CSW Industrials (CSWI) Q4 2026 earnings summary

Executive summary

• Achieved record Q4 and full-year revenue and adjusted EBITDA, surpassing $1.08 billion in annual revenue for the first time, driven by both organic and inorganic growth, with $223 million in inorganic growth from acquisitions and a more diversified portfolio.

• Adjusted EBITDA grew 18% to $270 million, with margin contracting 100 bps to 24.9% due to gross margin pressure from acquisitions and higher material costs.

• Adjusted EPS increased 7% to $10.38, reflecting higher operating income but offset by increased interest expense and share count from a recent equity offering; reported EPS and net income declined due to non-cash impairment and higher interest expense.

• Completed five synergistic acquisitions and a minority investment, deploying ~$1 billion in capital, and returned $146 million to shareholders via buybacks and dividends.

• Portfolio is now larger and more diversified, with increased exposure to HVAC repair cycles and a balanced product offering.

Financial highlights

• Q4 revenue reached $309 million, up 34% year-over-year, with $72 million from acquisitions and 2.8% consolidated organic growth.

• Q4 adjusted EBITDA grew 39% to $83 million; adjusted EPS was $3.14, up 21% year-over-year.

• Adjusted gross margin was 43.5% in Q4 and 43% for FY26, down due to acquisition-related dilution and inflation, partially offset by pricing and freight savings.

• Free cash flow for Q4 was an outflow of $6.8 million, reflecting working capital needs and higher interest expense; full-year free cash flow was $132.4 million.

• Net income for FY26 was $112 million, with reported Q4 EPS falling 41.1% to $1.22 and full-year EPS down 20% to $6.70 due to impairment and higher interest expense.

Outlook and guidance

• Expect all segments to show revenue growth in fiscal 2027, with significant adjusted EPS and free cash flow growth.

• Contractor Solutions and Specialized Reliability Solutions segments forecast higher EBITDA margins as synergies are realized.

• GAAP EPS will be impacted by higher interest expense and increased intangible amortization; fiscal 2027 GAAP tax rate expected at ~23%, adjusted tax rate at ~26%.

• Interest expense for FY27 estimated at $45.8 million; annualized intangible amortization projected at $60.7 million.