Financial Analysis

"ACQUISITIONS Dusk Acquisition Corporation On November 4, 2025, we acquired 100% of the equity interests of Dusk Acquisition Corporation and its wholly owned subsidiaries, Motors & Armatures, LLC and HVAC South, LLC (together, MARS Parts), based in Hauppauge, New York, for an aggregate purchase price of $658.1 million (including $6.0 million of cash acquired), comprised of cash consideration of $650.0 million, estimated cash on balance sheet at closing of $4.1 million, and contingent considerations initially valued at $4.0 million based on MARS Parts meeting defined financial targets over a period of one year. The cash consideration was funded with a combination of the TLA (as defined in Note 8) and borrowings under our existing RCF (as defined in Note 8). As of the acquisition date, the estimated fair value of the contingent consideration was classified as a current liability of $4.0 million, which was determined using an option pricing model simulation that determines an average projected payment value across numerous iterations. MARS Parts is one of the largest providers of HVAC/R parts and supplies in North America, and a leading provider of motors and capacitors. With a product mix more heavily focused on repair versus replacement, we expect MARS Parts will strategically complement our current HVAC/R end market, which traditionally has been more focused on new unit installations and replacements. The MARS Parts acquisition was accounted for as a business combination …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

CONTINGENCIES From time to time, we are involved in various claims and legal actions that arise in the ordinary course of business. There are no matters pending, whether individually or in the aggregate, that we currently believe have a reasonable possibility of having a material impact to our business, consolidated financial position, results of operations or cash flows. As of June 30, 2026, we were contingently liable in connection with a $1.3 million surety bond associated with our performance under an agreement with a logistics service provider. The letter of credit collateralizing this bond was issued under our RCF and reduces the available borrowing capacity. We have not recorded any liability for this contingency, as we believe the likelihood of having to perform under the letter of credit is remote.

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Disaggregation of revenues reconciled to our reportable segments is as follows (in thousands): Three Months Ended June 30, 2026 Contractor Solutions Specialized Reliability Solutions Engineered Building Solutions Total Build-to-order $ $ $ 24,406 $ 24,406 Book-and-ship 273,596 48,141 4,507 326,244 Net revenues $ 273,596 $ 48,141 $ 28,913 $ 350,650 Three Months Ended June 30, 2025 Contractor Solutions Specialized Reliability Solutions Engineered Building Solutions Total Build-to-order $ $ $ 28,426 $ 28,426 Book-and-ship 194,975 36,775 3,470 235,220 Net revenues $ 194,975 $ 36,775 $ 31,896 $ 263,646 …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

SHARE-BASED COMPENSATION Prior to September 17, 2024, we maintained the shareholder-approved 2015 Equity and Incentive Compensation Plan (the 2015 Plan), which provided for the issuance of up to 1,230,000 shares of CSW common stock through the grant of stock options, stock appreciation rights, restricted shares, restricted stock units, performance shares, performance units or other share-based awards, to employees, officers and non-employee directors. On August 15, 2024, our shareholders approved the 2024 Equity and Incentive Compensation Plan (the 2024 Plan) and on September 17, 2024, we registered the offering of shares under the 2024 Plan on a Registration Statement on Form S-8 (the 2024 Plan Registration). Following the 2024 Plan Registration, the 2015 Plans remaining share reserve for new awards was cancelled. Any awards granted under the 2015 Plan prior to the 2024 Plan Registration remained outstanding and will vest, if at all, in accordance with their original terms and conditions. The 2024 Plan provides for the issuance of up to 850,000 shares of CSW common stock (less any shares granted pursuant to awards under the 2015 Plan prior to the 2024 Plan Registration) through the grant of stock options, stock appreciation rights, restricted shares, restricted stock units, performance shares, performance units or other share-based awards, to eligible participants. As of June 30, 2026, 765,552 shares were reserved and available for issuance under the 2024 Plan. We recorded s …

