CSW (CSW) Q4 2026 Earnings Call Transcript

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Date

May 26, 2026, 10 a.m. ET

Call participants

• Chairman, President, and Chief Executive Officer — Joseph Brooks Armes
• Senior Vice President and Chief Financial Officer — James E. Perry

Takeaways

• Revenue -- $309 million, up 34%, driven mainly by acquisitions and 2.8% organic growth concentrated in Contractor Solutions and Specialized Reliability Solutions.
• Adjusted EBITDA -- $83 million, rising 39% with margin increasing to 26.8% from 25.9% due to acquisitions, pricing, and lower freight costs.
• Adjusted EPS -- $3.14, up 21%, with EPS growth constrained by higher net interest expense ($13.4 million) and margin dilution from recent acquisitions.
• Net debt to EBITDA ratio -- 2.55x, inside the targeted 1-3x range, providing balance sheet flexibility after significant acquisition activity.
• Contractor Solutions segment revenue -- $237 million (76% of total), up 43%, with $67 million from acquisitions and $4.3 million from organic growth.
• Contractor Solutions adjusted EBITDA -- $75 million with margin of 31.7%, compared to $56 million and 33.7% prior year, reflecting margin compression ahead of full synergy realization.
• Aspen performance -- 10.4% fiscal Q4 revenue growth and 13.5% growth since acquisition, with short-term operational impacts from ERP integration that normalized by quarter-end.
• Mars and Aspen pro forma organic growth -- Combined pro forma organic revenue growth of 5.5% for Contractor Solutions if wholly owned in both periods.
• Synergy realization -- Already actioned over $10 million in Mars synergies, updating the target to more than $12 million and aiming for a greater than 30% EBITDA margin by the Mars anniversary in November.
• Specialized Reliability Solutions revenue -- $46 million, up 22.4%, including $5.2 million from acquisitions and $3.3 million from organic growth, offset by ongoing industrial softness.
• Specialized Reliability Solutions adjusted EBITDA -- $10.1 million, up 73.7%, with adjusted margin expanding 640 basis points to 21.8% due to higher-margin acquisitions, pricing, and mix.
• Restructuring charges -- $5 million pretax charge in Specialized Reliability Solutions, with benefits reflected starting April 1.
• Engineered Building Solutions revenue -- $27.6 million, down 4%, and adjusted EBITDA of $4.9 million (17.6% margin), up from $4.2 million (14.5% margin), with strength in project mix partially offsetting higher material costs.
• Book-to-bill ratios -- Engineered Building Solutions: trailing eight-quarter book-to-bill at 0.9x, and ex-GRD backlog book-to-bill at 1.05x, indicating backlog growth in core lines.
• GRD business exit -- Plan finalized to sell GRD US, exit GRD Canada; $15.6 million impairment expense recorded, with $2.1 million in exit costs and further $1-2 million anticipated for the Canadian exit.
• Free cash flow -- ($6.8 million) outflow, compared with a $22.8 million inflow in the prior year, reflecting working capital, integration, and interest costs.
• Capital returned -- $146 million to shareholders ($128 million in repurchases, $18 million in dividends), with $35 million repurchased in the latest quarter at an average price of $265 per share.
• Tax rates -- Effective tax rate of 27.1% (GAAP) and 22% (adjusted) for the quarter, with full-year adjusted tax rate at 24.7%; fiscal 2027 guidance is approximately 23% (GAAP) and 26% (adjusted).
• Amortization and interest guidance -- Intangible asset amortization projected at $61 million, and interest expense estimated at $46 million in fiscal 2027, reflecting higher debt from acquisitions.
• Tuck-in acquisitions and investments -- DuctStrip acquired for $21 million; a $4.8 million minority investment made in Flair, targeting HVACR controls innovation; both aim to expand the HVAC product portfolio.
• Cost inflation responses -- Three price increases in Specialized Reliability Solutions since April to offset input cost increases, and ongoing project-based pricing actions in Engineered Building Solutions.
• Employee stock ownership -- Board approved ESOP contribution of 6% of US employee salary and a 3% profit-sharing 401(k) contribution on top of the 6% match for fiscal 2026.

