Csw Industrials, Inc. · NYSE:CSW

Csw Industrials — Q1 2021 Earnings Presentation

45 slides from Csw Industrials's earnings presentation, Aug 3, 2020

1. Slide 1: Investor Presentation Fiscal First Quarter 2021

   Investor Presentation Fiscal First Quarter 2021 August 3, 2020

2. Slide 2: Safe Harbor Statement

   Safe Harbor This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to, among other things, the business, financial Statement condition and results of operations of CSW Industrials, Inc. (“CSWI”). Any statements preced

3. Slide 3: CSW Industrials (Nasdaq: CSWI)

   CSW Industrials (Nasdaq: CSWI) A growth-oriented diversified industrial company with a strategic focus on providing niche, value-added products in the end markets we serve. Two Segments Serving Diverse End Markets: Specialty Chemicals 38% 32% 30% 11% 13% 6% 5% 3% Industrial Products 62% Total Traili

4. Slide 4: Compelling Investment Thesis

   Compelling Investment Thesis Consistently demonstrating growth in excess of end markets served Sustained multi-  Total revenue CAGR of 9.6% from FY16 through FY201 year revenue growth  Organic revenue CAGR of 7.2% from FY16 through FY201 Robust margin profile provided by niche products, applicatio

5. Slide 5: Corporate Culture and Values

   Corporate Culture and Values The Goal of Our Corporate Culture is to Maximize Performance. CSWI’s corporate culture will shape and guide our Company by helping each team member understand how to make his/her contribution to the Company we serve. Our culture manifests the observed behaviors, norms, a

6. Slide 6: Fiscal First Quarter 2021 Summary of Financial Results

   Fiscal First Quarter 2021 Summary of Financial Results CSWI Product Spotlight Novent® locking caps seal standard Schrader service valves on central Novent® Locking Caps AC units and minisplits to help prevent refrigerant leakage. Safeguard your AC system from loss or accidental mixing of refrigerant

7. Slide 7: 2021 Guiding Objectives

   2021 Guiding Objectives At CSWI, we will: Position Our Company for Treat Our Serve Our Manage Our Supply Sustainable, Long- Employees Well Customers Well Chains Effectively Term Growth and Profitability  Providing continuing  Operating with minimal  Selectively building  Responding decisively em

8. Slide 8: 1Q21 Summary of Consolidated Performance

   1Q21 Summary of Consolidated Performance  Strong balance sheet and liquidity position Summary Quarterly  $19.7 million of cash Consolidated Results1 (in millions)  $250.0 million fully available revolving credit facility  Net cash provided by operating activities from continuing $102.3 operation

9. Slide 9: Diversified Revenue Across End Markets

   Diversified Revenue Across End Markets1 (in millions) $89.6MM $102.3MM $91.0MM Mining 3% Mining 3% Mining 3% Rail 5% Rail 5% Rail 4% Energy 7% Energy 7% Energy 6% General Industrial General Industrial 12% General Industrial 13% 10% Plumbing 10% Plumbing 12% Plumbing 10% Architecturally Specified Arc

10. Slide 10: Industrial Products 1Q21 Summary

    Industrial Products 1Q21 Summary1 Revenue  Revenue was $61.2 million, a $2.1 million Adjusted Operating Income decrease from the prior year period ($ in millions)  The $2.1 million decrease primarily resulted from a $1.3 million increase in sales volume in the architecturally-specified building pr

11. Slide 11: Specialty Chemicals 1Q21 Summary

    Specialty Chemicals 1Q21 Summary1 Revenue  Revenue was $29.7 million, compared to Adjusted Operating Income $39.0 million in the prior year period as ($ in millions) decreased demand due to the broad impacts of COVID-19 drove lower sales in all end markets year over year  Segment operating income

12. Slide 12: COVID-19 Response

    Providing ongoing employment for full- time employees in an environment focused on health and safety  Procuring and requiring use of additional personal protective equipment  Ensuring incremental sanitizing of our work sites  Modifying work schedules and processes  Initiating employee health scr

13. Slide 13: COVID-19 Response

    Managing a consistent supply chain to meet customers’ needs and win addition market share  Increasing reliability of supply chains via diversification opportunities for third-party manufacturing locations  Utilizing strong of balance sheet to selectively build inventory with certain key inputs to

14. Slide 14: Driving Long-Term Shareholder Value

    Driving Long-Term Shareholder Value CSWI Product Spotlight Smoke Curtains are used throughout commercial, educational, Smoke Guard institutions, multi-family, and office buildings across the U.S., and allow Smoke Curtains architects to maintain aesthetics, while meeting code requirements. Displayed