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FAIR VALUE MEASUREMENTS The carrying amounts of cash, accounts receivable, net and accounts payable approximate their fair values at June 30, 2026 and March 31, 2026 due to their short-term nature. Cash equivalents generally consist of money market funds invested with a reputable and highly diversified global bank in instruments issued or guaranteed by the U.S. Treasury. The fair value of these cash equivalents is based on quoted market price, which is a Level I input. The fair value of the interest rate swap contract (as discussed in Note 10) is determined using Level II inputs. The carrying value of our debt (discussed in Note 8) approximates fair value as it bears interest at floating rates. The long-term investments with no readily determinable fair value are measured using the alternative for fair value and the investment's carrying value is reported at cost, adjusted for impairments or any observable price changes in ordinary transactions with identical or similar investments. As of June 30, 2026 and March 31, 2026, the long-term investments reported in the balance sheets were $7.3 million and $7.3 million, respectively. The redeemable noncontrolling interest is recorded at the higher of the redemption value or carrying value each reporting period. The redemption value of the redeemable noncontrolling interest is estimated using a discounted cash flow analysis, which requires management judgment with respect to future revenue, operating margins, growth rates and discoun …

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GOODWILL AND INTANGIBLE ASSETS The changes in the carrying amount of goodwill as of June 30, 2026 and March 31, 2026 were as follows (in thousands): Contractor Solutions Specialized Reliability Solutions Engineered Building Solutions Total Balance at March 31, 2026 $ 596,926 $ 19,145 $ 16,560 $ 632,631 MARS Parts acquisition measurement period adjustments 7,875 7,875 Aspen Manufacturing acquisition measurement adjustment (245) (245) Currency translation 3 9 12 Balance at June 30, 2026 $ 604,559 $ 19,154 $ 16,560 $ 640,273 The following table provides information about our intangible assets (in thousands, except years): June 30, 2026 March 31, 2026 Weighted Avg Life (Years) Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization Finite-lived intangible assets: Patents 10 $ 17,785 $ (11,590) $ 17,785 $ (11,312) Customer lists and amortized trademarks 15 922,940 (180,785) 922,925 (165,943) Non-compete agreements 6 1,000 (858) 1,000 (814) Other 10 6,454 (3,576) 6,453 (3,514) $ 948,179 $ (196,809) $ 948,163 $ (181,583) Trade names and trademarks not being amortized: $ 133,471 $ $ 133,471 $ Amortization expenses for the three months ended June 30, 2026 and 2025 were $15.2 million and $8.7 million, respectively. Of these amounts, cost of revenues includes $0.3 million and $0.2 million, respectively. The following table shows the estimated future amortization for intangible assets, as of June 30, 2026, for the remainder of the current fiscal year and the next four …

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"INCOME TAXES For the three months ended June 30, 2026, we earned $66.9 million from operations before taxes and recognized income tax expenses of $17.1 million, resulting in an effective tax rate of 25.6%. The provision for income taxes differed from the statutory rate for the three months ended June 30, 2026 primarily due to state income tax (net of federal benefit), executive compensation limitations, and provision for global intangible low-taxed income (""GILTI""); offset by excess tax deductions related to equity compensation, foreign tax credits, and foreign-derived intangible income (FDII). For the three months ended June 30, 2025, we earned $54.4 million from operations before taxes and recognized income tax expenses of $13.2 million, resulting in an effective tax rate of 24.3%. The provision for income taxes differed from the statutory rate for the three months ended June 30, 2025 primarily due to state income tax (net of federal benefit), executive compensation limitations, and provision for GILTI; offset by adjustment to tax payable, foreign tax credits, excess tax deductions related to equity compensation and FDII. The Company expects $6.6 million of reserves for uncertain tax positions to either be settled or expire within the next 12 months as the statutes of limitations expire. We are under examination by the state of New York for the fiscal years ended March 31, 2024 through March 31, 2025. We have not been notified of any material adjustments. The Organizatio …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

