CSW INDUSTRIALS INC

Previous wording

CSW Industrials, Inc. (“CSWI,” “we,” “our” or “us”) is a diversified industrial growth company with a strategic focus on providing niche, value-added products in the end markets we serve. We operate in three business segments: Contractor Solutions, Specialized Reliability Solutions and Engineered Building Solutions. Our products include mechanical products for heating, ventilation, air conditioning and refrigeration (“HVAC/R”), plumbing products, grilles, registers and diffusers (“GRD”), building safety solutions and high-performance specialty lubricants and sealants. End markets that we serve include HVAC/R, architecturally-specified building products, plumbing, electrical, general industrial, energy, rail transportation and mining. Our manufacturing operations are concentrated in the United States (“U.S.”), Vietnam and Canada, and we have distribution operations in the U.S., Australia, Canada and the United Kingdom (“U.K.”). Our products are sold directly to end users or through designated channels in over 100 countries around the world, primarily including the U.S., Canada, the U.K. and Australia.

Current wording

CSW Industrials, Inc. (the “Company,” “CSWI,” “we,” “our” or “us”) is a diversified industrial growth company with a strategic focus on providing niche, value-added products in the end markets we serve. We operate in three business segments: Contractor Solutions, Specialized Reliability Solutions and Engineered Building Solutions. Our products include mechanical products for heating, ventilation, air conditioning and refrigeration (“HVAC/R”), plumbing products, grilles, registers and diffusers (“GRD”), building safety solutions and high-performance specialty lubricants and sealants. End markets that we serve include HVAC/R, architecturally-specified building products, plumbing, electrical, general industrial, energy, rail transportation and mining. Our manufacturing operations are concentrated in the United States (“U.S.”), Vietnam and Canada, and we have distribution operations in the U.S., Australia, Canada and the United Kingdom (“U.K.”). Our products are sold directly to end users or through designated channels in over 100 countries around the world, primarily including the U.S., Canada, the U.K. and Australia.

Previous wording

Many of our products are used to protect the capital assets of our customers that are expensive to repair or replace and are critical to their operations. We have a source of recurring revenue from the maintenance, repair and overhaul and consumable nature of many of our products. We also provide some custom engineered products that strengthen and enhance our customer relationships. The reputation of our product portfolio is built on more than 100 well-respected brand names, such as AC Guard®, Air Sentry®, Balco®, Cover Guard®, Deacon®, Dust Free®, Falcon Stainless®, Greco®, Jet-Lube®, Kopr-Kote®, Leak Freeze®, Metacaulk®, No. 5®, OilSafe®, RectorSeal®, Safe-T-Switch®, Shoemaker Manufacturing®, Smoke Guard®, TRUaire® and Whitmore®.

Current wording

Many of our products are used to protect the capital assets of our customers that are expensive to repair or replace and are critical to their operations. We have a source of recurring revenue from the maintenance, repair and overhaul and consumable nature of many of our products. We also provide some custom engineered products that strengthen and enhance our customer relationships. The reputation of our product portfolio is built on more than 100 well-respected brand names, such as AC Guard®, Air Sentry®, Balco®, Cover Guard®, Deacon®, Dust Free®, Falcon Stainless®, Greco®, Jet-Lube®, Kopr-Kote®, Leak Freeze®, Metacaulk®, No. 5®, OilSafe®, PF WaterWorks TM, PSP Products TM, RectorSeal®, Safe-T-Switch®, Shoemaker Manufacturing®, Smoke Guard®, TRUaire® and Whitmore®.

Previous wording

All acquisitions are described in Note 2 to our consolidated financial statements included in this Quarterly Report. PSP Products, Inc. (“PSP”) activity has been included in our results within our Contractor Solutions segment since the August 1, 2024 acquisition date. Dust Free, LP. (“Dust Free”) activity has been included in our results within our Contractor Solutions segment since the February 6, 2024 acquisition date.