15. Slide 15: Seeking Sustainable Growth in Shareholder Value

    Seeking Sustainable Growth in Shareholder Value Demonstrated track record Maintain Our Strong Balance Sheet of proven growth and enhancing long-term shareholder value Allocate Capital Efficiently  2015 public debut with market cap of ~$500MM, ~$1.0B as of 7/30/20  FY15 revenue1 of $262MM, Maximize

16. Slide 16: Maintain Our Strong Balance Sheet

    Maintain Our Strong Balance Sheet CSWI is committed to maintaining a strong balance sheet, with ample liquidity through cash and available credit to maximize growth opportunities, both organically and inorganically. Attributes Liquidity Position1 (in millions)  Cash balance of $19.7 million1  Stro

17. Slide 17: Allocate Capital Efficiently

    Allocate Capital Efficiently Capital allocation decisions will continue to be prioritized on a risk-adjusted returns basis, with the goal of driving long-term shareholder value. TTM Capital Allocation1 Organic Growth Inorganic Growth ($ in millions) Invest in enhancing innovative, Prioritize accreti

18. Slide 18: Access to Distribution Channels Accelerates Growth

    Access to Distribution Channels Accelerates Growth We have focused on growing our distribution network in recent years; this enhances revenue growth from new product introductions and acquisitions. Without CSWI: Limited Distribution <40 Newly designed products, while innovative & helpful for Distrib

19. Slide 19: Invest in Innovative Products

    Invest in Innovative Products Our product innovation strategy is focused on commercially attractive products and solutions, while maintaining a flexible manufacturing strategy. Key Innovation Attributes Include: • Attractive in our target • Products that are in • Enhancing products via • Driving mat

20. Slide 20: Strategic M&A

    Strategic M&A As a diversified industrial growth company, our goal is to increase free cash flow through sustainable organic growth, accretive inorganic growth, and operational efficiency. CSW Industrials Target Criteria Seek long-term growth well in excess of GDP Expect strong margin contribution i

21. Slide 21: CSWI Acquisition History

    CSWI Acquisition History Acquisition Metrics  Identify and execute accretive acquisitions that will broaden and complement our portfolio of brands and products  Optimize costs in strategic acquisitions and eliminate most non-manufacturing related costs in product line acquisitions  Focus on comme

22. Slide 22: CSWI Key Takeaways

    CSWI Key Takeaways A growth-oriented diversified industrial company with a strategic focus on providing niche, value-added products in the end markets we serve. Sustained, Proven History of Growth Supported Experienced Driving Long-Term Multi-Year Robust by Liquidity and Leadership Team Shareholder

23. Slide 23: Business Segment Discussion

    Business Segment Discussion CSWI Product Spotlight OilSafe®, is a lubrication management system used to establish best OilSafe practices throughout our customer’s workflow. Every step is color-coded to eliminate risk and human error - simplifying maintenance and Lubrication Management extending the

24. Slide 24: Two Business Segments With Diverse Product Offerings

    Two Business Segments With Diverse Product Offerings Industrial Products Specialty Chemicals Specialty mechanical products, controls, fire & smoke Consumables that enhance performance characteristics and protection; architecturally specified building products; reliability, including pipe thread seal

25. Slide 25: Industrial Products – Segment Overview

    Industrial Products – Segment Overview Summary:  Highly diversified product portfolio providing  Focus on adding value by innovating industry leading products in both direct-to- new and existing products to accelerate customer and distributor models. organic growth.  Strong reputation for providi

26. Slide 26: Specialty Chemicals – Segment Overview

    Specialty Chemicals – Segment Overview Summary:  Our product portfolio allows us to effectively  Focus on adding value by innovating compete and capture enhanced margins new and existing products to accelerate relative to larger Specialty Chemical peers. organic growth.  Focus on end markets with

27. Slide 27: Competitors in Our End Markets

    Competitors in Our End Markets Building HVAC/R Industrial Rail Energy Plumbing Mining Products 27 Investor Presentation August 2020

28. Slide 28: Appendix

    Appendix CSWI Product Spotlight Air Sentry Breathers provide the first line of defense in contamination Air Sentry® control, using patented designs to clean air. These are often used to Desiccant Breathers replace existing breather caps or air vents on fluid holding storage tanks. End Market: Genera

