: Free cash flow fell to $58.7M (-5.5%) due to tax deferral, but adjusted cash flow rose 22.2% to $61.8M, with strong net debt/EBITDA at 0.12x.
  • Tariff Pricing Actions & Margin Outlook:: 7% price increase in SRS and EBS to offset tariffs, with full-year margins expected in low 30s, despite temporary Mars-related margin headwinds.

Segment Performance

The Contractor Solutions segment, which accounted for 74% of consolidated revenue, delivered $205.6 million in revenue, with $49.6 million or 31.2% growth driven by recent acquisitions. Adjusted EBITDA for this segment was $68 million or 32.4% of revenue. The Specialized Reliability Solutions segment saw a slight increase in revenue, while the Engineered Building Solutions segment decreased by 2%.

Acquisition and Growth Strategy

The company announced a definitive agreement to acquire Mars Parts for $650 million in cash, with an additional $20 million of potential consideration based on revenue growth. The acquisition is expected to close in November 2025 and will expand CSW's existing portfolio in the HVACR end market. The company is confident in its ability to meet demand when the market bounces back and is focused on delivering sustainable growth that outpaces the end markets it serves.

Cash Flow and Balance Sheet

CSW's cash flow from operations was $61.8 million in the second quarter, down 8% compared to the same quarter last year. The company's free cash flow was $58.7 million in the fiscal second quarter, a decrease of 5.5% from the same period a year ago. The company's balance sheet remains strong, with a net debt-to-EBITDA leverage ratio of 0.12x, providing ample liquidity to pursue growth initiatives.

Valuation and Outlook

With a P/E Ratio of 30.38 and an EV/EBITDA of 18.83, the market is pricing in significant growth expectations. Analysts estimate next year's revenue growth at 21.2%. The company's ROIC is 10.02%, indicating a decent return on invested capital. As CSW Industrials continues to execute its growth strategy through acquisitions and organic growth initiatives, its strong balance sheet and commitment to maintaining it will be crucial in driving shareholder value.

3. NewsRoom

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CSW Industrials (CSW) Q2 Earnings and Revenues Top Estimates

Oct -30

Source: zacks.com

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Will CSW Industrials (CSW) Beat Estimates Again in Its Next Earnings Report?

Oct -13

Source: zacks.com

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CSW Industrials (CSW) is an Incredible Growth Stock: 3 Reasons Why

Aug -25

Source: zacks.com

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3 Reasons Growth Investors Will Love CSW Industrials (CSW)

Aug -07

Source: zacks.com

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CSW Industrials (CSWI) Q1 Revenue Up 17%

Aug -01

Source: fool.com

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CSW Industrials (CSW) Beats Q1 Earnings Estimates

Jul -31

Source: zacks.com

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CSW Industrials (CSW) Reports Next Week: Wall Street Expects Earnings Growth

Jul -24

Source: zacks.com

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CSW Industrials: A Solid Stock, But A Little Too Pricey Right Now

Jul -20

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.68%)

6. Segments

Contractor Solutions

Expected Growth: 5.5%

Contractor Solutions' 5.5% growth is driven by increasing demand for HVAC and plumbing products, expansion into e-commerce channels, and strategic acquisitions. Additionally, the segment benefits from a strong reputation for quality and reliability, leading to customer loyalty and retention. Furthermore, investments in digital marketing and sales force expansion have enhanced the segment's competitive position.

Specialized Reliability Solutions

Expected Growth: 6.2%

CSW Industrials' Specialized Reliability Solutions segment growth of 6.2% is driven by increasing demand for predictive maintenance and reliability services in industries such as oil and gas, power generation, and transportation. Additionally, the adoption of IoT and digital technologies is fueling growth, as companies seek to optimize asset performance and reduce downtime.

Engineered Building Solutions

Expected Growth: 5.8%

CSW Industrials' Engineered Building Solutions segment growth of 5.8% is driven by increasing demand for energy-efficient and sustainable building solutions, expansion in the industrial and commercial construction markets, and strategic acquisitions. Additionally, the segment benefits from a strong backlog of orders and a focus on innovative product offerings, such as modular and prefabricated buildings.

7. Detailed Products

Rust-Oleum Industrial Coatings

A line of high-performance coatings for industrial applications, including epoxy, polyurethane, and acrylic coatings.

Rust-Oleum Consumer and Craft Coatings

A range of coatings for consumer and craft applications, including spray paints, brush-on paints, and specialty coatings.

Diamond Crystal Water Treatment Products

A line of water treatment products, including water softeners, conditioners, and filters.

Thermal Control Products

A range of thermal control products, including heat shields, thermal insulation, and temperature sensors.

Sealants and Adhesives

A line of sealants and adhesives for industrial and commercial applications, including epoxy, silicone, and acrylic-based products.

8. CSW Industrials, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for CSW Industrials, Inc. is medium due to the availability of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers for CSW Industrials, Inc. is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for CSW Industrials, Inc. is medium due to the presence of multiple suppliers in the market.

Threat Of New Entrants

The threat of new entrants for CSW Industrials, Inc. is high due to the low barriers to entry in the industry.

Intensity Of Rivalry

The intensity of rivalry for CSW Industrials, Inc. is high due to the presence of several established competitors in the market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 22.18%
Debt Cost 7.56%
Equity Weight 77.82%
Equity Cost 7.56%
WACC 7.56%
Leverage 28.49%

11. Quality Control: CSW Industrials, Inc. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Watts Water Technologies

A-Score: 5.9/10

Value: 2.4

Growth: 6.9

Quality: 8.0

Yield: 1.0

Momentum: 8.0

Volatility: 9.0

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Donaldson

A-Score: 5.6/10

Value: 2.6

Growth: 5.8

Quality: 6.7

Yield: 2.0

Momentum: 7.0

Volatility: 9.3

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A O Smith

A-Score: 5.6/10

Value: 3.9

Growth: 5.8

Quality: 8.0

Yield: 4.0

Momentum: 3.0

Volatility: 8.7

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ITT

A-Score: 5.4/10

Value: 2.4

Growth: 6.7

Quality: 7.2

Yield: 2.0

Momentum: 7.0

Volatility: 7.3

1-Year Total Return ->

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CSW Industrials

A-Score: 4.9/10

Value: 2.4

Growth: 8.2

Quality: 7.9

Yield: 0.0

Momentum: 2.0

Volatility: 8.7

1-Year Total Return ->

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Nordson

A-Score: 4.7/10

Value: 2.4

Growth: 5.0

Quality: 6.8

Yield: 2.0

Momentum: 3.0

Volatility: 8.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

305.1$

Current Price

305.1$

Potential

-0.00%

Expected Cash-Flows