Csw Industrials, Inc. · NYSE:CSW
Csw Industrials — Q3 FY2023 Earnings Presentation
46 slides from Csw Industrials's earnings presentation, February 2023
Slide 1: Investor Presentation February 2023 Fiscal 3rd Quarter Results
February 2023 Fiscal 3rd Quarter Investor Presentation 2023 Results
Slide 2: Forward Looking Statement; Non-GAAP Financial Information
Forward Looking Statement 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 condition and results of operations of CSW Industrials, Inc. (“CSWI” or the “Company”).
Slide 3: Index
Index 4 Overview and Investment Thesis 7 Fiscal 2023 3rd Quarter Results 12 Fiscal 2023 Year-to-Date Results 17 Driving Long-Term Shareholder Value 25 Corporate Sustainability Update 28 Business Segment Overview 41 Appendix
Slide 4: CSW Industrials, Inc. Key Highlights
CSW Industrials, Inc. (Nasdaq: CSWI) Key Highlights 2015 Publicly Listed on Nasdaq2 ~$2.1B A diversified industrial growth company with a strategic focus on providing niche, Market Capitalization3 value-added products in the end markets we serve. ~$103MM Three Segments (Segment percentages reflect T
Slide 5: Compelling Investment Thesis
Compelling Investment Thesis Consistently demonstrating growth in excess of end markets served Sustained multi-year • Total revenue CAGR of 13.9% from FY17 through FY221 revenue growth • Organic revenue CAGR of 8.2% from FY17 through FY221 Robust margin profile provided by niche products, applicatio
Slide 6: Our Guiding Objectives
Our Guiding Objectives At CSWI, how we succeed matters, and accordingly we will: Position CSWI for Treat Our Serve Our Manage Our Supply Sustainable, Long-Term Team Members Well Customers Well Chains Effectively Growth and Profitability • Focus on Safety: • Emphasis consistent • Supply chain recover
Slide 7: Fiscal 2023 3rd Quarter Summary of Financial Results
Fiscal 2023 3rd Quarter Summary of Financial Results
Slide 8: Consolidated Results: 3Q23 Summary
Consolidated Results: 3Q23 Summary Consolidated Financial Highlights (3Q23 vs 3Q22): Summary Quarterly Consolidated Results1, 2 • Record fiscal third quarter Revenue of $171.1MM, a 26% increase ($ in millions) ◦ $12.0MM inorganic contribution from the Shoemaker, Cover Guard, AC Guard, and Falcon acq
Slide 9: Contractor Solutions: 3Q23 Segment Summary
Contractor Solutions: 3Q23 Segment Summary Summary Quarterly Segment Financials (3Q23 vs 3Q22): Segment Results 1 ($ in millions) • Segment Revenue of $111.9MM, a 36% increase ◦ Inorganic growth of $12.0MM from the Shoemaker, Cover Guard, AC Guard, and Falcon acquisitions 25.4% 20.8% Margin ◦ Organi
Slide 10: Engineered Building Solutions: 3Q23 Segment Summary
Engineered Building Solutions: 3Q23 Segment Summary Segment Financials (3Q23 vs 3Q22): Summary Quarterly Segment Results • Segment Revenue of $24.6MM, a 3% increase ($ in millions) ◦ Growth due to sustained commercial initiatives and market retention • Segment EBITDA decreased 26% due to a shift in
Slide 11: Specialized Reliability Solutions: 3Q23 Segment Summary
Specialized Reliability Solutions: 3Q23 Segment Summary Summary Quarterly Segment Financials (3Q23 vs 3Q22): Segment Results 1 ($ in millions) • Segment Revenue of $36.3MM, a 16% increase ◦ Continued strength in all end markets ◦ Incremental unit volumes and cumulative benefit of implemented pricing
Slide 12: Fiscal Year-to-Date 2023 Summary of Financial Results
Fiscal Year-to-Date 2023 Summary of Financial Results
Slide 13: Consolidated Results: 3Q23 YTD Summary
Consolidated Results: 3Q23 YTD Summary Consolidated Financial Highlights (3Q23 YTD vs 3Q22 YTD): Summary 3Q23 YTD • Record Revenue of $562.2MM, a 24% increase Consolidated Results1, 2 ($ in millions) ◦ $31.6MM inorganic contribution from Shoemaker, Cover Guard, and AC Guard acquisitions ◦ $77.5MM or
Slide 14: Contractor Solutions: 3Q23 YTD Segment Summary
Contractor Solutions: 3Q23 YTD Segment Summary Summary 3Q23 YTD Segment Financials (3Q23 YTD vs 3Q22 YTD): Segment Results 1 ($ in millions) • Segment Revenue increased 28% to $379.8MM, primarily driven by: ◦ Inorganic growth of $31.6MM from the Shoemaker, Cover 29.1% 30.1% Margin Guard, AC Guard, a
Slide 15: Engineered Building Solutions: 3Q23 YTD Segment Summary