Current wording

All acquisitions are described in Note 2 to our consolidated financial statements included in this Quarterly Report. PF WaterWorks, L.P. ("PF WaterWorks") activity has been included in our results within our Contractor Solutions segment since the November 4, 2024 acquisition date. PSP Products, Inc. (“PSP”) activity has been included in our results within our Contractor Solutions segment since the August 1, 2024 acquisition date. Dust Free, LP. (“Dust Free”) activity has been included in our results within our Contractor Solutions segment since the February 6, 2024 acquisition date.

Previous wording

Net revenues for the three months ended September 30, 2024 increased $24.3 million, or 11.9%, as compared with the three months ended September 30, 2023. The increase was partially due to the acquisitions of PSP and Dust Free ($11.6 million or 5.7%). Excluding the impact of the acquisitions, organic sales increased $12.7 million, or 6.2%, from the prior year primarily due to an increase in unit volumes and a slight increase from pricing actions. Net revenue increased in the HVAC/R, architecturally-specified building products, electrical, energy, plumbing, rail transportation, and mining end markets and decreased in the general industrial end market.

Current wording

Net revenues for the three months ended December 31, 2024 increased $18.7 million, or 10.7%, as compared with the three months ended December 31, 2023. The increase was primarily due to the acquisitions of Dust Free, PSP, and PF WaterWorks ($15.3 million or 8.7%). Excluding the impact of the acquisitions, organic sales increased $3.4 million, or 1.9%, from the prior year primarily due to an increase in unit volumes. Net revenue increased in the HVAC/R, plumbing, electrical, and rail transportation end markets and decreased in the architecturally-specified building products, energy, and mining end markets.

Previous wording

Net revenues for the six months ended September 30, 2024 increased $47.1 million, or 11.6%, as compared with the six months ended September 30, 2023. The increase was partially due to the acquisitions of PSP and Dust Free ($18.8 million or 4.6%). Excluding the impact of the acquisitions, organic sales increased $28.3 million, or 7.0%, from the prior year due to increased unit volumes and a slight increase from pricing actions. Net revenue increased in the HVAC/R, architecturally-specified building products, electrical, plumbing, and rail transportation end markets and decreased in the mining end market.

Current wording

Net revenues for the nine months ended December 31, 2024 increased $65.8 million, or 11.3%, as compared with the nine months ended December 31, 2023. The increase was partially due to the acquisitions of Dust Free, PSP, and PF WaterWorks ($34.1 million or 5.9%). Excluding the impact of the acquisitions, organic sales increased $31.7 million, or 5.5%, from the prior year due to increased unit volumes and a slight increase from pricing actions. Net revenue increased in the HVAC/R, plumbing, architecturally-specified building products, electrical, and rail transportation end markets and decreased in the mining and energy end markets.

Previous wording

Gross profit for the three months ended September 30, 2024 increased $12.9 million, or 14.2%, as compared with the three months ended September 30, 2023. The increase was primarily a result of the increased net revenue and the inclusion of recent acquisitions of Dust Free and PSP. Gross profit margin of 45.6% for the three months ended September 30, 2024 increased as compared to 44.7% for the three months ended September 30, 2023. The increase was driven primarily by improved leverage from volume increase and pricing actions.

Current wording

Gross profit for the three months ended December 31, 2024 increased $6.1 million, or 8.3%, as compared with the three months ended December 31, 2023. The increase was primarily a result of the increased net revenue and the inclusion of recent acquisitions of Dust Free, PSP, and PF WaterWorks, and was partially offset by increased freight. Gross profit margin of 41.4% for the three months ended December 31, 2024 decreased as compared to 42.3% for the three months ended December 31, 2023. The decrease was driven primarily by the aforementioned increase in freight expense.

