CSW Industrials (CSWI) Q1 2027 earnings summary

Executive summary

• Achieved record quarterly revenue of $351 million in Q1/Q2 2026-2027, up 33% year-over-year, driven by both organic and inorganic growth, with major contributions from five accretive acquisitions including MARS Parts and Aspen Manufacturing.

• Adjusted EBITDA reached $102 million, up 48% year-over-year, with margin expanding to 29% due to acquisitions, pricing actions, and cost controls.

• Adjusted EPS was $3.84, up 35% year-over-year, while net income rose 22% to $50 million, reflecting higher income partially offset by increased interest expense from acquisition-related debt and share repurchases.

• Returned $28.4 million to shareholders via $23.5 million in share repurchases and $4.9 million in dividends during the quarter, with cumulative $396 million returned since 3Q18.

• All business segments delivered strong top-line growth and margin expansion, except Engineered Building Solutions, which faced Greco-related headwinds.

Financial highlights

• Consolidated revenue reached $351 million, up 33% year-over-year, with $87 million increase driven by acquisitions and 5.3% organic growth.

• Adjusted gross margin rose to 45.1%, up 130 bps from prior year, due to favorable mix, cost savings, and acquisition synergies.

• Adjusted EBITDA was $102 million, up 48% year-over-year, with margin expanding 290 bps to 29%.

• Adjusted EPS was $3.84, up 35% year-over-year; higher interest expense from increased debt moderated EPS growth relative to EBITDA.

• Operating cash inflow was $76 million, up from $61 million last year; free cash flow was $70 million.

Outlook and guidance

• Expect all segments to deliver organic revenue and EBITDA growth in fiscal 2027, excluding Greco businesses.

• Significant adjusted EBITDA and EPS growth anticipated for the full year, with strong free cash flow generation.

• GAAP tax rate expected at 23%-24%, adjusted tax rate at 26% for fiscal 2027.

• Margin targets: Contractor Solutions to maintain low 30% EBITDA margin; Specialized Reliability Solutions to exceed 20% margin; Engineered Building Solutions to target 20%+ margin.

• Backlog at all-time high in continuing businesses, supporting confidence in future margin strength.