Csw Industrials, Inc. · NYSE:CSW
Csw Industrials — FY2021 Earnings Presentation
48 slides from Csw Industrials's earnings presentation, May 2021
Slide 1: Investor Presentation: Fiscal 4th Quarter and Full-Year 2021 Results
Investor Presentation Fiscal 4th Quarter and Full-Year 2021 Results May 2021
Slide 2: Forward Looking Statements and Non-GAAP Financial Information
Forward Looking 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, Statements financial condition and results of operations of CSW Industrials, Inc. (“CSWI” or the “Company”).
Slide 3: Index
Index Fiscal Year Highlights & Investment Thesis................................. 4 Fiscal 4th Quarter and Full-Year 2021 Results............................. 7 Long-Term Shareholder Value.................................................. 17 Company, Segment, End Market Overview.....................
Slide 4: Compelling Investment Thesis
Compelling Investment Thesis Consistently demonstrating growth in excess of end markets served 1 Sustained multi- ▪ Total revenue CAGR of 9.4% from FY16 through FY21 1 year revenue growth ▪ Organic revenue CAGR of 5.8% from FY16 through FY21 Robust margin profile provided by niche products, applicat
Slide 5: 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: Key Highlights: 2015 1 Publicly listed on Nasdaq Specialty Chemicals ~$2B 31% 2 Mark
Slide 6: Our Guiding Objectives
Our Guiding Objectives At CSWI, how we succeed matters, and hence we will: Position CSWI for Treat Our Serve Our Customers Manage Our Supply Sustainable, Long- Employees Well Well Chains Effectively Term Growth and Profitability Employees ▪ Employees and and insiders insiders ▪ Emphasize consistent
Slide 7: Fiscal 4th Quarter 2021 Summary of Financial Results
TH Fiscal 4 Quarter 2021 Summary of Financial Results TRUaire’s SF Series single and double deflection spiral style diffusers TRUaire Product Spotlight feature durable extruded aluminum construction and have individually Single Deflection Grille adjustable blades for deflection control. Available in
Slide 8: 4Q21: Quarterly Revenue and Operating Income
4Q21: Quarterly Revenue and Operating Income 1 Consolidated Financial Highlights (4Q21 vs 4Q20): Summary Quarterly ▪ Revenue of $133.4MM, a 35.4% increase Consolidated Results 1 ($ in millions) ◦ $29.4MM inorganic contribution from TRUaire acquisition ◦ Organic sales were flat to the prior year peri
Slide 9: 4Q21: Industrial Products Summary
1 4Q21: Industrial Products Summary Revenue ▪ 4Q21 Segment Revenue increased 61.2% Adjusted Operating Income ($ in millions) (12.4% organic) over 4Q20, to $96.9MM, primarily driven by: ◦ Inorganic growth from TRUaire of $29.4MM ◦ Organic growth of $7.4MM ▪ Plumbing, HVAC/R, and ASBP increased $8.3MM
Slide 10: 4Q21: Specialty Chemicals Summary
1 4Q21: Specialty Chemicals Summary Revenue Adjusted Operating Income ($ in millions) ▪ 4Q21 Segment Revenue decreased 5.0%, compared to 4Q20, to $36.5MM as increased revenue into the HVAC/R, mining, and energy end markets were more than offset by the decline in ASBP, general industrials, and rail e
Slide 11: Diversified Revenue Across End Markets Served
1 Diversified Revenue Across End Markets Served ($ in millions) $91.5MM $98.5MM $133.4MM 4Q19 4Q20 4Q21 1 11 Investor Presentation Calculated for continuing operations only. Each period may not sum to 100% due to rounding. May 2021
Slide 12: Fiscal Year Ending March 2021 Summary of Financial Results
Fiscal Year Ending March 2021 Summary of Financial Results CSWI Product Spotlight Safe-T-Switch® Model SC1 inline cleanout device allows quick and easy Safe-T-Switch SC1 ® access for cleaning of condensate drain lines. Device includes an integrated, easy-access Schrader valve for pressure cleaning.