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Risks

• Adjusted EPS growth "did not fully keep pace with the strong revenue and EBITDA growth, which was expected. Primarily due to the higher net interest expense of $13.4 million as we move from a net cash position last year to a net debt position."
• Supply chain and input cost inflation pressures remain, with "ocean freight's been up 25-30% in the last few months" and delays in passing through costs in Contractor Solutions due to multi-month lags.
• Free cash flow experienced a "$29.6 million year-over-year decline" to negative $6.8 million, due to working capital, integration, and higher interest expense.
• Engineered Building Solutions segment revenue down 4% and recording impairment and exit charges related to the GRD business, signaling ongoing restructuring and non-core business exposure.

Summary

CSW Industrials (NYSE:CSW) reported record revenue and adjusted EBITDA, driven primarily by recent acquisitions and steady organic growth in core segments. The company executed five acquisitions and a minority investment, increasing leverage but remaining within its stated target range. Management finalized the exit of non-core GRD businesses, booked significant related charges, and reconstituted Engineered Building Solutions to focus on higher-margin offerings. Specialized Reliability Solutions achieved meaningful EBITDA margin expansion, while ongoing restructuring and pricing strategies aimed to offset input cost pressures. Employee ownership initiatives were expanded, further aligning stakeholder interests as CSW transitions to a larger, more diversified platform.

• Management stated growth in Contractor Solutions now includes expanded repair-cycle exposure, balancing the revenue mix between repair and replacement, with flexibility to meet either demand direction as conditions evolve.
• Integration of major acquisitions, particularly Mars and Aspen, is proceeding on plan, with full realization of cross-selling and synergy benefits expected by the first anniversary dates, and ERP integration facilitating broader product access for customers.
• The company emphasized continued outperformance versus industry peers and asserted its intention to "outperform the market meaningfully," without offering explicit quantitative guidance for the upcoming fiscal year.
• CSW expects annualized increases in both amortization of intangibles and interest expense in fiscal 2027, marking a step-up from historical levels due to recent capital deployment.
• A disciplined capital allocation approach was reiterated, with priorities including debt repayment, share repurchases, and opportunistic add-on acquisitions, supported by ongoing monitoring of M&A pipeline opportunities.

Industry glossary

• Book-to-bill ratio: Order intake divided by revenue recognized over a period, indicating future revenue potential when above 1.0x.
• ERP: Enterprise Resource Planning; integrated software platform used to manage operational processes across business units, important for integration post-acquisition.
• GRD: Grilles, Registers, and Diffusers business unit within Engineered Building Solutions; recently classified as non-core and in the process of exit/sale.
• HVACR: Heating, Ventilation, Air Conditioning, and Refrigeration; the largest end market focus area for the company’s Contractor Solutions segment.
• ESOP: Employee Stock Ownership Plan offering equity-based profit-sharing to employees, aimed at aligning interests and enhancing retention.

Full Conference Call Transcript

Joseph Brooks Armes: Thank you, Alexa, and good morning, everyone. To begin, I want to highlight what was a really strong quarter for CSW Industrials. Our team delivered record fiscal fourth quarter revenue, highlighted by both organic and inorganic growth, record adjusted EBITDA, and record adjusted earnings per diluted share. We crossed the $1 billion mark in annual revenue during fiscal 26. Achieving this milestone just 10 years after our spin off as an independent public company delivering 15% revenue compound annual growth rate over 10 years, while allocating over $1.7 billion to accretive acquisitions. Overall, these record results demonstrate the strength of our portfolio the excellence with which our teams are executing, and the strategies that serve as our guide.

