CSW Industrials, Inc.

Good day and welcome to the CSW Industrial's first quarter 2024 earnings conference call. I'm Andre, the operator. All participants will be in this and only mode. Should you need assistance, please sing our conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchstone telephone. To withdraw your question, please press star then two. Please know this event is being recorded. I would now like to turn the conference over to Alexa Huerta, Vice President of Investor Relations and Treasurer. Please go ahead.

Thank you, Andre. Good morning, everyone, and welcome to the CSW Industrials Fiscal 2024 First Quarter Earnings Call. Joining me today is 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, updated investor relations presentation, and Form 10-Q 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 accessing 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.

Thank you, Alexa. Good morning, everyone, and thank you for joining our fiscal first quarter conference call. Once again, our team executed well in the face of headwinds in certain key markets. Our first quarter results reflect the tenacity and professionalism of our team members around the world. We are acutely focused on managing our costs, outperforming the categories we compete in, and expanding our margins. For the quarter, we are announcing many record results with our record first quarter revenue of $203 million, our record first quarter earnings per diluted share of $1.97 per share, and our record first quarter EBITDA of $54 million. We also delivered impressive operating leverage as EBITDA grew by 10 percent on 2 percent growth in revenue. But potentially, our most impressive metric is record cash flow from operations of $50 million for the first quarter. This led to a pay down of $43 million of borrowings under our revolving credit facility, and the company ended the quarter with a balance of $210 million outstanding. on our $500 million facility, allowing us to reduce our interest expense and maximize our potential to secure future opportunities as they arise. During the first fiscal quarter, last fall's CoverGuard, ACGuard, and Falcon acquisitions collectively contributed $5.1 million to inorganic revenue, all of which was reported in our contractor solution segments. These product line extensions expanded our offerings into our high-margin HVACR and plumbing end markets, reflecting the accretive nature of our capital allocation strategy and our focus on complementary product categories within our existing end markets served. As we have mentioned on our recent earnings calls, the cost of shipping containers from Asia is down quite a bit since last year, and now we are seeing a reduction in domestic freight as well as a reduction in certain raw materials over the prior year. We are, however, still experiencing increased employee expenses as well as increased amortization of intangible assets due to recent acquisitions. By successfully maintaining our pricing across all three segments, we have further expanded our margins. In the first three months of fiscal year 2024, we deployed $7.9 million of capital via dividends and capital expenditures in addition to the revolver reduction that I already mentioned. We continue to pursue both internal and external opportunities for growth consistent with our disciplined risk-adjusted return methodology and have maintained a healthy pipeline of acquisition opportunities. I want to touch briefly on our segments, then James will provide the additional details on our performance. Overall, I remain pleased with the execution of all three business segments, and in particular, with our leadership team's ability to adapt to dynamic conditions. We are in the middle of a busy summer season for our contractor solutions segment, and our team is highly focused on another year of growth, despite the industry currently experiencing a decline in residential HVACR volumes. The strength of this segment centers around leveraging our powerful distribution network, optimizing acquisition integration, and delivering high-value products to our customers. We are able to quickly acquire or master distribute products, resulting in sales at a faster and more cost-effective rate due to logistics leverage, supply agreements, our network of sales representatives, credit, and back office support. This allows us to do what we have always done well, which is to focus on serving our customers well as we add new products to our portfolio. Our specialized reliability solution segment continues to exceed expectations. The capacity utilization in our primary facility continues to increase, and our team there remains focused on top and bottom line growth by driving operational efficiencies and offering the optimal mix of products to our customers around the globe. Energy market growth remains solid, and industrial end markets are stable. Our joint venture with Shell continues to yield financial benefits, and we expect to complete the previously announced capacity expansion project within our existing facility by the end of this fiscal year, which will allow for increased revenue and profitability in fiscal 2025. Our engineered building solution segment was down slightly, the decrease in revenue of 3 percent in the quarter. However, for a sixth consecutive quarter, this segment's backlog reached another all-time high, with the aluminum railings business driving most of the growth. I will remind you that a significant portion of the current backlog is coming from larger jobs that typically do not turn into revenue for 18 months to two years. We are highly focused on pursuing institutional and multifamily projects undertaken by the highest quality developers with the highest likelihood of completion. And our team is performing well and delivering on current projects. Before I turn the call over to James, I would like to remind everyone of the demonstrated resiliency of our business model. Strength of our business model include the diversification of our product portfolio and of the end markets we serve, as well as the consumable nature of many of our products that are used either in maintenance, repair and replacement applications, or to extend the reliability, performance, and lifespan of mission-critical assets. Specific to our largest end markets, HVACR and plumbing, the products we sell and the value they provide are often non-discretionary, fundamental necessities for both homeowners and businesses. We continue to outperform the categories in which we compete. We have continued to maintain a strong balance sheet that allows us to withstand market headwinds with ample liquidity that affords us the ability to pursue growth opportunities that arise across our entire portfolio of businesses. At this time, I will turn the call over to James for a closer look at our results, and then I will conclude our prepared remarks.