CSW Industrials, Inc.

Greetings and welcome to CSW Industrials Fiscal Second Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Adrienne Griffin, Vice President of Investor Relations and Treasurer. Please go ahead.

Thank you, Maria. Good morning, everyone, and welcome to the CSW Industrials Fiscal 2022 Second Quarter Earnings Call. Joining me today are Joseph Arms, Chairman, Chief Executive Officer and President of CSW Industrials, and James Perry, Executive Vice President and Chief Financial Officer. We issued our earnings release presentation, and form 10Q prior to the market's opening today, which are available on the investor portion of our website at www.cswindustrials.com. This call is being webcast, and information on how to access the replay is included in the earnings release. During this call, we will make forward-looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Actual results could materially differ because of factors discussed today in our earnings release, in the comments made during this call, as well as the risk factors identified in our annual report on Form 10-K and other filings with the SEC. We do not undertake any duty to update any forward-looking statements. I will now turn the call over to Joe Arms.

Thank you, Adrienne. Good morning, and thank you for joining our fiscal second quarter conference call. CSWI posted impressive second quarter results, building on momentum from the ongoing TrueAir integration, along with organic growth aided by disciplined price actions and demand in end markets recovering from last year's general economic downturn. In collaboration with our resilient team members around the globe, our leadership team has managed the macro headwinds and challenging dynamics for the past 20 months. including accelerating inflation, supply chain challenges, and operational dislocations, with extraordinary diligence, professionalism, resolve, and customer focus that are consistent with the high standards we set for ourselves. To provide context for our fiscal second quarter performance, I'll highlight a few key metrics. As compared to the same prior year period, which was then our strongest quarter on record, we achieved 48% revenue growth of which 15% was organic growth and 33% was inorganic growth from our TrueAir acquisition. EBITDA growth was 33% and quarterly earnings per share attributable to CSWI rose to $1.14 compared to $1.10 in the prior year period. For additional perspective, if we compare this quarter's results to this quarter two years ago, which was our fiscal 2020, top line growth was nearly 54%, including organic growth of 19%, adjusted EBITDA growth was a compelling 50%, 5-0, and adjusted earnings per share increased 24%. We are pleased to have achieved these results as they illustrate our success in providing high-quality, innovative products with excellent customer service while limiting disruptions to our customers and partners and minimizing product outages. In short, our customers rely on us to be dependable partners for their distribution network, and we have not disappointed them. Next, I would like to provide an update on our TruAir manufacturing operations in Vietnam. As reported on our August earnings call, in response to strict local COVID protocols, we were required to reduce the number of employees on site. Through extraordinary accomplishments by approximately 250 team members who lived and worked on site, we continued manufacturing key products and kept all of our team members safe. Vietnam's COVID restrictions have relaxed in recent weeks, and we now have approximately 1,150 team members working at our facility and are in the process of returning to full production. For perspective, on average, during August and September, we shipped nine containers of product per week, which compares with 22 containers in the week ended October 29, 2021. We anticipate reestablishing full operations for approximately 36 containers per week by the end of November. Strategic production decisions we made in conjunction with our TruAir inventory position in the United States proved sufficient to meet customer demands, and as a result, no loss of TruAir revenue is expected for this fiscal year. During the quarter, we integrated two of the five TruAir distribution centers and now ship both RectorSeal and TruAir products from our Jacksonville, Florida and Santa Fe Springs, California warehouses. This co-location allows us to fulfill a portion of RectorSeal's customer orders from the southeast and the west coast, significantly reducing the time between order placement and delivery. Turning to our stated capital allocation priorities, since closing the acquisition of TrueAir in December of 2020, we repaid $41 million of credit facility borrowings that funded that acquisition. During the first six months of this fiscal year, we paid $4.7 million in dividends, and we have invested capital to implement our enterprise resource planning systems and automation safety and efficiency initiatives. Through our rigorous risk-adjusted returns analysis, we will continue evaluating inorganic investments, and we have a very healthy pipeline of opportunities. The key differentiator for our company is our distribution network. and we will continue seeking to add products that exploit our distribution channels in the most profitable end markets we serve. Our organization stands ready to capitalize on the next compelling opportunity. At this time, I'll turn the call over to James for a closer look at our results, and then I will conclude our prepared remarks with thoughts on the remainder of the fiscal year.