CSW Industrials (NASDAQ: CSWI) reported Q4 EPS of $0.83, $0.08 better than the analyst estimate of $0.75. Revenue for the quarter came in at $98.5 million versus the consensus estimate of $95.56 million.

Company Highlights

• Management responding decisively to the global pandemic, acting in the best interest of all stakeholders
• Operations deemed essential with minimal disruption and enhanced safeguards for employees
• Reported 10.2% and 9.3% growth in revenue and operating income, respectively, in fiscal year 2020, as compared to fiscal year 2019
• Reported fiscal year 2020 earnings per share of $2.95 as compared to fiscal year 2019 EPS of $2.96, with adjusted EPS of $3.20 compared to $2.77, respectively
• Demonstrated continued commitment to disciplined capital allocation strategy with $26.5 million of shares repurchased, $20.6 million in net debt repayments, and $8.1 million in dividend payments to shareholders in fiscal year 2020
• Strong balance sheet and liquidity position, with $18.3 million of cash and fully available $250.0 million revolving credit facility at fiscal year-end
• Net cash provided by operating activities from continuing operations increased to $71.4 million, compared to $68.2 million in the prior year

Joseph B. Armes, CSW Industrials’ Chairman, President, and Chief Executive Officer, commented, “Our sustainable business model drove strong results in fiscal 2020, with outstanding top and bottom-line growth resulting from increased volumes across both segments and contributions from our recent acquisitions. Impressive cash flow generated by continuing operations enabled us to return $34.6 million to shareholders through share repurchases and dividends during the year, and to end the year with $18.3 million of cash and the full revolver capacity available.”

“Our strong financial results in fiscal 2020 are directly attributable to the diligence and professionalism of each of the over 700 employees of CSWI,” Armes continued. “We recognize the challenges that the pandemic has posed to all of our stakeholders, including our employees, customers, and suppliers, and our focus has been on safety, continuity of service, and support throughout a changing environment for our businesses.

“We are committed to our strong, employee-centric culture, where the safety and wellbeing of our employees are top priorities, and we redoubled our efforts in this regard as the pandemic unfolded. A few examples of our actions include procuring and requiring the use of additional personal protective equipment, ensuring incremental cleaning and sanitizing of our work sites, and modifying work schedules and processes. Our employees deserve our utmost respect and sincere gratitude as they have shown tremendous resiliency and courage in maintaining business continuity throughout this period, as we continue to support our customers and the critical infrastructure needs of our economy.”

Armes discussed, “As we look ahead to fiscal year 2021, most of the end markets we serve expect to experience temporary, but significant, demand degradation resulting from COVID-19 pandemic disruptions. We expect this will cause declines in demand for our products and services. While visibility is limited, we currently expect revenue and earnings in the first half of our fiscal year to be meaningfully lower than the prior year, with some recovery expected in the second half, assuming a successful reopening of the economy. We are monitoring demand through both macroeconomic data and, more importantly, direct conversations with our customers.”

“We have initiated several prudent cost control measures across the Company to manage short-term pressures,” Armes concluded, “but we do not anticipate these actions will fully offset the impact from expected revenue declines in the near term. Our highly experienced management team and Board of Directors, comprised of accomplished leaders adept at managing through economic cycles, are focused on the factors we can control, and supported by our strong balance sheet, we remain dedicated to long-term value creation.”

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