CSW Industrials (CSWI) Q3 2026 earnings summary

Executive summary

• Achieved record quarterly and year-to-date revenue of $233 million, up 20.3% year-over-year, and record adjusted EBITDA, primarily driven by recent acquisitions despite organic revenue declines in key segments due to softer demand in residential HVAC/R.

• Adjusted EBITDA and adjusted EPS grew year-to-date, but quarterly adjusted EPS and net income declined due to higher interest and integration expenses from acquisition-related debt.

• Completed major acquisitions including MARS Parts ($650–$667.5 million), Aspen Manufacturing, Hydrotex, and ProAction Fluids, with integration ahead of schedule and synergies expected to exceed initial $10 million target.

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

• Integration of new businesses expanded product offerings and diversified end markets, particularly in HVAC/R and plumbing.

Financial highlights

• Fiscal Q3 revenue rose 20.3% year-over-year to $233.0 million, with $45.0 million from acquisitions; organic revenue declined 2.9%.

• Adjusted consolidated EBITDA grew 7% year-over-year to $44.8 million; adjusted EBITDA margin declined to 19.2% from 21.7%.

• Adjusted EPS was $1.42, down 21% year-over-year, mainly due to $10 million higher interest expense from acquisition funding.

• Gross profit rose 15.4% to $92.4 million, but gross margin contracted to 39.7% due to acquisition mix and increased tariffs/material costs.

• 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 improved order patterns, customer inventory normalization, and margin recovery as integration costs subside and synergies are realized.

• Expects to outperform end markets served, leveraging recent acquisitions and pricing actions to manage tariffs and cost pressures.

• Integration of acquisitions expected to drive further growth and operational synergies, with SRS segment targeting sustainable 20% EBITDA margin.