29. Slide 29: Executive Team: Corporate

    Executive Team: Corporate Joe Armes James Perry Luke Alverson Chairman, CEO & Executive VP & CFO Senior VP, General President Counsel & Secretary Joe has served as the Company’s James has been EVP and CFO since Luke has served as SVP, General Chairman of the Board of Directors & May 2020. From 2004

30. Slide 30: Executive Team: Business Segments

    Executive Team: Business Segments Don Sullivan Craig Foster Executive VP & GM, Industrial Products Senior VP & GM, Specialty Chemicals Don has served as the EVP & GM, Industrial Products since Craig has served as SVP & GM, Specialty Chemicals since May 2020. Mr. Sullivan previously served as the Sen

31. Slide 31: Fiscal Full Year Revenues by Segment

    Fiscal Full Year Revenues by Segment FY2020 Summary of Segment Performance: Overall full year revenue increased 10.2% (5.9% organic) compared to the prior year period. Industrial Products Segment: Revenues1 (in millions)  Revenue increased 14.1% (6.7% organic) FY20 compared to FY19, primarily drive

32. Slide 32: Fiscal Full Year Operating Income by Segment

    Fiscal Full Year Operating Income by Segment1 Consolidated Adjusted Operating Income and Segment Adjusted Operating Income Adjusted Operating Income Margin ($ in millions) $70.0 ($ in millions) $66.4 20.0% 23.7% Margin $60.0 $58.6 19.0% 23.6% $51.8 24.0% Margin 18.0% Margin $50.0 17.0% $40.0 17.2% 1

33. Slide 33: Total Fiscal Year Consolidated Revenue By End Market

    Total Fiscal Year Consolidated Revenue1 By End Market ($ in millions) $326MM $350MM $386MM Mining 5% Mining 4% Mining 4% Rail 6% Rail 6% Rail 5% Energy 7% Energy 6% Energy 7% General Industrial General Industrial General Industrial 14% 13% 12% Plumbing 11% Plumbing 11% Plumbing 11% Architecturally A

34. Slide 34: Architecturally Specified Building Products

    Architecturally Specified Building Products 34 Investor Presentation August 2020

35. Slide 35: Products Serving the Energy End Market

    Products Serving the Energy End Market 35 Investor Presentation August 2020

36. Slide 36: Products Serving the HVAC/R End Market

    Products Serving the HVAC/R End Market 36 Investor Presentation August 2020

37. Slide 37: Products Serving Niche HVAC/R Mini-Splits

    Products Serving Niche HVAC/R Mini-Splits 37 Investor Presentation August 2020

38. Slide 38: Products Serving the General Industrial End Market

    Products Serving the General Industrial End Market 38 Investor Presentation August 2020

39. Slide 39: Products Serving the Mining End Market

    Products Serving the Mining End Market 39 Investor Presentation August 2020

40. Slide 40: Products Serving the Plumbing End Market

    Products Serving the Plumbing End Market 40 Investor Presentation August 2020

41. Slide 41: Products Serving the Rail End Market

    Products Serving the Rail End Market 41 Investor Presentation August 2020

42. Slide 42: 1Q21 Reconciliation of Business Segment to Consolidated Adjusted Operating Income

    1Q21 Reconciliation of Business Segment to Consolidated Adjusted Operating Income (Amounts in thousands, except percentages) (unaudited) For the Three Months Ended June 30, 2020 For the Three Months Ended June 30, 2019 For the Three Months Ended June 30, 2018 Consolidated Consolidated Consolidated I

43. Slide 43: FY Reconciliation of Adjusted Operating Income

    FY Reconciliation of Adjusted Operating Income (in thousands, except percentages) Fiscal Year Ended March 31, 2020 Fiscal Year Ended March 31, 2019 Fiscal Year Ended March 31, 2018 Consolidated Consolidated Consolidated Industrial Specialty Corporate Continuing Industrial Specialty Corporate Continu

44. Slide 44: TTM Reconciliation of Adjusted Operating Income

    TTM Reconciliation of Adjusted Operating Income (Unaudited) (Amounts in thousands, except percentages) Trailing Twelve Month Actuals by Quarter 2Q20 3Q20 4Q20 1Q21 T12M Revenue $ 101,324 $ 83,716 $ 98,498 $ 90,964 $ 374,501 Operating Income 20,122 10,488 15,135 16,253 $ 61,998 Adjusting items: (Gain

45. Slide 45: Investor Presentation 2020

    45 Investor Presentation 2020

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