Slide 13: FY21: Best Year in Company History
FY21: Best Year in Company History Consolidated Financial Highlights: Strong balance sheet ▪ $178.1MM of effective liquidity with $10.1MM cash on hand plus $168.0MM 1 and liquidity position available on a new, 5-year, $400.0MM revolving credit facility ▪ Executing on all parts of our capital allocat
Slide 14: FY21: Industrial Products Summary
1 FY21: Industrial Products Summary Revenue ▪ FY21 total revenue growth of 23.2% (8.8% organic) over the prior year period, Adjusted Operating Income ($ in millions) to $289.4MM, due to increased demand in the HVAC/R, plumbing, and ASBP end markets, modestly offset by sales into the general industri
Slide 15: FY21: Specialty Chemicals Summary
1 FY21: Specialty Chemicals Summary Revenue Adjusted Operating Income ($ in millions) ▪ Revenue decreased 14.0%, to $129.8MM, as compared to the prior year period, resulting primarily from pandemic- driven demand decline ◦ Macro fundamentals in the energy, rail and mining end markets such as rig cou
Slide 16: Diversified Revenue Across End Markets Served
1 Diversified Revenue Across End Markets Served ($ in millions) $350.2MM $385.9MM $419.2MM FY19 FY20 FY21 1 16 Investor Presentation Calculated for continuing operations only. Each period may not sum to 100% due to rounding. May 2021
Slide 17: Driving Long-Term Shareholder Value
Driving Long-Term Shareholder Value ® CSWI Product Spotlight Fortress Lineset covers are a precision system of premade ducting offering strength and longevity at a modest price point. Perfect for a Fortress Lineset Covers variety of A/C systems, Fortress® conceals/protects lineset, wiring and End Ma
Slide 18: Seeking Sustainable Growth in Shareholder Value
Seeking Sustainable Growth in Shareholder Value Demonstrated track record of growth and enhancing long-term shareholder value Maintain Our Strong Balance Sheet ▪ ~$2B market cap, as of 5/14/21, compared to ~$500MM in 2015 public debut 1 Allocate Capital Efficiently ▪ $419.2MM FY21 revenue , versus $
Slide 19: Maintaining Our Strong Balance Sheet
Maintaining 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. 1 Attributes Liquidity Position ($ in millions) ▪ Liquidity 1 ~$178.1MM ◦ Cash ba
Slide 20: Allocating Capital Efficiently
Allocating Capital Efficiently Capital allocation decisions will continue to be prioritized on a risk-adjusted returns basis, with the goal of driving long-term shareholder value. 1 Organic Growth Inorganic Growth FY21 Capital Allocation ($ in millions) ▪ Invest in enhancing innovative, ▪ Prioritize
Slide 21: Accessing Distribution Channels to Accelerate Growth
Accessing Distribution Channels to Accelerate Growth We have focused on growing our distribution network in recent years, enhancing revenue growth from new product introductions and acquisitions. Without CSWI: Limited Distribution <40 Newly designed products, while innovative & helpful for contracto
Slide 22: Investing in Innovative Products
Investing 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
Slide 23: Strategic, Disciplined Approach to M&A
Strategic, Disciplined Approach to 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 st
Slide 24: CSWI Acquisition History
CSWI Acquisition History Acquisitions Aligned with Targeted Metrics ▪ Identify and execute accretive acquisitions that broaden and complement our portfolio of brands and products ▪ Optimize costs in strategic acquisitions and eliminate most non-manufacturing related costs in product line acquisition
Slide 25: CSWI Expands HVAC/R Product Portfolio
CSWI Expands HVAC/R Product Portfolio Acquisition delivers on CSWI’s disciplined acquisition strategy, maintains strong balance sheet, and maximizes existing channels to markets, while increasing market share Results in an expanded, competitive, Award winning delivery lead times to comprehensive HVA
Slide 26: Shell Whitmore Reliability Solutions: A Strategic Joint Venture
1 Shell Whitmore Reliability Solutions: A Strategic Joint Venture Aligns with CSWI Capital Allocation Organic growth acceleration ▪ CSWI initial’s investment in the JV consists ▪ Partnering with global lubricant leader, Shell solely of existing assets ▪ JV will target North America Class I, II, and