If you look at CSW today versus where we were when reporting our fiscal 2025 year-end results, We are meaningfully larger and more diversified and that is intentional. Driven by our disciplined capital allocation philosophy and facilitated by our strong balance sheet, we leaned in during fiscal 26 and invested in multiple high quality growth opportunities. During the year, we completed 5 highly synergistic cash flow accretive acquisitions and made an incremental minority investment in an HVACR controls technology company.

In our contractor solutions segment, we invested approximately $1 billion in acquisitions including Mars, our largest acquisition to date. $650 million Aspen Manufacturing for $313 million, and DuctStrip for $21 million In our specialized reliability solutions segment, we acquired HydroTex and ProAction Fluids for a combined $2.5265 billion. In addition, CSW returned an aggregate of $146 million in capital to our shareholders. Through $128 million of open market share repurchases and $18 million in dividends. Demonstrating our commitment to long term value creation and of utilizing all capital allocation avenues available to us. We financed these investments with a mix of cash on hand and low cost debt.

While maintaining our financial discipline, we ended the fiscal year at a net debt to EBITDA of 2.55 times, which is comfortably inside our target leverage range of 1 to 3x. Our prudent approach has kept our balance sheet strong and resilient, and continues to provide flexibility to support future growth opportunities. 1 note on comparability. With the size of the acquisitions made in fiscal 26, especially Mars and Aspen, some year over year comparisons can be challenging. As we have moved from a net cash position to a net debt position, interest expense is higher. We also have more non cash amortization of acquired intangibles. These factors impact both GAAP and adjusted EPS.

As you think about performance across periods, we still believe that adjusted EBITDA and free cash flow are the most appropriate metrics by which to measure how the business is performing. From an end market perspective, the positive momentum we saw in our contractor solutions and specialized reliability solutions segments. As we exited December and moved into January continued through the fourth fiscal quarter. In Contractor Solutions, we also saw order trends pick up in March and April as our distribution partners started gearing up for the peak cooling season. We have maintained our momentum in May, though it is still early in the season.

Over the last decade, we have consistently communicated that through the cycle, contractor solutions should be a mid- to high-single-digit organic growth business. While recognizing the short term volatility is inherent in the business. The products we provide to our customers are essential, demonstrated by the strong resilience of the segment. Historically, we have been more indexed to the replacement of HVAC units in residences with some exposure to new housing. With the addition of Mars, and Aspen, we have increased our exposure to the HVAC repair cycle providing a more balanced product offering that enables us to perform well as the repair versus replace mix changes from time to time during economic cycles.

At this time, I will turn the call over to James for a detailed review of our financial performance and then I will return with a few closing comments. James E. Perry: Thank you, Joe, and good morning, everyone.

James E. Perry: This was another busy quarter, and we have seen conditions in the residential HVAC end market stabilize as we head into the summer season. I will walk through the fourth quarter's consolidated and segment results, cash flow and the balance sheet. Highlighting how we are positioning the business for growth. Starting with the headline numbers for the fourth quarter of fiscal 2026, revenue was a record $309 million up 34% as compared to the prior year. Growth was primarily driven by the acquisitions completed over the last year along with consolidated organic revenue growth of 2.8%. Which was concentrated in contractor solutions, and specialized reliability solutions.

Adjusted consolidated EBITDA grew by 39% reflecting both acquisition leverage and the resilience of our platform. Adjusted EPS for the fiscal fourth quarter was $3.14, up 21% from the same period last year. EPS growth did not fully keep pace with the strong revenue and EBITDA growth, which was expected. Primarily due to the higher net interest expense of $13.4 million as we move from a net cash position last year to a net debt position following the significant acquisition activity and share repurchases in the back half of our fiscal year. Also as expected, we saw some margin dilution from recent acquisitions ahead of full synergy realization. Turning to items excluded from adjusted EPS.

