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Introduction & Market Context
CSW Industrials Inc (NYSE:CSW) (NASDAQ:CSWI), a diversified industrial growth company focused on niche, value-added products, reported its fiscal 2026 first quarter results on July 31, 2025. The company, which has grown its market capitalization to approximately $4.8 billion since going public in 2015, delivered strong revenue growth primarily driven by acquisitions, though margins faced pressure across all segments.
The company operates through three segments: Contractor Solutions (71% of revenue), Specialized Reliability Solutions (16%), and Engineered Building Solutions (13%). Since its inception, CSW Industrials has completed 17 acquisitions, deploying cumulative capital of $1.0 billion at an average purchase price multiple of 8.1x.
Quarterly Performance Highlights
CSW Industrials reported first quarter revenue of $263.6 million, representing a 17% increase compared to the same period last year. This growth was primarily driven by $43.7 million in inorganic revenue from recent acquisitions, partially offset by a $6.2 million decrease in organic revenue in the Contractor Solutions segment due to softer demand in the housing market.
The company achieved record first quarter EBITDA of $68.7 million, a 5% year-over-year increase. However, EBITDA margin declined 280 basis points to 26.1%. Adjusted earnings per share reached a record $2.85, up 3% from the prior year.
As shown in the following breakdown of first quarter financial results:
Segment Performance
The Contractor Solutions segment, which accounts for 71% of total revenue, reported $196.7 million in revenue, a 23% increase driven by acquisitions. Organic revenue decreased by $7.4 million or 4.6%. Segment EBITDA increased 12% to $65.0 million, while EBITDA margin decreased 330 basis points to 33.0%. The company expects to deliver "impressive organic growth rates during the remaining quarters of fiscal year 2026 which outpaces growth in our end markets."
The following chart illustrates the Contractor Solutions segment performance:
The Specialized Reliability Solutions segment reported revenue of $36.8 million, flat compared to the prior year. Segment EBITDA decreased 24% to $6.5 million, and EBITDA margin decreased 540 basis points. This segment serves rail transport, energy, mining, and general industrial markets.
The Engineered Building Solutions segment generated revenue of $31.9 million, a 3% increase. However, segment EBITDA decreased 29%, and EBITDA margin decreased 620 basis points, driven by higher material costs and increased investment in the sales team and R&D to drive future revenue.
Strategic Initiatives
A key strategic focus for CSW Industrials has been its acquisition of Aspen Manufacturing, one of the largest independent coil and air handler manufacturers in North America. Founded in 1975 and based in Humble, TX, Aspen primarily serves the residential market segment, shipping over 2,000 SKUs to more than 150 customers across 2,300+ locations in the United States and Canada.
For fiscal year 2026, Aspen is expected to grow low-double digits off its fiscal 2025 full year revenue of $125 million, with an EBITDA margin of approximately 24%. The acquisition is projected to contribute $11.6 million in amortization expense and $1.7 million in depreciation expense for the full fiscal year.
The following slide details Aspen’s expected financial impact:
CSW Industrials’ acquisition strategy has been a significant driver of its growth since going public in 2015. The company has completed 17 acquisitions, deploying $1.0 billion in capital at an average purchase price multiple of 8.1x. This approach has allowed CSW to expand its product portfolio and distribution network.
The company’s acquisition timeline demonstrates consistent execution of its M&A strategy:
Long-term Growth Trajectory
Despite the current quarter’s mixed results, CSW Industrials has demonstrated impressive long-term growth. Since its inception in 2015, the company has achieved 919% market cap growth, 243% revenue growth, and 301% adjusted EBITDA growth. It has also returned $232 million to shareholders through dividends and share repurchases, resulting in an 840% total shareholder return.
The company’s portfolio has evolved significantly since 2015, transitioning from a focus on specialty chemicals and industrial products to its current three-segment structure. This transformation has driven substantial financial improvements, with TTM sales reaching $916 million, adjusted EBITDA of $231 million, and adjusted EPS of $9.82.
The following chart illustrates this portfolio evolution:
CSW Industrials has also demonstrated strong free cash flow and earnings per share growth, with a free cash flow per share CAGR of 25.2% and an adjusted EPS CAGR of 25.8% from FY21 to FY25.
Forward-Looking Statements
Looking ahead, CSW Industrials remains focused on its four guiding objectives: treating team members well, serving customers well, managing supply chains effectively, and positioning for sustainable long-term growth and profitability.
The company expects to deliver organic growth rates during the remaining quarters of fiscal year 2026 that outpace its end markets, particularly in the Contractor Solutions segment. For Aspen Manufacturing, management projects low-double-digit growth off its fiscal 2025 revenue base of $125 million.
CSW Industrials continues to maintain a strong balance sheet with $604 million available on its $700 million revolving credit facility and $38 million in cash on hand as of June 30, 2025. The company paid down $20 million of borrowings under its revolving credit facility during the twelve months ended June 30, 2025, demonstrating its commitment to maintaining a leverage ratio of 1x to 3x total debt to EBITDA.
While the company faces near-term challenges from softer demand in the housing market affecting its Contractor Solutions segment and margin pressure across all segments, its diversified portfolio, acquisition strategy, and strong financial position provide a foundation for continued long-term growth.
Full presentation:
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