LEASES We have operating leases for manufacturing facilities, offices, warehouses, vehicles and certain equipment. Our leases have remaining lease terms of 1 year to 22 years, s ome of which include escalation clauses and/or options to extend or terminate the leases . We have immaterial financing lease arrangements. Three Months Ended June 30, (in thousands) 2026 2025 Components of Operating Lease Expense Operating lease expense (a) $ 4,674 $ 3,939 Short-term lease expense 100 227 Total operating lease expense $ 4,774 $ 4,166 (a) Included in cost of revenues and selling, general and administrative expenses (in thousands) June 30, 2026 March 31, 2026 Operating Lease Assets and Liabilities Right-of-use assets, net (b) $ 65,273 $ 68,617 Assets of business held for sale 2,345 2,385 Short-term lease liabilities (c) $ 13,360 $ 13,622 Long-term lease liabilities (c) 58,656 61,862 Liabilities of business held for sale 2,449 2,398 Total operating lease liabilities $ 74,465 $ 77,882 (b) Included in other assets (c) Included in accrued and other current liabilities and other long-term liabilities Three Months Ended June 30, (in thousands) 2026 2025 Supplemental Cash Flow Cash paid for amounts included in the measurement of operating lease liabilities (d) $ 4,540 $ 3,993 Right-of-use assets obtained in exchange for new operating lease liabilities 63 604 (d) Included in our Consolidated Statements of Cash Flows under operating activities in net income and accounts payable and other curren …

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"LONG-TERM DEBT Long-term debt consists of the following (in thousands): June 30, 2026 March 31, 2026 Revolving Credit Facility, interest rate of 5.67% and 5.42% (a) $ 272,522 $ 279,000 Senior Secured Term Loan A, interest rate of 5.64% and 5.42% (a) 585,000 592,500 Total debt, gross 857,522 871,500 Less: Deferred TLA financing costs, net of amortization (2,071) (2,206) Less: Current portion (29,458) (29,458) Long-term debt, net $ 825,993 $ 839,836 (a) Represents the interest rate effective on June 30, 2026 and March 31, 2026, excluding the impact from the interest rate swap discussed in Note 10. Revolving Credit Facility As discussed in Note 9 to our consolidated financial statements included in our Annual Report, on May 2, 2025, we entered into a Third Amended and Restated Credit Agreement (the Third Credit Agreement) with JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the lenders, issuing banks and swingline lender party thereto. The Third Credit Agreement provides for a $700.0 million Revolving Credit Facility (""RCF"") that contains a $30.0 million sublimit for the issuance of letters of credit, a $15.0 million sublimit for swingline loans and an additional accordion feature of $250 million. The Third Credit Agreement was scheduled to mature on May 2, 2030. The Company incurred a total of $2.8 million in financing fees, including underwriting fees, which will be amortized over the life of the Third Credit Agreement. The deferred financing fe …

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Accounting Developments Pronouncements not yet implemented In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. This ASU provides guidance to expand disclosures related to the disaggregation of income statement expenses. Also, this ASU requires, in the notes to the financial statements, disclosure of specified information about certain costs and expenses which includes purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. ASU 2025-01 is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. This ASU will be effective for our Form 10-K for fiscal 2028 and our Form 10-Q for the first quarter of 2029. We are currently evaluating the impact this ASU may have on our financial statement disclosures. In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements, which includes amendments to more closely align hedge accounting with the economics of an entitys risk management activities. ASU 2025-09 is effective for fiscal years beginning after December 15, 2027 with early adoption permitted sh …

