Csw Industrials, Inc. · NYSE:CSW
Csw Industrials — Q3 2021 Earnings Presentation
49 slides from Csw Industrials's earnings presentation, February 2021
Slide 1: Investor Presentation: Fiscal Third Quarter and Year-to-Date 2021 Results
Investor Presentation Fiscal Third Quarter and Year-to-Date 2021 Results February 2021
Slide 2: Forward Looking Statements / 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 Investment Thesis & Third Quarter Highlights..........................................................4 Fiscal 3rd Quarter and Year-to-Date 2021 Results................................................10 Long-Term Shareholder Value................................................................
Slide 4: Compelling Investment Thesis
Compelling Investment Thesis Sustained multi- Consistently demonstrating growth in excess of end markets served year revenue Total revenue CAGR of 9.6% from FY16 through FY201 growth Organic revenue CAGR of 7.2% from FY16 through FY201 Robust margin profile provided by niche products, applications
Slide 5: 3Q21: Quarterly Revenue and Operating Income
3Q21: Quarterly Revenue and Operating Income Consolidated Financial Highlights (3Q21 vs 3Q20): Summary Quarterly Consolidated Results1 Revenue of $89.9MM, a 7.4% increase ($ in millions) ◊ Includes 2.1% organic, and 5.3% inorganic growth from the TRUaire acquisition Successfully closed largest t
Slide 6: 2021 Guiding Objectives: Fiscal 3rd Quarter Updates
2021 Guiding Objectives: Fiscal 3rd Quarter Updates At CSWI, we: Position CSWI for Treat Our Serve Our Customers Manage Our Supply Sustainable, Long- Employees Well Well Chains Effectively Term Growth and Profitability Continued employment Recently acquired TRUaire Integrate our newly Execut
Slide 7: 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 8: 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 Revenue1 $385.9MM CSWI + TRUaire Revenue1,2 $480.2MM Mining 3% Mining 4% Rail 4% Rail 5% Energy 5% Energy 6% General Industrial 10% General Industrial 13% Plumbing 9% Specialt
Slide 9: Shell Whitmore Reliability Solutions: A Strategic Joint Venture
Shell Whitmore Reliability Solutions: A Strategic Joint Venture1 Aligns with CSWI Capital Allocation Organic growth acceleration CSWI initial’s investment in the JV consists Partnering with global lubricant leader, Shell solely of existing assets JV will target North America Class I, II, and I
Slide 10: Fiscal 3rd Quarter 2021 Summary of Financial Results
Fiscal 3rd Quarter 2021 Summary of Financial Results TRUaire’s SF Series single and double deflection spiral style diffusers TRUaire Product Spotlight feature durable extruded aluminum construction and have individually Single Deflection Grille adjustable blades for deflection control. Available in
Slide 11: Diversified Revenue Across End Markets Served
Diversified Revenue Across End Markets Served1 ($ in millions) $77.5MM $83.7MM $89.9MM Mining 4% Mining 3% Mining 4% Rail 5% Rail 8% Rail 7% Energy 5% Energy 9% Energy 7% General Industrial 11% General Industrial 13% General Industrial 13% Plumbing 10% Plumbing 10% Plumbing 12% Architecturally Speci
Slide 12: 3Q21: Industrial Products Summary
3Q21: Industrial Products Summary1 Revenue Quarterly Revenue increased 20.8% Adjusted Operating Income ($ in millions) (11.6% organic) over the prior year period to $58.8MM primarily driven by increased sales into the HVAC/R and ASBP end markets, partially offset by declines in other end markets s
Slide 13: 3Q21: Specialty Chemicals Summary
3Q21: Specialty Chemicals Summary1 Revenue Quarterly Segment Revenue decreased Adjusted Operating Income ($ in millions) 11.1%, compared to the prior year period, to $31.1MM as increased sales volumes into the HVAC/R and general industrial end markets were more than offset by pandemic driven deman
Slide 14: Fiscal Year-To-Date December 31, 2020 Summary of Financial Results
Fiscal Year-To-Date December 31, 2020 Summary of Financial Results CSWI Product Spotlight Safe-T-Switch® Model SC1 inline cleanout device allows quick and easy Safe-T-Switch® SC1 access for cleaning of condensate drain lines. Device includes an integrated, easy-access Schrader valve for pressure cle
Slide 15: Diversified Revenue Across End Markets Served
Diversified Revenue Across End Markets Served1 ($ in millions) $258.7MM $287.4MM $285.8MM Mining 3% Mining 3% Mining 3% Rail 6% Rail 6% Rail 4% Energy 5% Energy 8% Energy 8% General Industrial 10% General Industrial 15% General Industrial 13% Plumbing 10% Plumbing 10% Plumbing 11% Architecturally Sp
Slide 16: 3Q21 YTD: Further Enhanced Liquidity and Leverage
3Q21 YTD: Further Enhanced Liquidity and Leverage Consolidated Financial Highlights: Durable Operating Delivered net cash provided by operating activities of $54MM, compared to Cash Flow $60MM in the prior year period with the decrease due primarily to transaction expenses Strong balance sheet,
Slide 17: 3Q21 YTD: Industrial Products Summary
3Q21 YTD: Industrial Products Summary1 Revenue Adjusted Operating Income ($ in millions) Revenue increased 10.1% (7.6% organic) over the prior year period to $192.5 million due to increased demand in the HVAC/R and ASBP end markets, modestly offset by sales into the general industrial and rail end
Slide 18: 3Q21 YTD: Specialty Chemicals Summary
3Q21 YTD: Specialty Chemicals Summary1 Revenue Adjusted Operating Income ($ in millions) Revenue decreased 17.1% to $93.3 million 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 ri
Slide 19: 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 Mar
