CSW Industrials (CSWI) Q3 2026 earnings summary

Executive summary

• Achieved record quarterly and year-to-date revenue of $233 million, primarily driven by recent acquisitions, despite organic revenue declines in key segments due to softer demand in residential HVAC/R.

• Adjusted EBITDA reached a record $44.8 million for the quarter, up 6.6%–7% year-over-year, though adjusted EPS declined 21% due to higher interest expense from acquisition-related debt.

• Over $1.0 billion invested in acquisitions year-to-date, including the $650 million MARS Parts deal, the largest in company history, and several smaller deals.

• Integration of acquisitions is ahead of schedule, with most identified synergies already actioned and expectations to exceed initial synergy targets.

• Significant capital returned to shareholders via $92.6 million in buybacks and $13.6 million in dividends year-to-date.

Financial highlights

• Fiscal Q3 revenue rose 20%–20.3% year-over-year to $233 million, with $45 million from acquisitions; organic revenue declined 2.9%–5.1%.

• Adjusted consolidated EBITDA grew 6.6%–7% to $44.8 million, with margin down 250 bps to 19.2% due to acquisition mix and higher input costs.

• Adjusted EPS was $1.42, down 21% year-over-year, mainly due to $10 million higher interest expense and increased operating costs.

• Gross profit rose 15.4% to $92.4 million, but gross margin declined to 39.7% from 41.4% due to acquisition dilution and material cost inflation.

• Free cash flow for Q3 was $22.7 million, up 193% year-over-year; year-to-date free cash flow was $139.2 million.

Outlook and guidance

• Management is cautiously optimistic for fiscal 2027, expecting to leverage recent acquisitions and pricing actions to outperform end markets and manage tariffs and cost pressures.

• Integration of acquisitions is expected to drive further growth, operational synergies, and sustainable 20% EBITDA margin in the SRS segment in the next few quarters.

• Higher margin backlog in Engineered Building Solutions expected to benefit results as lower margin projects roll off over the next 6–18 months.