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REVENUE RECOGNITION Refer to Note 20 to our consolidated financial statements included in our Annual Report for a description of our disaggregation of revenues. Disaggregation of revenues reconciled to our reportable segments is as follows (in thousands): Three Months Ended June 30, 2026 Contractor Solutions Specialized Reliability Solutions Engineered Building Solutions Total Build-to-order $ $ $ 24,406 $ 24,406 Book-and-ship 273,596 48,141 4,507 326,244 Net revenues $ 273,596 $ 48,141 $ 28,913 $ 350,650 Three Months Ended June 30, 2025 Contractor Solutions Specialized Reliability Solutions Engineered Building Solutions Total Build-to-order $ $ $ 28,426 $ 28,426 Book-and-ship 194,975 36,775 3,470 235,220 Net revenues $ 194,975 $ 36,775 $ 31,896 $ 263,646 As of June 30, 2026 and March 31, 2026, accounts receivable, net balances were $233.3 million and $210.3 million, respectively. As of June 30, 2025 and March 31, 2025, accounts receivable, net balances were $179.4 million and $155.7 million, respectively. The following table summarizes the activity in the allowance for credit losses (in thousands): June 30, 2026 June 30, 2025 Balance at beginning of the fiscal year: $ 2,314 $ 1,137 Reserve 188 72 Write offs, net of recoveries (76) (340) Ending balance $ 2,426 $ 869 Contract Balances We receive payment from customers based on a contractual billing schedule and specific performance requirements as established in our contracts. We record billings as accounts receivable when an …

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SEGMENTS As discussed in Note 21 to our consolidated financial statements in our Annual Report, we conduct our operations through three reportable segments: Contractor Solutions Specialized Reliability Solutions Engineered Building Solutions The following is a summary of the financial information of our reporting segments reconciled to the amounts reported in the consolidated financial statements (in thousands). Three Months Ended June 30, 2026: (in thousands) Contractor Solutions Specialized Reliability Solutions Engineered Building Solutions Subtotal - Reportable Segments Eliminations and Other Total Revenues, net to external customers $ 273,595 $ 48,141 $ 28,914 $ 350,650 $ $ 350,650 Intersegment revenue 2,412 53 24 2,489 (2,489) Cost of revenues 148,537 29,656 17,585 195,778 (2,489) 193,289 Selling, general, and administrative expenses 52,454 10,485 6,779 69,718 7,789 77,507 Operating income 75,016 8,053 4,574 87,643 (7,789) 79,854 Depreciation & amortization 18,612 1,503 117 20,232 25 20,257 Capital expenditures 3,641 1,840 34 5,515 489 6,004 Three Months Ended June 30, 2025: (in thousands) Contractor Solutions Specialized Reliability Solutions Engineered Building Solutions Subtotal - Reportable Segments Eliminations and Other Total Revenues, net to external customers $ 194,975 $ 36,775 $ 31,896 $ 263,646 $ $ 263,646 Intersegment revenue 1,765 31 1,796 (1,796) Cost of revenues 106,465 23,622 19,913 150,000 (1,796) 148,204 Selling, general, and administrative expenses …

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"SHAREHOLDERS' EQUITY Common Stock June 30, 2026 June 30, 2025 Common Stock Treasury Stock Common Stock Treasury Stock Balance at beginning of the fiscal year 17,893,059 1,543,791 17,809,590 1,026,941 Vesting of performance shares and restricted stock units 53,803 20,281 40,162 14,966 Reissuance of treasury shares (19,079) (15,539) Restricted stock awards activities (484) 12,394 (1,114) Share repurchases 87,970 15,539 Ending balance 17,946,378 1,645,357 17,848,638 1,041,907 Equity Offering In September 2024, the Company completed a follow-on equity offering (""Equity Offering"") pursuant to which we issued and sold a total of 1,265,000 shares of our common stock to the public, including shares issued pursuant to the underwriters' full exercise of their over-allotment option, at an offering price of $285 per share. We received proceeds of $347.4 million, net of underwriting fees and discounts and expenses incurred directly related to the Equity Offering. We used a portion of the proceeds to pay off the outstanding balance of our RCF at the time of the Equity Offering, and used the remainder of the proceeds for general corporate purposes, including the acquisitions of PF WaterWorks, L.P. and Aspen Manufacturing, as discussed in Note 2. Share Repurchase Program On November 18, 2024, we announced that our Board of Directors authorized a new $200.0 million share repurchase program, which replaced the previously announced $100.0 million program. On December 15, 2025, we announced a …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing