CSW Industrials Reports Fiscal First Quarter 2019 Results
Highlights
- First quarter 2019 revenue from continuing operations of
$89.6 million , compared to$89.3 million in the prior year period. - First quarter 2019 GAAP operating income of
$17.7 million ; Non-GAAP operating income of$15.9 million . - First quarter 2019 GAAP net earnings from continuing operations of
$14.0 million , or$0.88 per diluted share; Non-GAAP net earnings from continuing operations of$12.0 million , or$0.76 per diluted share. - Returned
$7.3 million to shareholders through share repurchases of 146 thousand shares. - The Company completed a sale of assets related to its Coatings business on
July 31, 2018 .
Net revenue during the fiscal first quarter of 2019 was
Net income from continuing operations in the fiscal first quarter of 2019 was
First Quarter Results of Operations
Consolidated revenue increased to
Industrial Products segment revenue was
Specialty Chemicals segment revenue was
Consolidated gross profit increased to
Consolidated operating expenses decreased 3.4% to
Reported income from continuing operations was
The Company also announced that it has completed a sale of assets related to its Coatings business, which was previously classified as held for sale, to an unrelated third party. The terms of the transaction were not disclosed due to immateriality.
Conference Call Information
The company will host a conference call today at
To listen to a telephonic replay of the conference call, dial toll-free 1-844-512-2921 or 1-412-317-6671 (international) and enter confirmation code 13681698. The telephonic replay will be available beginning at
Safe Harbor Statement
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words or phrases such as "may," "should," "expects," "could," "intends," "plans," "anticipates," "estimates," "believes," "forecasts," "predicts" or other similar expressions are intended to identify forward-looking statements, which include, without limitation, earnings forecasts, effective tax rate, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations and financial performance and condition.
The forward-looking statements included in this press release are based on our current expectations, projections, estimates and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the risk factors described from time to time in our filings with the
All forward-looking statements included in this press release are based on information currently available to us, and we assume no obligation to update any forward-looking statement except as may be required by law.
Non-GAAP Financial Measures
This press release includes an analysis of adjusted earnings per share, adjusted net income, and adjusted operating income, which are non-GAAP financial measures of performance. For a reconciliation of these measures to the most directly comparable GAAP measures and for a discussion of why we consider these non-GAAP measures useful, see the “Reconciliation of Non-GAAP Measures” section of this release.
About
CSWI is a diversified industrial growth company with well-established, scalable platforms and domain expertise across two segments: Industrial Products and Specialty Chemicals. CSWI's broad portfolio of leading products provides performance optimizing solutions to its customers. CSWI's products include mechanical products for heating, ventilation and air conditioning ("HVAC") and refrigeration applications, sealants and high performance specialty lubricants. Markets that CSWI serves include: HVAC, industrial, rail, plumbing, architecturally-specified building products, energy, mining and general industrial markets.
| Consolidated Income Statements | ||||||||
| Unaudited | ||||||||
| Three Months Ended June 30, | ||||||||
| (Amounts in thousands, except per share amounts) | 2018 | 2017 | ||||||
| Revenues, net | $ | 89,578 | $ | 89,299 | ||||
| Cost of revenues | (47,490 | ) | (47,426 | ) | ||||
| Gross profit | 42,088 | 41,873 | ||||||
| Selling, general and administrative expenses | (24,344 | ) | (25,202 | ) | ||||
| Operating income | 17,744 | 16,671 | ||||||
| Interest expense, net | (384 | ) | (631 | ) | ||||
| Other income (expense), net | 738 | 18 | ||||||
| Income before income taxes | 18,098 | 16,058 | ||||||
| Provision for income taxes | (4,091 | ) | (5,771 | ) | ||||
| Income from continuing operations | 14,007 | 10,287 | ||||||
| Loss (income) from discontinued operations, net of tax | (2,331 | ) | (1,773 | ) | ||||
| Net (loss) income | $ | 11,676 | $ | 8,514 | ||||
| Basic earnings (loss) earnings per common share: | ||||||||
| Continuing operations | $ | 0.89 | $ | 0.65 | ||||
| Discontinued operations | (0.15 | ) | (0.12 | ) | ||||
| Net (loss) income | $ | 0.74 | $ | 0.53 | ||||
| Diluted earnings (loss) earnings per common share: | ||||||||
| Continuing operations | $ | 0.88 | $ | 0.65 | ||||
| Discontinued operations | (0.15 | ) | (0.12 | ) | ||||
| Net (loss) income | $ | 0.73 | $ | 0.53 | ||||
| Consolidated Balance Sheets | ||||||||
| Unaudited | ||||||||
| June 30, | March 31, | |||||||
| (Amounts in thousands, except per share amounts) | 2018 | 2018 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 10,983 | $ | 11,706 | ||||
| Accounts receivable, net | 65,555 | 63,383 | ||||||
| Inventories, net | 46,335 | 42,974 | ||||||
| Prepaid expenses and other current assets | 5,044 | 7,077 | ||||||
| Current assets, discontinued operations | 2,193 | 2,427 | ||||||
| Total current assets | 130,110 | 127,567 | ||||||
| Property, plant and equipment, net | 53,437 | 54,473 | ||||||
| Goodwill | 81,334 | 81,764 | ||||||
| Intangible assets, net | 51,122 | 53,054 | ||||||
| Other assets | 22,876 | 23,958 | ||||||
| Total assets | $ | 338,879 | $ | 340,816 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 18,273 | $ | 16,826 | ||||
| Accrued and other current liabilities | 23,038 | 23,501 | ||||||
| Current portion of long-term debt | 561 | 561 | ||||||
| Current liabilities, discontinued operations | 3,467 | 3,966 | ||||||
| Total current liabilities | 45,339 | 44,854 | ||||||
| Long-term debt | 19,319 | 23,459 | ||||||
| Retirement benefits payable | 1,941 | 2,017 | ||||||
| Other long-term liabilities | 4,671 | 4,721 | ||||||
| Total liabilities | 71,270 | 75,051 | ||||||
| Equity: | ||||||||
| Common shares, $0.01 par value | 158 | 158 | ||||||
| Shares authorized – 50,000 | ||||||||
| Shares issued – 15,948 and 15,957, respectively | ||||||||
| Preferred shares, $0.01 par value | - | - | ||||||
| Shares authorized – 10,000 | ||||||||
| Shares issued – 0 | ||||||||
| Additional paid-in capital | 43,613 | 42,684 | ||||||
| Treasury shares, at cost (229 and 80 shares, respectively) | (10,754 | ) | (3,252 | ) | ||||
| Retained earnings | 243,402 | 233,650 | ||||||
| Accumulated other comprehensive loss | (8,810 | ) | (7,475 | ) | ||||
| Total equity | 267,609 | 265,765 | ||||||
| Total liabilities and equity | $ | 338,879 | $ | 340,816 | ||||
| Consolidated Statements of Cash Flow | |||||||
| Unaudited | |||||||
| Three Months Ended June 30, | |||||||
| (Amounts in thousands) | 2018 | 2017 | |||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 11,676 | $ | 8,514 | |||
| Less: Loss from discontinued operations | (2,331 | ) | (1,773 | ) | |||
| Income from continuing operations | 14,007 | 10,287 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation | 1,925 | 1,866 | |||||
| Amortization of intangible and other assets | 1,636 | 1,807 | |||||
| Provision for inventory reserves | 740 | 20 | |||||
| Share-based and other executive compensation | 929 | 1,017 | |||||
| Net (gain) loss on disposals of property, plant and equipment | (2,922 | ) | 105 | ||||
| Net pension benefit | (106 | ) | (319 | ) | |||
| Net deferred taxes | 147 | 1,443 | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable, net | (2,405 | ) | (7,386 | ) | |||
| Inventories | (3,333 | ) | (298 | ) | |||
| Prepaid expenses and other current assets | 2,022 | 764 | |||||
| Other assets | (27 | ) | 6 | ||||
| Accounts payable and other current liabilities | (719 | ) | 4,595 | ||||
| Retirement benefits payable and other liabilities | (53 | ) | 95 | ||||
| Net cash provided by operating activities, cont'd ops | 11,841 | 14,002 | |||||
| Net cash used in operating activities, discont'd ops | (2,894 | ) | (3,553 | ) | |||
| Net cash provided by operating activities | 8,947 | 10,449 | |||||
| Cash flows from investing activities: | |||||||
| Capital expenditures | (1,489 | ) | (1,656 | ) | |||
| Proceeds from sale of assets held for investment | 278 | - | |||||
| Proceeds from sale of assets | 3,230 | 1 | |||||