Previous wording

Gross profit for the six months ended September 30, 2024 increased $28.2 million, or 15.4%, as compared with the six months ended September 30, 2023. The increase was primarily a result of the increased net revenue and the inclusion of recent acquisitions of Dust Free and PSP. Gross profit margin of 46.5% for the six months ended September 30, 2024 increased as compared to 45.0% for the six months ended September 30, 2023. The increase was primarily due to improved leverage from volume increase, favorable product mix and pricing actions.

Current wording

Gross profit for the nine months ended December 31, 2024 increased $34.3 million, or 13.3%, as compared with the nine months ended December 31, 2023. The increase was primarily a result of the increased net revenue and the inclusion of recent acquisitions of Dust Free, PSP, and PF WaterWorks. Gross profit margin of 45.0% for the nine months ended December 31, 2024 increased as compared to 44.2% for the nine months ended December 31, 2023. The increase was primarily due to improved leverage from increased volume, favorable product mix, and a slight favorable impact from pricing actions.

Previous wording

Operating expenses for the three months ended September 30, 2024 increased $3.4 million, or 6.9%, as compared with the three months ended September 30, 2023. The increase was primarily due to added expenses related to the inclusion of Dust Free and PSP in the current period, including increased amortization of intangible assets, as well as increased expenses related to business integrations, strategic development activities, and employee compensation. The decrease in operating expenses as a percentage of revenues was attributable to revenue increasing by a greater percentage than the increase in operating expenses.

Current wording

Operating expenses for the three months ended December 31, 2024 increased $4.1 million, or 8.9%, as compared with the three months ended December 31, 2023. The increase was primarily due to added expenses related to the inclusion of Dust Free, PSP, and PF WaterWorks in the current period, including amortization of intangible assets, as well as increased expenses related to business acquisitions and integrations, including a $0.9 million acquisition broker fee. The decrease in operating expenses as a percentage of revenues was attributable to revenue increasing by a greater percentage than the increase in operating expenses.

Previous wording

Operating expenses for the six months ended September 30, 2024 increased $8.8 million, or 9.2%, as compared with the six months ended September 30, 2023. The increase was primarily due to added expenses related to the inclusion of Dust Free and PSP in the current period, including increased amortization of intangible assets and increased expenses related to employee compensation, business integrations, and strategic development activities. The decrease in operating expenses as a percentage of revenues was attributable to revenue increasing by a greater percentage than the increase in operating expenses.

Current wording

Operating expenses for the nine months ended December 31, 2024 increased $12.9 million, or 9.1%, as compared with the nine months ended December 31, 2023. The increase was primarily due to added expenses related to the inclusion of Dust Free, PSP, and PF WaterWorks in the current period, including amortization of intangible assets and increased expenses related to employee compensation, business integrations, acquisitions (including the aforementioned acquisition broker fee) and strategic development activities. The decrease in operating expenses as a percentage of revenues was attributable to revenue increasing by a greater percentage than the increase in operating expenses.

Previous wording

Operating income for the three months ended September 30, 2024 increased $9.6 million, or 22.8%, as compared with the three months ended September 30, 2023, as a result of the increase in gross profit, partially offset by the increase in operating expenses, as discussed above.

Current wording

Operating income for the three months ended December 31, 2024 increased $2.0 million, or 7.3%, as compared with the three months ended December 31, 2023, as a result of the increase in gross profit, partially offset by the increase in operating expenses, as discussed above.

Previous wording

Operating income for the six months ended September 30, 2024 increased $19.4 million, or 22.3%, as compared with the six months ended September 30, 2023, as a result of the increase in gross profit, partially offset by the increase in operating expenses, as discussed above.

Current wording

Operating income for the nine months ended December 31, 2024 increased $21.4 million, or 18.7%, as compared with the nine months ended December 31, 2023, as a result of the increase in gross profit, partially offset by the increase in operating expenses, as discussed above.

Previous wording

Net interest expense of $1.3 million for the three months ended September 30, 2024 decreased $2.0 million as compared to the three months ended September 30, 2023. Net interest expense of $3.9 million for the six months ended September 30, 2024 decreased $3.4 million as compared to the six months ended September 30, 2023. The decrease in the three and six months ended September 30, 2024 was due to reduced average borrowing under our Revolving Credit Facility as a result of strong operating cash flows generated and the repayment of the outstanding balance under our Revolving Credit Facility, as discussed in Note 7. The interest income generated by our cash equivalents invested in money market funds also contributed to the net interest expense decrease.

Current wording

Net interest income of $2.0 million for the three months ended December 31, 2024 improved $4.7 million as compared to the net interest expense of $2.8 million for the three months ended December 31, 2023. Net interest expense of $1.9 million for the nine months ended December 31, 2024 decreased $8.2 million as compared to the nine months ended December 31, 2023. The changes in the three and nine months ended December 31, 2024 were due to the reduced average borrowing under our Revolving Credit Facility, as a result of strong operating cash flows generated and the repayment of the outstanding balance under our Revolving Credit Facility, as discussed in Note 7, using the proceeds from the equity offering. The interest income generated by our cash proceeds from the equity offering and invested in money market funds also contributed to the net interest expense decrease.

Previous wording

Other income (expense), net changed $2.6 million to net expense of $(0.7) million for the three months ended September 30, 2024 as compared with net income of $1.9 million for the three months ended September 30, 2023. Other income (expense), net changed $2.6 million to net expense of $(0.4) million for the six months ended September 30, 2024 as compared with net income of 2.2 million for the six months ended September 30, 2023. The change in the three and six months ended September 30, 2024 was due to a $1.4 million gain reported in the previous period in connection with the sale of a property previously held for investment that did not recur, in addition to losses arising from transactions in currencies other than functional currencies.

Current wording

Other expense, net decreased $5.5 million to net expense of $0.7 million for the nine months ended December 31, 2024 as compared with net expense of $6.2 million for the nine months ended December 31, 2023. The change in the nine months ended December 31, 2024 was due to the above mentioned releases of non-cash tax indemnification assets, as well as a $1.4 million gain reported in the previous period in connection with the sale of a property previously held for investment that did not recur. The remaining change is attributed to foreign currency gains/losses related to transactions in currencies other than functional currencies.

Previous wording

For the three months ended September 30, 2024, we earned $49.5 million from operations before taxes and provided for income taxes of $12.9 million, resulting in an effective tax rate of 26.1%. For the six months ended September 30, 2024, we earned $102.3 million from operations before taxes and provided for income taxes of $26.9 million, resulting in an effective tax rate of 26.2%. The provision for income taxes differed from the statutory rate for the three and six months ended September 30, 2024 primarily due to state income tax (net of federal benefit), provision for global intangible low-taxed income (“GILTI”), executive compensation limitations, and increases to penalties and interest on uncertain tax positions (“UTP”); offset by foreign tax credits and excess tax deductions related to equity compensation and foreign-derived intangible income (“FDII”).

Current wording

For the three months ended December 31, 2024, we earned $31.3 million from operations before taxes and provided for income taxes of $4.3 million, resulting in an effective tax rate of 13.8%. For the nine months ended December 31, 2024, we earned $133.6 million from operations before taxes and provided for income taxes of $31.2 million, resulting in an effective tax rate of 23.3%. The provision for income taxes differed from the statutory rate for the three and nine months ended December 31, 2024 primarily due to state income tax (net of federal benefit), executive compensation limitations, and provision for global intangible low-taxed income (“GILTI”); offset by release of uncertain tax positions (“UTP”) due to lapse of statute, excess tax deductions related to equity compensation, foreign currency rate impact on the cumulative unrepatriated foreign earnings, foreign tax credits and foreign-derived intangible income (“FDII”).

Previous wording

For the three months ended September 30, 2023, we earned $40.6 million from operations before taxes and provided for income taxes of $10.4 million, resulting in an effective tax rate of 25.7%. For the six months ended September 30, 2023, we earned $82.1 million from operations before taxes and provided for income taxes of $20.9 million, resulting in an effective tax rate of 25.4%. The provision for income taxes differed from the statutory rate for the three and six months ended September 30, 2023 primarily due to state income tax (net of federal benefit), executive compensation limitations, provision for GILTI and increase in the reserves of UTP; offset by excess tax deductions related to FDII, non-controlling interest and excess deductions related to stock-based compensation, net of limitations

Current wording

For the three months ended December 31, 2023, we earned $16.4 million from operations before taxes and provided for income taxes of $7.1 million, resulting in an effective tax rate of 43.2%. For the nine months ended December 31, 2023, we earned $98.5 million from operations before taxes and provided for income taxes of $28.0 million, resulting in an effective tax rate of 28.4%. The provision for income taxes differed from the statutory rate for the three and nine months ended December 31, 2023 primarily due to the tax impact on the aforementioned release of the indemnification assets, the release of UTPs, the impact of US federal provision to return adjustments, state income tax (net of federal benefit), executive compensation limitations, and the inclusions related to foreign operations.

Previous wording

The Company expects $3.6 million of reserves for UTPs to either be settled or expire within the next 12 months as the statutes of limitations expire.

Current wording

The Company expects $6.2 million of reserves for UTPs to either be settled or expire within the next 12 months as the statutes of limitations expire.

Previous wording

The Organization for Economic Cooperation and Development introduced a framework under Pillar Two, which includes a global minimum tax rate of 15% that applies to fiscal year starting on or after January 1, 2024, with certain remaining provisions to be effective in 2025. Certain jurisdictions in which we do business have enacted laws implementing Pillar Two. Based on our current forecast, we do not expect the Pillar Two rules to apply to the Company in the near term. We are monitoring these developments and do not believe these rules will have a material impact on our financial condition and/or consolidated results.

Current wording

The Organization for Economic Cooperation and Development introduced a framework under pillar two (“Pillar Two”), which includes a global minimum tax rate of 15% that applies to fiscal year starting on or after January 1, 2024, with certain remaining provisions to be effective in 2025. Certain jurisdictions in which we do business have enacted laws implementing Pillar Two. Based on our current forecast, we do not expect the Pillar Two rules to apply to the Company in the near term. We are monitoring these developments and do not believe these rules will have a material impact on our financial condition and/or consolidated results.

Previous wording

Net revenues for the three months ended September 30, 2024 increased $18.9 million, or 13.5%, as compared with the three months ended September 30, 2023. The increase was partially due to the acquisitions of Dust Free and PSP ($11.6 million or 8.3%). Excluding the impact of the acquisitions, organic sales increased by $7.3 million, or 5.2%, due to increased unit volumes and a slight increase from pricing actions. Net revenue increased in the HVAC/R, electrical and plumbing end markets and decreased in the architecturally-specified building product end market.

Current wording

Net revenues for the three months ended December 31, 2024 increased $16.7 million, or 14.5%, as compared with the three months ended December 31, 2023. The increase was primarily due to the acquisitions of Dust Free, PSP, and PF WaterWorks ($15.3 million or 13.3%). Excluding the impact of the acquisitions, organic sales increased by $1.4 million, or 1.2%, due to increased unit volumes. Net revenue increased in the HVAC/R, plumbing, and electrical end markets and decreased in the architecturally-specified building product end market.

Previous wording

Net revenues for the six months ended September 30, 2024 increased $39.4 million, or 14.1%, as compared with the six months ended September 30, 2023. The increase was partially due to the acquisitions of Dust Free and PSP ($18.8 million or 6.7%). Excluding the impact of the acquisitions, organic sales increased by $20.6 million, or 7.4%, due to an increase in unit volumes and a slight increase from pricing actions. Net revenue increased in the HVAC/R, electrical, and plumbing end markets.