Slide 20: 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 2/2/21, compared to ~$500MM in 2015 public debut Allocate Capital Efficiently $384MM TTM2 revenue, versus $262MM
Slide 21: Maintaining Our Strong Balance Sheet
Maintaining Our Strong Balance Sheet CSWI is committed to maintaining a strong balance sheet, with ample liquidity through cash and available credit to maximize growth opportunities, both organically and inorganically. Attributes Liquidity Position1 ($ in millions) Liquidity ~$73MM of available
Slide 22: Allocating Capital Efficiently
Allocating Capital Efficiently Capital allocation decisions will continue to be prioritized on a risk-adjusted returns basis, with the goal of driving long-term shareholder value. Organic Growth Inorganic Growth TTM Capital Allocation1.2 ($ in millions) Invest in enhancing innovative, Prioritize
Slide 23: 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 24: 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 25: 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 26: CSWI Acquisition History
CSWI Acquisition History Acquisitions Aligned with Target Metrics Identified and executed accretive acquisitions that broadened and complemented our portfolio of brands and products Optimize costs in strategic acquisitions and eliminate most non-manufacturing related costs in product line acquis
Slide 27: CSW Industrials (Nasdaq: CSWI)
CSW Industrials (Nasdaq: CSWI) A growth-oriented, diversified industrial company with a strategic focus on providing niche, value-added products Key Highlights: in the end markets we serve. Two Segments Serving Diverse End Markets: 2015 Publicly listed on Nasdaq1 Specialty ~$2B Market capitalization
Slide 28: 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 extendi
Slide 29: 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 30: Industrial Products – Segment Overview
Industrial Products – Segment Overview Summary: Highly diversified product portfolio Focus on adding value by innovating ~$253MM providing industry leading products in new and existing products to TTM1 Revenue both direct-to-customer and accelerate organic growth. distributor models. Future gr
Slide 31: Specialty Chemicals – Segment Overview
Specialty Chemicals – Segment Overview Summary: Our product portfolio allows us to Focus on adding value by innovating ~$132MM effectively compete and capture new and existing products to TTM1 Revenue enhanced margins relative to larger accelerate organic growth. Specialty Chemical peers. Futu
Slide 32: 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 33: 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 34: 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 35: 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 36: Products Serving the Architecturally Specified Building Products End Market
Products Serving the Architecturally Specified Building Products End Market 36 Investor Presentation February 2021
Slide 37: Products Serving the Energy End Market
Products Serving the Energy End Market 37 Investor Presentation February 2021
Slide 38: Products Serving the HVAC/R End Market
Products Serving the HVAC/R End Market 38 Investor Presentation February 2021
Slide 39: Products Serving the Niche HVAC/R Mini-Split Market
Products Serving the Niche HVAC/R Mini-Split Market 39 Investor Presentation February 2021
Slide 40: Products Serving the General Industrial End Market
Products Serving the General Industrial End Market 40 Investor Presentation February 2021
Slide 41: Products Serving the Mining End Market
Products Serving the Mining End Market 41 Investor Presentation February 2021
Slide 42: Products Serving the Plumbing End Market
Products Serving the Plumbing End Market 42 Investor Presentation February 2021
Slide 43: Products Serving the Rail End Market
Products Serving the Rail End Market 43 Investor Presentation February 2021
Slide 44: Reconciliation of Fiscal Third Quarter Segment Operating Income to Adjusted Segment Operating Income
Reconciliation of Fiscal Third Quarter Segment Operating Income to Adjusted Segment Operating Income (unaudited) (Amounts in thousands, except percentages) For the Three Months Ended December 31, 2020 For the Three Months Ended December 31, 2019 For the Three Months Ended December 31, 2018 Consolida
Slide 45: Reconciliation of Fiscal Year-To-Date Segment Operating Income to Adjusted Segment Operating Income
Reconciliation of Fiscal Year-to-Date Segment Operating Income to Adjusted Segment Operating Income 45 Investor Presentation Note: Numbers may not foot due to rounding. February 2021
Slide 46: Reconciliation of Fiscal Year Segment Operating Income to Adjusted Segment Operating Income
Reconciliation of Fiscal Year Segment Operating Income to Adjusted Segment 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 Cont
Slide 47: Reconciliation of TTM Operating Income to Adjusted Operating Income
Reconciliation of TTM1 Operating Income to Adjusted Operating Income (Amounts in thousands, except percentages) (Unaudited) Training Twelve Month Actuals by Quarter 4Q20 1Q21 2Q21 3Q21 T12M Revenue $ 98,498 $ 90,964 $ 104,940 $ 89,932 $ 384,334 Operating Income 15,135 16,253 22,180 4,117 $ 57,685 Ad
Slide 48: Reconciliation of Net Income to Adjusted Net Income, Continuing Operations
Reconciliation of Net Income to Adjusted Net Income, Continuing Operations 48 Investor Presentation Note: Numbers may not foot due to rounding. February 2021
Slide 49: CSW Industrials
CSW INDUSTRIALS