Engineered Building Solutions: 3Q23 YTD Segment Summary Segment Financials (3Q23 YTD vs 3Q22 YTD): Summary 3Q23 YTD Segment Results • Segment Revenue increased 8% to $79.0MM, primarily ($ in millions) driven by: ◦ Successful commercial initiatives and new product introductions • Segment EBITDA incre
Slide 16: Specialized Reliability Solutions: 3Q23 YTD Segment Summary
Specialized Reliability Solutions: 3Q23 YTD Segment Summary Summary 3Q23 YTD Segment Financials (3Q23 YTD vs 3Q22 YTD): Segment Results 1 ($ in millions) • Record Segment Revenue increased 28% (all organic), to $109.0MM, primarily driven by: ◦ Pricing initiatives, increased unit volumes and growth i
Slide 17: Driving Long-Term Shareholder Value
Driving Long-Term Shareholder Value
Slide 18: Seeking Sustainable Growth in Shareholder Value
Seeking Sustainable Growth in Shareholder Value Our demonstrated track record of growth and enhancing long-term shareholder value. Since Inception Maintain Our Strong Balance Sheet • 345% market cap growth1 Allocate Capital Efficiently • 181% Revenue growth2 • 189% adjusted EBITDA growth33 Invest in
Slide 19: Maintaining Our Strong Balance Sheet
Maintaining Our Strong Balance Sheet CSWI is committed to maintaining a strong balance sheet, with ample liquidity through cash on hand and available credit, to maximize growth opportunities, both organically and inorganically. Liquidity Position as of 12/31/22 Strong liquidity position to support o
Slide 20: Allocating Capital Efficiently
Allocating Capital Efficiently Capital allocation decisions will continue to be prioritized on a risk-adjusted TTM Capital Allocation1 returns basis, with the goal of driving long-term shareholder value. ($ in millions) $131.5MM Organic Growth Inorganic Growth Capital Expenditures $15.6 • Invest in
Slide 21: Investing in Innovative Products
Investing in Innovative Products Our product innovation strategy is focused on developing commercially attractive products and solutions, while maintaining a flexible manufacturing strategy. Key Innovation Attributes Include: Serving Niche Applications Providing Incremental Value-Selling Through Res
Slide 22: 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 efficiencies. CSW Industrials Target Criteria: • Seek long-term growth well in excess • Expand in
Slide 23: Strategic, Disciplined M&A Execution
Strategic, Disciplined M&A Execution Demonstrated track record of acquisitions aligned with our stated strategy Shoemaker Falcon AC Leak Freeze MSD TRUaire Manufacturing Stainless Greco Aluminum Petersen Metals Cover Guard Deacon Railings & AC Guard Contractor Solutions Specialized Reliability Solut
Slide 24: 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 With CSWI: Broad Distribution <40 >200 Distributor Groups Distributor
Slide 25: Corporate Sustainability
Corporate Sustainability
Slide 26: Corporate Culture and Values
Corporate Culture and Values The Goal of Our Corporate Culture is to Our Core Values Provide the Framework for Maximize Performance Our Corporate Culture: CSWI is committed to recruiting great talent, offering Accountability Respect rewarding career destinations, and recognizing team members for a j
Slide 27: Corporate Culture and Values
Corporate Culture and Values Our Commitment to Diversity, Inclusion, and Respect: We seek to create, nurture, and sustain an inclusive and diverse environment that attracts and retains the highest caliber team members, leveraging their skills and expertise to serve our customers. We are dedicated to
Slide 28: Business Segment Overview
Business Segment Overview
Slide 29: Segments Summary
Segments Summary Contractor Solutions Engineered Building Solutions Specialized Reliability Solutions • $500.3MM TTM Revenue, • $102.9MM TTM Revenue, $13.5MM • $139.7MM TTM Revenue, $23.1MM $145.4MM EBITDA, and 29.1% EBITDA, and 13.1% EBITDA margin EBITDA, and 16.5% EBITDA margin EBITDA margin • Pr
Slide 30: Contractor Solutions Segment – Overview
Contractor Solutions Segment – Overview Summary: End Markets Served: • Highly diversified product portfolio • Future growth focus on new product providing industry leading products introductions through organic HVAC/R in both direct-to-customer and innovation and inorganic additions distributor mode