Current wording

Net revenues for the nine months ended December 31, 2024 increased $56.1 million, or 14.2%, as compared with the nine months ended December 31, 2023. The increase was partially due to the acquisitions of Dust Free, PSP, and PF WaterWorks ($34.1 million or 8.6%). Excluding the impact of the acquisitions, organic sales increased by $22.1 million, or 5.6%, due to an increase in unit volumes and a slight increase from pricing actions. Net revenue increased in the HVAC/R, plumbing, and electrical, end markets and decreased in the architecturally-specified building product end market.

Previous wording

Operating income for the three months ended September 30, 2024 increased $1.0 million or 20.5% as compared to the three months ended September 30, 2023. The increase was primarily due to the increased net revenue. Operating income margin of 15.1% for the three months ended September 30, 2024 increased as compared to 13.2% for the three months ended September 30, 2023 due to improved manufacturing efficiencies.

Current wording

Operating income for the three months ended December 31, 2024 increased $1.0 million, or 3.9%, as compared with the three months ended December 31, 2023. The increase was due to the increased net revenue and the inclusion of recent acquisitions of Dust Free, PSP, and PF WaterWorks, and was partially offset by increased freight, including freight expense alignment, and a $0.9 million acquisition broker fee. Operating income margin of 20.2% for the three months ended December 31, 2024 decreased as compared to 22.3% for the three months ended December 31, 2023. This decrease was due to lower gross margin driven primarily by the aforementioned increase in freight expense.

Previous wording

Operating income for the six months ended September 30, 2024 increased $17.4 million, or 22.2%, as compared with the six months ended September 30, 2023. The increase was due to the increased net revenue, the inclusion of recent acquisitions of Dust Free and PSP and favorable product mix. Operating income margin of 30.1% for the six months ended September 30, 2024 increased as compared to 28.1% for the six months ended September 30, 2023. This increase was primarily due to gross margin improvement driven primarily by increased operating leverage from additional volume, favorable product mix and pricing actions, combined with the management of operating expenses.

Current wording

Operating income for the nine months ended December 31, 2024 increased $18.5 million, or 17.7%, as compared with the nine months ended December 31, 2023. The increase was due to the increased net revenue and the inclusion of recent acquisitions of Dust Free, PSP and PF WaterWorks. Operating income margin of 27.2% for the nine months ended December 31, 2024 increased as compared to 26.4% for the nine months ended December 31, 2023. This increase was primarily due to gross margin improvement driven primarily by increased operating leverage from additional volume, favorable product mix and pricing actions, which offset the aforementioned increase in freight expense and a $0.9 million acquisition broker fee. Operating income margin was further improved due to the management of operating expenses.

Previous wording

Net revenues for the three months ended September 30, 2024 increased $1.9 million, or 5.2%, as compared with the three months ended September 30, 2023. The increase was primarily due to increased unit volumes. Net revenue increased in the energy, rail transportation and mining end markets and decreased in the general industrial end market.

Current wording

Net revenues for the three months ended December 31, 2024 increased $0.9 million, or 2.5%, as compared with the three months ended December 31, 2023. The increase was primarily due to increased unit volumes. Net revenue increased in the general industrial and rail transportation end markets and decreased in the energy and mining end markets.

Previous wording

Net revenues for the six months ended September 30, 2024 increased $1.0 million, or 1.3%, as compared with the six months ended September 30, 2023. The increase was primarily due to increased unit volumes and pricing actions. Net revenue increased in the rail transportation end market and decreased in the mining end market.

Current wording

Net revenues for the nine months ended December 31, 2024 increased $1.9 million, or 1.7%, as compared with the nine months ended December 31, 2023. The increase was primarily due to increased unit volumes. Net revenue increased in the rail transportation and general industrial end markets and decreased in the mining and energy end markets.