And consistent with our updated methodology, the fiscal fourth quarter included net of tax, $13.6 million or $0.83 per share of expense related to impairment of goodwill, intangible assets, and other long lived assets. And expenses related to restructuring and the write down of additional assets of $1.6 million net of tax or $0.10 per share. These items are connected with a planned strategic exit and disposition of the GRD business line within Engineered Building Solutions, which I will discuss again later in my remarks.

We also had net of tax $3 million or $0.18 per share of acquisition related transaction and integration costs, $900 thousand or $0.05 per share of a nonrecurring inventory write-down, $400 thousand or $0.02 per share of other restructuring costs, and $12.1 million or $0.73 per share of amortization of acquired intangible assets. Looking at our revenue and gross profit in more detail. Consolidated revenue for the fourth quarter of fiscal 26 increased $78 million or 34% as compared to the prior year quarter. Driven mainly by the acquisitions. We are pleased to post consolidated organic revenue growth of 2.8%. Coming from the Contractor Solutions and Specialized Reliability Solutions segments.

Adjusted consolidated gross profit in the fiscal fourth quarter was $135 million, up 32%. Adjusted gross margin was 43.5%, down 70 basis points from 44.2% in the prior year period. Primarily due to the acquisition related dilution we have discussed as well as inflation in some material costs and the impact of tariffs. The team has been able to offset some of the inflation and tariff related margin dilution with pricing actions and freight. Consolidated adjusted EBITDA for the fiscal fourth quarter was a record $83 million, up $23 million or 39% as compared to the prior year period. Adjusted EBITDA margin increased 90 basis points.

To 26.8% from 25.9% driven by the addition of recent acquisitions strategic pricing actions, and lower freight costs. Our already realized synergies in the operating expenses line contributed to the consolidated EBITDA margin accretion as compared to the dilution at the gross margin line. In contractor solutions, fiscal fourth quarter revenue was $237 million, which was 76% of consolidated revenue and the result was an increase of 43% over the prior year. Of that growth, $67 million or 40.3% was driven by acquisitions and $4.3 million or 2.6% came from organic growth. We are particularly pleased to return to organic growth especially against a strong comparable quarter last year.

Pricing actions more than offset a slight unit volume decline in organic revenue. During the fourth quarter, Aspen delivered 10.4% revenue growth. Aspen is growing 13.5% since the time of acquisition, May 1, significantly outperforming the market. 10.4% in the quarter, was driven by a mix of short and long term items. In the short term, the primary Mars distribution center was integrated onto the CSW ERP system in January. As well as upgraded to allow for greater storage and shipment capacity to realize future operational efficiencies. These upgrades delayed some order fulfillment early in the fourth quarter. Though fulfillment rates at the end of the quarter were in line with expectations.

For Mars parts in the longer term, we have completed the product SKU rationalization and portfolio review. This exercise resulted in exiting some nominal product categories where Mars did not have a differentiated product offering and/or where the legacy contractor solutions products have a better and more profitable offering. Because of this, over the next 12 months, the top line growth of Mars parts will not necessarily be indicative of underlying demand. As there has been and will be some shift of that demand to legacy contractor solutions products.

Including the Mars and Aspen fiscal fourth quarter results. pro forma organic revenue for Contractor Solutions, would have increased 5.5% if we had owned these businesses in the prior year. a pro forma metric we have been reporting following our $1 billion of capital deployed toward these acquisitions. A reminder that we will begin including Aspen in our organic growth reporting metric as of May 1. The 1 year anniversary of that acquisition. Per our historical methodology. Adjusted EBITDA for the Contractor Solutions segment was $75 million, 31.7% of revenue. Compared to $56 million or 33.7% of revenue in the prior year period.

The year over year margin compression primarily reflects acquisition related dilution ahead of the full realization of expected synergies. Partially offset by pricing actions and improved domestic freight efficiency. We can now update our expectation for Mars parts run rate synergies to be in excess of $12 million as well as attaining greater than a 30% run rate EBITDA margin by the first anniversary of our ownership in November. Our confidence is based on already actioning in excess of $10 million in synergies so far, In addition to the SKU rationalization process, I mentioned earlier. As Joe mentioned, in the fiscal fourth quarter, the Contractor Solutions segment completed a $21 million acquisition of DuctStrip.

A differentiated electrical cable for HVAC mini split systems that combines all required conductors into a single cable. And helps the pro trade install more quickly and efficiently. Based on the announced 7x trailing 12 months EBITDA multiple paid, and the approximately $3 million of trailing EBITDA assumed in our purchase price, we expect incremental EBITDA to CSW to be about $2 million as CSW already participated in a portion of the business prior to the acquisition as a master distributor. We also made a $4.8 million incremental investment in Flair, which has developed an innovative suite of HVACR control products.

Including smart grills, registers, diffusers, as well as ductless thermostat controls, enabling room level temperature control with meaningful energy savings. Specialized reliability solutions revenue increased 22.4% to $46 million up from $38 million in the prior period. The increase included $5.2 million or 13.7% from recent acquisitions. And $3.3 million or 8.8% from organic growth. Partially offset by continued softness in the general industrial end market. Adjusted segment EBITDA in the fourth quarter was $10.1 million, up 73.7% from $5.8 million a year ago. And adjusted EBITDA margin expanded 640 basis points to 21.8%. Margin expansion was driven by the inclusion of the higher margin acquisitions, pricing actions, and a favorable product mix.

The integration of the 2 businesses acquired in the third fiscal quarter continues to progress very successfully. In response to margin performance and end market challenges, the specialized reliability solutions segment initiated targeted restructuring actions during the fiscal fourth quarter as we noted on our January earnings call. These actions are intended to strengthen the integration of our recent acquisitions, and support progress toward our sustained 20% EBITDA margin target for the segment. The financial benefits from the restructuring fully took effect on April 1, and the pretax onetime charges associated with these restructuring activities in the fiscal fourth quarter were $5 million. We expect to fully realized synergies from the acquisitions during the back half of the fiscal year.

In response to the recent rising cost for certain input in the specialized reliability solutions segment, we have implemented 3 separate price increases during this fiscal first quarter to offset the impact. We are monitoring the situation very closely. and will continue to take appropriate action as needed. With respect to demand in the segment, we have seen solid momentum and resiliency to date in our fiscal first quarter, and the team has done a great job in meeting that demand. Engineered building solutions segment revenue decreased 4% to $27.6 million. from $28.7 million in the prior year period. Segment EBITDA increased 17% to $4.9 million representing a 17.6% margin. Compared to $4.2 million and 14.5% respectively last year.

The EBITDA margin expansion was driven by a favorable project mix that more than offset higher material costs indirectly linked to tariffs. The trailing 8 quarter book to bill ratio remained steady at 0.9 to 1. We are encouraged by the improved mix in EBS backlog, as our Smoke Guard and VACO business lines grew backlog by 13%. Including a greater proportion of higher margin products. Pricing actions to offset increased costs are ongoing. With additional increases planned on a project by project basis. During the fiscal fourth quarter of 26, CSW finalized a plan. To sell the GRD US business and to strategically exit the GRD Canada business. As both are increasingly noncore to CSW.

These businesses are part of our Engineered Building Solutions segment. The GRD US business was classified as held for sale as of 03/31/2026. GRD Canada recognized $2.1 million of expenses related to the planned exit. In addition, we recorded a $15.6 million impairment expense in connection with our decisions. We expect to incur $1 to $2 million of additional costs related to the GRD Canada exit primarily for severance and termination expenses, as the process concludes. We will update our progress on these transactions on future earnings calls as warranted. Excluding the GRD businesses, Engineered Building Solutions segment revenue was $21.7 million, a 10.5% increase compared to $19.7 million in the prior year period.