Slide 31: Contractor Solutions Segment – Overview
Contractor Solutions Segment – Overview Strategic Growth that Outpaces End Markets: • Continue to develop and market innovative products providing low cost and high value, while supporting additional revenue growth for distributors and efficiencies for professional contractors • Acquire, develop, an
Slide 32: Contractor Solutions: Products
Contractor Solutions: Products Water & Gas Pipe Thread Sealant Connectors Push-to-connect refrigerant fittings Surge Protective Devices Grilles, Registers, and Diffusers Condensate overflow switches and clean out devices Secondary Condensate Drain Pans Investor Presentation 32 February 2023
Slide 33: Products Serving Niche HVAC/R Mini-Split Market
Products Serving Niche HVAC/R Mini-Split Market Investor Presentation 33 February 2023
Slide 34: Engineered Building Solutions Segment – Overview
Engineered Building Solutions Segment – Overview Summary: End Markets Served: • Decades of experience creating • Multiple manufacturing locations products that protect lives provides efficiency to meet the needs Smoke & Fire of general contractors and architects Protection • Endless use cases for co
Slide 35: Engineered Building Solutions Segment – Overview
Engineered Building Solutions Segment – Overview Where Form Meets Function: • Market leader in providing unique solutions to architects and contractors that meet code requirements, while adding functionality, performance, and aesthetically pleasing designs • Whether for new construction or renovatio
Slide 36: Engineered Building Solutions: Products
Engineered Building Solutions: Products Investor Presentation 36 February 2023
Slide 37: Specialized Reliability Solutions Segment – Overview
Specialized Reliability Solutions Segment – Overview Summary: End Markets Served: • Our product portfolio allows us to • Focus on adding value by innovating effectively compete and capture new and existing products to Rail/Transport enhanced margins relative to larger accelerate organic growth Speci
Slide 38: Specialized Reliability Solutions Segment – Overview
Specialized Reliability Solutions Segment – Overview Mission Critical Meets Mission Accomplished: • Established reputation for solving equipment maintenance challenges and increasing the reliability, performance, and lifespan of industrial assets utilized in the most demanding environments and extre
Slide 39: Specialized Reliability Solutions: Products
Specialized Reliability Solutions: Products Investor Presentation 39 February 2023
Slide 40: Specialized Reliability Solutions: Shell Whitmore JV Products
Specialized Reliability Solutions: Shell Whitmore JV Products Investor Presentation 40 February 2023
Slide 41: Appendix
Appendix
Slide 42: CSWI Executive Team
CSWI Executive Team Veteran leadership with broad industry experience, dedicated to enhancing shareholder value. Joseph B. Armes James E. Perry Donal J. Sullivan Luke E. Alverson Danielle R. Garde Chairman, CEO Executive VP and CFO Executive VP and GM, Senior VP, General Senior VP and and President
Slide 43: Reconciliation of Fiscal Third Quarter Segment Operating Income to Segment EBITDA
Reconciliation of Fiscal Third Quarter Segment Operating Income to Adjusted Segment Operating Income and to Segment EBITDA (Unaudited) (Unaudited) (Unaudited) (Amounts in thousands) Three Months Ended December 31, 2022 Three Months Ended December 31, 2021* Three Months Ended December 31, 2020* Engin
Slide 44: Reconciliation of YTD Segment Operating Income to Adjusted Segment EBITDA
Reconciliation of YTD Segment Operating Income to Adjusted Segment Operating Income and to Adjusted Segment EBITDA (Unaudited) (Unaudited) (Unaudited) (Amounts in thousands) Nine Months Ended December 31, 2022 Nine Months Ended December 31, 2021* Nine Months Ended December 31, 2020* Engineered Speci
Slide 45: Reconciliation of TTM Segment Operating Income to Segment EBITDA
Reconciliation of TTM Segment Operating Income to Segment EBITDA (Unaudited) (Amounts in thousands) Trailing Twelve Months Ended December 31, 2022 Engineered Specialized Contractor Building Reliability Corporate Consolidated Solutions Solutions Solutions and Other Operations Revenue, net $ 500,270 $
Slide 46: ISTR
ISTR