Previous wording

Operating income for the six months ended September 30, 2024 increased $1.2 million or 10.0% as compared to the six months ended September 30, 2023. The increase was primarily driven by an immaterial inventory adjustment and the increased net revenue. Operating income margin of 17.2% for the six months ended September 30, 2024 increased as compared to 15.9% for the six months ended September 30, 2023. This increase was primarily due to the aforementioned inventory adjustment.

Current wording

Operating income for the nine months ended December 31, 2024 increased $2.7 million or 17.2% as compared to the nine months ended December 31, 2023. The increase was primarily driven by a modest inventory adjustment and the increased net revenue. Operating income margin of 16.6% for the nine months ended December 31, 2024 increased as compared to 14.4% for the nine months ended December 31, 2023. This increase was primarily due to the aforementioned modest inventory adjustment.

Previous wording

Net revenues for the three months ended September 30, 2024 increased $3.5 million or 11.9% as compared to the three months ended September 30, 2023 driven by strength in the backlog converting to revenue and market expansion through innovative products and focused efforts on high-growth markets.

Current wording

Net revenues for the three months ended December 31, 2024 increased $1.0 million or 3.4% as compared to the three months ended December 31, 2023 driven by backlog converting to revenue.

Previous wording

Net revenues for the six months ended September 30, 2024 increased $6.8 million or 11.9% as compared to the six months ended September 30, 2023 due to the continued conversion of strong project bookings into revenue and market expansion.

Current wording

Net revenues for the nine months ended December 31, 2024 increased $7.7 million or 9.1% as compared to the nine months ended December 31, 2023 due to the continued conversion of strong project bookings into revenue and market expansion.

Previous wording

Operating income for the three months ended September 30, 2024 increased $0.8 million, or 16.2%, as compared with the three months ended September 30, 2023. The increase was driven by the increased net revenue and improved operating leverage. Operating income margin of 18.6% for the three months ended September 30, 2024 increased as compared to 17.9% for the three months ended September 30, 2023. This increase was primarily due to effective management of operating expenses.

Current wording

Operating income for the three months ended December 31, 2024 increased $0.1 million, or 3.1%, as compared with the three months ended December 31, 2023. The increase was driven by the increased net revenue. Operating income margin of 12.6% for the three months ended December 31, 2024 decreased slightly as compared to 12.7% for the three months ended December 31, 2023.

Previous wording

Operating income for the six months ended September 30, 2024 increased $2.3 million, or 24.4%, as compared with the six months ended September 30, 2023. The increase was due to the increased net revenue and improved operating leverage. Operating income margin of 18.6% for the six months ended September 30, 2024 increased as compared to 16.7% for the six months ended September 30, 2023. This increase was primarily due to effective management of operating expenses.

Current wording

Operating income for the nine months ended December 31, 2024 increased $2.4 million, or 18.6%, as compared with the nine months ended December 31, 2023. The increase was due to the increased net revenue and improved operating leverage. Operating income margin of 16.7% for the nine months ended December 31, 2024 increased as compared to 15.4% for the nine months ended December 31, 2023. This increase was primarily due to improved operating leverage and effective management of operating expenses.

Previous wording

Our cash balance (including cash and cash equivalents) at September 30, 2024 was $273.2 million, as compared with $22.2 million at March 31, 2024.

Current wording

Our cash balance (including cash and cash equivalents) at December 31, 2024 was $213.8 million, as compared with $22.2 million at March 31, 2024.

Previous wording

For the six months ended September 30, 2024, our cash provided by operating activities from operations was $129.5 million, as compared with $94.9 million for six months ended September 30, 2023.

Current wording

For the nine months ended December 31, 2024, our cash provided by operating activities from operations was $141.1 million, as compared with $141.9 million for nine months ended December 31, 2023.

Previous wording

•Working capital provided cash for the six months ended September 30, 2024 due to higher accounts payable and other current liabilities ($39.6 million) and lower accounts receivable ($11.3 million), partially offset by higher inventories ($25.3 million), higher prepaid expenses and other current assets ($2.1 million).