In the fiscal fourth quarter, segment adjusted EBITDA, adjusted EBITDA margin, excluding GRD, were $5.6 million and 25.8%, respectively. Compared to $4.2 million and 21.2% in the prior year. The year over year improvement reflects stronger unlock underlying performance of the remaining business lines. The trailing 8 quarter book to bill ratio excluding the GRD businesses was a healthy 1.05 to 1. Our remaining businesses within EBS are growing the backlog faster than revenue, generating a strong future revenue stream. We wanted to share these results with you in this manner to better reflect the EBS segment on a go-forward model going forward. Which currently has an EBITDA margin well in excess of 20%. Our long-stated goal for this segment.

Our new strategy is expected to support improved margins over time. Turning to consolidated cash flow. We had an operating cash outflow of $1.7 million in the fiscal fourth quarter compared to an inflow of $27.3 million in the prior year quarter. The year over year change primarily reflects working capital deployed to support our record revenue along with acquisition related integration costs, and the higher level of interest expense. Free cash flow defined as cash flow from operations less capital expenditures, was an outflow of $6.8 million in the fiscal fourth quarter. Compared with an inflow of $22.8 million in the prior year period. The $29.6 million year-over-year decline was driven by the same factors just mentioned.

Our effective tax rate for the fiscal fourth quarter was 27.1% on a GAAP basis. Our adjusted tax rate was 22%. Modestly below our normal range due to discrete items that can vary quarter to quarter. For the full fiscal year, our tax rate was 22.5% on a GAAP basis, and 24.7% on an adjusted basis. As we enter fiscal 27, amortization of intangible assets will step up meaningfully as a result of the significant acquisitions completed in fiscal 26 particularly Mars Parts. On an annualized basis, we now expect amortization of intangible assets, to be approximately $61 million for fiscal 27.

We funded this year's acquisitions with cash on hand, from the September 2024 follow-on equity offering revolver borrowings, a new Term Loan A. At quarter end, we had $871.5 million outstanding across our revolver and the Term Loan A. Reflecting the shift to a net debt position, interest expense in the fourth quarter of fiscal 26 was $11.8 million compared with interest income of $1.6 million in the prior year quarter. We currently estimate fiscal 27 interest expense of approximately $46 million. At quarter end, our net debt for covenant calculation purposes was $843 million. Resulting in a net debt to EBITDA leverage ratio of 2.55x.

This corresponds to an interest rate of SOFR plus 200 basis points for the revolver and Term Loan A. As a reminder, in the third quarter of fiscal 26, we executed an interest rate swap to fix SOFR at 3.42% for 3 years to hedge $300 million of our Term Loan A balance. This swapped interest rate remains well below the current SOFR rate. We continue to maintain a strong balance sheet. With a net debt to EBITDA well within our target range of 1 to 3x. This provides ample liquidity to support growth initiatives, and the rest of our capital allocation priorities.

Consistent with that position, during the quarter, we repurchased approximately $35 million of our stock in the open market representing about 132 thousand shares at an average price of $265 per share. Reinforcing our confidence in our ability to create long term shareholder value. For the full fiscal year, we repurchased $128 million of our stock at an average purchase price of $253 per share. Let me touch briefly now on tariffs and our expectations as we look ahead. We continue to monitor tariff developments and the potential impact across our businesses. Importantly, the recent February tariff interpretation is expected to be neutral for CSW industrials.

In terms of direct tariffs paid Of note, we have minimal exposure to inputs from Mexico with no manufacturing footprint there. However, the recent changes could have indirect commodity price impacts. While our specialized reliability solutions and Engineered Building Solutions segments have minimal direct exposure to tariffs, both experienced indirect effects during fiscal 26 from the broader economic consequences of tariff policies. Each of these segments sources a limited number of inputs internationally. And we have also seen meaningful cost increases even on US sourced materials. As I mentioned, in SRS we have mitigated the indirect impact of tariffs and rising commodity prices through pricing actions.