| Net change in bank time deposits | - | (5 | ) | ||||
| Cash paid for acquisitions | - | (44 | ) | ||||
| Net cash provided by (used in) investing activities, cont'd ops | 2,019 | (1,704 | ) | ||||
| Net cash provided by (used in) investing activities, discont'd ops | 297 | (645 | ) | ||||
| Net cash provided by (used in) investing activities | 2,316 | (2,349 | ) | ||||
| Cash flows from financing activities: | |||||||
| Repayments of lines of credit | (4,140 | ) | (6,015 | ) | |||
| Purchase of treasury shares | (7,502 | ) | (10 | ) | |||
| Net cash used in financing activities | (11,642 | ) | (6,025 | ) | |||
| Effect of exchange rate changes on cash and equivalents | (344 | ) | 705 | ||||
| Net change in cash and cash equivalents | (723 | ) | 2,780 | ||||
| Cash and cash equivalents, beginning of period | 11,706 | 23,146 | |||||
| Cash and cash equivalents, end of period | $ | 10,983 | $ | 25,926 | |||
| Reconciliation of Non-GAAP Measures | |||||||
| Reconciliation of Operating Income to Adjusted Operating Income---Continuing Operations | ||||||
| (unaudited) | ||||||
| (in thousands) | Quarter Ended June 30, | |||||
| 2018 | 2017 | |||||
| GAAP Operating Income- Continuing Operations | $ | 17,744 | $ | 16,671 | ||
| Adjusting items: | ||||||
| Restructuring & realignment | - | 1,108 | ||||
| Gain on sale of property & other | (1,839 | ) | - | |||
| Adjusted Operating Income--Continuing Operations | $ | 15,905 | $ | 17,779 | ||
| Reconciliation of Net Income to Adjusted Net Income---Continuing Operations | ||||||
| (unaudited) | ||||||
| (in thousands, except share data) | Quarter Ended June 30, | |||||
| 2018 | 2017 | |||||
| GAAP Net Income---Continuing Operations | $ | 14,007 | $ | 10,287 | ||
| Adjusting items, net of tax: | ||||||
| Restructuring & realignment | - | 720 | ||||
| Gain on sale of property & other | (1,361 | ) | - | |||
| Discrete Tax Provisions | (614 | ) | - | |||
| Adjusted Net Income---Continuing Operations | $ | 12,032 | $ | 11,007 | ||
| GAAP Diluted income per common share, Continuing operations | $ | 0.88 | $ | 0.65 | ||
| Adjusting items, per diluted common share: | ||||||
| Restructuring & realignment | - | 0.05 | ||||
| Gain on sale of property & other | (0.08 | ) | - | |||
| Discrete Tax Provisions | (0.04 | ) | - | |||
| Adjusted earnings per diluted common share | $ | 0.76 | $ | 0.70 | ||
| Reconciliation of Segment Operating Income to Adjusted Segment Operating Income | |||||||||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||||||||
| (in thousands, except percentages) | For the Three Months Ended June 30, 2018 | For the Three Months Ended June 30, 2017 | |||||||||||||||||||||||||||||
| Industrial Products |
Specialty Chemicals |
Corporate and Other |
Consolidated Continuing Operations |
Industrial Products |
Specialty Chemicals |
Corporate and Other |
Consolidated Continuing Operations |
||||||||||||||||||||||||
| Revenue | $ | 53,860 | $ | 35,718 | $ | - | $ | 89,578 | $ | 53,261 | $ | 36,036 | $ | 2 | $ | 89,299 | |||||||||||||||
| Operating Income | $ | 13,893 | $ | 6,473 | $ | (2,622 | ) | $ | 17,744 | $ | 13,663 | $ | 5,499 | $ | (2,491 | ) | $ | 16,671 | |||||||||||||
| Adjusting items: | |||||||||||||||||||||||||||||||
| Restructuring & realignment | - | - | - | - | 232 | 876 | - | 1,108 | |||||||||||||||||||||||
| Gain on sale of property & other | (253 | ) | (1,586 | ) | - | (1,839 | ) | - | - | - | - | ||||||||||||||||||||
| Adjusted Operating Income | $ | 13,640 | $ | 4,887 | $ | (2,622 | ) | $ | 15,905 | $ | 13,895 | $ | 6,375 | $ | (2,491 | ) | $ | 17,779 | |||||||||||||
| % of revenue | 25.3 | % | 13.7 | % | 17.8 | % | 26.1 | % | 17.7 | % | 19.9 | % | |||||||||||||||||||
We use adjusted earnings per share, adjusted net income and adjusted operating income, together with financial measures prepared in accordance with GAAP, such as revenue, income from operations, operating expense, operating income and net income, to assess our historical and prospective operating performance and to enhance our understanding of our core operating performance. We also believe these measures are useful for investors to assess the operating performance of our business without the effect of non-operating items.
Investor contact:
(203) 682-8311
Michael.Callahan@icrinc.com
Source: CSW Industrials, Inc.