Current wording

•Working capital used cash for the nine months ended December 31, 2024 due to higher inventories ($42.5 million), higher prepaid expenses and other current assets ($17.2 million), partially offset by lower accounts receivable ($32.3 million) and higher accounts payable and other current liabilities ($21.4 million).

Previous wording

•Working capital provided cash for the six months ended September 30, 2023 due to higher accounts payable and other current liabilities ($9.0 million), lower inventories ($7.7 million) and higher other liabilities ($1.1 million), partially offset by higher prepaid and other current assets ($5.5 million) and higher accounts receivable ($3.9 million).

Current wording

•Working capital provided cash for the nine months ended December 31, 2023 due to lower accounts receivable ($17.8 million), higher accounts payable and other current liabilities ($9.6 million) and lower inventories ($7.8 million), partially offset by higher prepaid and other current assets ($6.7 million).

Previous wording

Cash flows used in investing activities from operations during the six months ended September 30, 2024 were $41.3 million, as compared with $8.7 million used in investing activities for the six months ended September 30, 2023.

Current wording

Cash flows used in investing activities from operations during the nine months ended December 31, 2024 were $98.6 million, as compared with $15.1 million used in investing activities for the nine months ended December 31, 2023.

Previous wording

•Capital expenditures during the six months ended September 30, 2024 and 2023 were $8.6 million and $7.8 million, respectively. Our capital expenditures have been focused on capacity expansion (including $0.4 million and $2.1 million during the current and prior year periods for the Whitmore JV), enterprise resource planning systems, new product introductions, continuous improvement and automation of manufacturing facilities.

Current wording

•Capital expenditures during the nine months ended December 31, 2024 and 2023 were $11.7 million and $11.7 million, respectively. Our capital expenditures have been focused on capacity expansion (including $0.4 million and $2.5 million during the current and prior year periods for the Whitmore JV), enterprise resource planning systems, new product introductions, continuous improvement and automation of manufacturing facilities.

Previous wording

•During the six months ended September 30, 2024, we acquired PSP for an aggregate purchase price of $47.1 million, including $32.5 million in cash consideration at closing, as discussed in Note 2 to our consolidated financial statements in this Quarterly Report.

Current wording

•During the nine months ended December 31, 2024, we acquired PSP for an initially estimated purchase price of $47.1 million, including $32.5 million in cash consideration at closing and subsequent working capital true-up adjustment of $7.0 million, as discussed in Note 2 to our consolidated financial statements in this Quarterly Report.

Previous wording

•During the six months ended September 30, 2023, $2.4 million cash was paid for immaterial product line acquisitions.

Current wording

•During the nine months ended December 31, 2024, $2.9 million cash was paid for immaterial product line acquisitions.

Previous wording

•During the six months ended September 30, 2024, $0.5 million was paid to acquire a long-term investment.

Current wording

•During the nine months ended December 31, 2024, $2.5 million was paid to acquire long-term minority investments.

Previous wording

•During the six months ended September 30, 2023, $1.7 million cash was received from the sale of a property previously held for investment.

Current wording

•During the nine months ended December 31, 2023, $1.7 million cash was received from the sale of a property previously held for investment.

Previous wording

Cash flows provided by (used in) financing activities during the six months ended September 30, 2024 and 2023 were $162.6 million and $(89.8) million, respectively.

Current wording

Cash flows provided by (used in) financing activities during the nine months ended December 31, 2024 and 2023 were $149.9 million and $(119.5) million, respectively.

Previous wording

•Net repayments on our Revolving Credit Facility (as discussed in Note 7 to our consolidated financial statements included in this Quarterly Report) of $166.0 million and $80.0 million during the six months ended September 30, 2024 and 2023, respectively.

Current wording

•Net repayments on our Revolving Credit Facility (as discussed in Note 7 to our consolidated financial statements included in this Quarterly Report) of $166.0 million and $100.0 million during the nine months ended December 31, 2024 and 2023, respectively.