In Engineered Building Solutions, we continue to factor higher cost into bids on new projects. As we have filed our applications for tariff refunds that we are due, with limited receipts to date, We will update this process during our next quarterly earnings call. I will remind everybody that our forward-looking outlook is included in the investor presentation posted on our website this morning. Overall, we expect all segments to show revenue growth versus the prior year. In the Engineered Building Solutions segment, that growth excludes the impact of exiting the GRD businesses. In contractor solutions, we expect solid growth in revenues and EBITDA as well as strong synergy realization throughout the year from our recent acquisitions.

We continue to make strategic changes to our global supply chain. To reduce the impact of potential disruptions. We remain highly focused on cost discipline across the company, especially in the current economic environment. Turning to specialized Reliability Solutions, we expect a higher full year EBITDA margin in fiscal 27 as we realize synergies from the recent acquisitions, and the restructuring actions we have executed. In engineered building solutions, we expect a higher full year EBITDA margin excluding the GRD businesses. Supported by a growing backlog in our remaining business lines, that includes a higher proportion of higher margin projects.

At a consolidated level, we expect to see significant adjusted EPS growth in fiscal 27, As a reminder, GAAP EPS will be impacted by the full year impact from higher interest expense, and the step up in intangible amortization from our recent acquisitions. As such, we will continue to focus on adjusted EBITDA as the best comparable measure of our profitability growth over time. We expect strong free cash flow generation in fiscal 27. With significant growth from the fiscal 26 level due to our expectations for earnings growth, and prudent management of working capital. Finally, we currently forecast our fiscal year 27 GAAP tax rate to be approximately 23% and the adjusted tax rate to be approximately 26%.

The rates will vary quarter to quarter based on specific items. With that, I will now turn the call back to Joe.

Joseph Brooks Armes: Thank you, James. To summarize, our fiscal fourth quarter of 2026 provided a strong finish to the year. Delivered record quarterly revenue and adjusted EBITDA with revenue up 34% year over year. This outperformance was driven by acquisitions that are outperforming our acquisition models and are also helping to support organic growth. As previously discussed, we are proactively managing our portfolio of businesses consistent with our long term objectives. As a result, we feel very good about the strength and positioning of the portfolio, and our ability to continue delivering sustainable, above market profitable growth over time that creates long term shareholder value.

For the full year, we deployed approximately $1 billion of capital into acquisitions, which underscores our conviction in the long term fundamentals of residential HVACR plumbing and electrical end markets. With a strong balance sheet, and disciplined capital allocation philosophy, we have invested opportunistically through market cycles. And importantly, we are doing so with a clear focus on prudent capital management operational excellence, and the good work of our fantastic team of people across CSW who deliver impressive results day in and day out. Turning to fiscal year 2027, while the environment remains dynamic, our priorities are unchanged.

To deliver sustainable growth that exceeds the markets we serve expand profitability and to allocate capital in a disciplined manner while maintaining our strong balance sheet. We expect to deliver full year growth in revenue and adjusted EBITDA, adjusted EPS and in free cash flow. We will continue to identify and pursue accretive acquisitions of innovative businesses and products that are synergistic with our portfolio. While maintaining our balance sheet strength and our discipline with respect to our capital allocation. As always, our expectations reflect our current view of the market conditions. And are subject to the forward looking risks and assumptions discussed in our materials. Our most recent acquisition, DuctStrip, is a strong strategic fit within contractor solutions.

It adds a differentiated high value product that aligns with our focus on innovation. Along with our minority investment in Flair, this final acquisition of fiscal 26 reflects our continued confidence in allocating capital to the attractive HVACR space including faster growing areas like ductless. Where we can leverage our distribution scale and execution capabilities. Moving on to our people, you may have seen in a separate news release on May 12, that we announced the promotion of Jeff A. Underwood, To Executive Vice President of CSW in recognition of his outstanding leadership and his commitment to excellence while executing on our long term growth strategy.