Slide 27: CSWI and Business Segment Overview
CSWI and Business Segment Overview ® 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 exten
Slide 28: 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
Slide 29: Industrial Products – Segment Overview
Industrial Products – Segment Overview ~$289.4MM Summary: ▪ Highly diversified product portfolio ▪ Focus on adding value by innovating providing industry leading products new and existing products to FY21 Revenue in both direct-to-customer and accelerate organic growth. distributor models. ▪ Future
Slide 30: Specialty Chemicals – Segment Overview
Specialty Chemicals – Segment Overview ~$129.8MM Summary: ▪ Our product portfolio allows us to ▪ Focus on adding value by innovating effectively compete and capture new and existing products to FY21 Revenue enhanced margins relative to larger accelerate organic growth. Specialty Chemical peers. ▪ Fu
Slide 31: 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
Slide 32: 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 replace existing breather caps or air vents on fluid holding storage tanks. Desiccant Breathers End Market: Genera
Slide 33: CSWI Executive Team: Corporate
CSWI 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
Slide 34: CSWI Executive Team: Business Segments
CSWI 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 th
Slide 35: CSWI Revenue and End Market Analysis
CSWI Revenue and End Market Analysis: Significant Growth Potential in Industrial Products Segment and HVAC/R End Market CSWI Revenue $385.9MM CSWI Revenue $419.2MM CSWI FY20 Revenue by CSWI FY20 Revenue CSWI FY21 Revenue by CSWI FY21 Revenue Reporting Segment by End Market Served Reporting Segment b
Slide 36: Products Serving the Architecturally Specified Building Products End Market
Products Serving the Architecturally Specified Building Products End Market 36 Investor Presentation May 2021
Slide 37: Products Serving the Energy End Market
Products Serving the Energy End Market 37 Investor Presentation May 2021
Slide 38: Products Serving the HVAC/R End Market
Products Serving the HVAC/R End Market 38 Investor Presentation May 2021
Slide 39: Products Serving the Niche HVAC/R Mini-Split Market
Products Serving the Niche HVAC/R Mini-Split Market 39 Investor Presentation May 2021
Slide 40: Products Serving the General Industrial End Market
Products Serving the General Industrial End Market 40 Investor Presentation May 2021
Slide 41: Products Serving the Mining End Market
Products Serving the Mining End Market 41 Investor Presentation May 2021
Slide 42: Products Serving the Plumbing End Market
Products Serving the Plumbing End Market 42 Investor Presentation May 2021
Slide 43: Products Serving the Rail End Market
Products Serving the Rail End Market 43 Investor Presentation May 2021
Slide 44: Reconciliation of Fiscal Fourth Quarter Segment Operating Income to Adjusted
Reconciliation of Fiscal Fourth Quarter Segment Operating Income to Adjusted Segment Operating Income (Unaudited) (Unaudited) (Unaudited) Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 Consolidated Consolidated Consolidated Industrial Specialty
Slide 45: Reconciliation of Fiscal Year End Segment Operating Income to Adjusted
Reconciliation of Fiscal Year End Segment Operating Income to Adjusted Segment Operating Income (Unaudited) (Unaudited) (Unaudited) Fiscal Year Ended March 31, 2021 Fiscal Year Ended March 31, 2020 Fiscal Year Ended March 31, 2019 Consolidated Consolidated Consolidated Industrial Specialty Corporate
Slide 46: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Quarter and Fiscal Year End Segment Net Income to Adjusted EBITDA (Unaudited) Three Months Ended March 31, Fiscal Years Ended March 31, (Amounts in thousands) 2021 2020 2021 2020 GAAP Net Income, Continuing Operations 9,627 13,373 40,287 44,817 Interest Expense 1,312 245 2,383 1,33
Slide 47: Reconciliation of Net Income to Adjusted Net Income
Reconciliation of Net Income to Adjusted Net Income, Continuing Operations (Unaudited) (Unaudited) Three Months Ended March 31, Twelve Months Ended March 31, (Amounts in thousands, except share data) 2021 2020 2019 2021 2020 2019 GAAP Net Income, Continuing Operations $ 9,627 $ 13,373 $ 13,624 $ 40,
Slide 48: CSW Industrials
CSW INDUSTRIALS