Jeff has been an instrumental leader at CSW and the primary driver of growth within contractor solutions. His relationships in the market, his commitment to an employee centric culture, and his ability to successfully lead in the consummation and integration of acquisitions have meaningfully improved the size and scale of CSW. Please join me in congratulating Jeff on this well deserved promotion. CSW strives to be the partner of choice for our loyal customers. With the goal of making it as easy as possible to do business with us. During the fiscal fourth quarter, our contractor solutions segment was recognized as Vendor of the Year.

By both Gensco and Standard Supply, further validating the service levels and the operational excellence our teams deliver. I want to publicly recognize the contractor solutions organization for these achievements. Finally, our employee centric culture continues to be a competitive advantage. I could not be more proud to announce that CSW Industrials has recently been certified as a great place to work for the 4th year in a row. This recognition is a testament to our focus on core values such as accountability, citizenship, teamwork, respect, integrity, stewardship, and excellence. At CSW, how we succeed matters. And our success is shaped by the collaborative efforts of our team members.

We remain focused on attracting and retaining great talent, offering rewarding careers, and offering our team members the opportunity to earn a safe secure and dignified retirement. In that spirit, our board of directors approved a profit sharing employee stock ownership plan contribution for fiscal 26 equal to 6% of each US employee's salary. As well as an additional profit sharing 401(k) contribution of 3% for fiscal 26 on top of our existing 6% match. In closing, I want to thank all of our CSW Industrials team collectively own approximately 3% of the company which includes our ESOP. For their continued performance. And I also want to thank our shareholders. For your continued interest in and support of CSW Industrials.

With that, Rob, we are ready now to take questions.

Operator: Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. 1 moment, please, while we poll for questions. Our first question comes from Jon Tanwanteng with CJS Securities. Your line is now live.

Analyst (Jon Tanwanteng): Hi, good morning. Thank you for taking my questions and congratulations on a strong quarter. My first 1 is, just could you talk about inflation in COGS specifically where you are seeing the most pressure number 1. And then number 2, talk about the pricing strategy to offset that and the timing around it, and if you expect to offset them at a dollar level or a margin percentage level, over what time frame, that will be helpful. Thanks.

James E. Perry: Yeah. John, it is James. Thanks for being on as always. Appreciate your support. Yeah. What clearly continue to see some inflation at the COGS line, primarily originally from tariffs. And obviously, we are looking back to the March quarter as we talk about things today. Tariffs and indirect impact from tariffs continue to cause some inflation pressure. We had our normal price increase in contractor solutions at the beginning of the year. We have taken multiple price increases within SRS, throughout the year, and we mentioned already 3 times this quarter we have done that, the first of each month, April, May, and June. To offset some of that. I will come back to that in a minute.

Within EBS, as you know, that is done as we bid projects as we go along those that are longer term focus. So continue to see that inflationary pressure. I would like to think that it slowed down, but you know, recent geopolitical impacts in The Middle East have increased the cost of you know, ocean freight. Shipping, of course, has gone up quite a bit since quarter end. You have certainly seen an input cost on base oils directly within SRS. The supply chain for oil based products like plastics that affects even contractor solutions, has been impactful in Asia. You are not gonna see that piece in contractor solutions flow through COGS.

As you know, there is a lag of several months before it works its way through. But given that started a couple months ago, you will start to see some of that in the coming months. We have not taken specific pricing action in contractor solutions yet.

Joseph Brooks Armes: Some folks have done that. We are kind of watching to see what we see in the market as well as when we need to do things, as I mentioned, because of that lag effect in COGS. We have done it in SRS because that is more real time focused.

James E. Perry: That product turns rather quickly when those input costs come in, those pricing increases have come through from the suppliers pretty quickly. And I mentioned on the call, the last thing I will mention there, before I get to the last part of your question is you know, the recent February impact that affected inputs from Mexico and Canada did not really impact us much. We have minimal input cost out of Mexico. Some of our recent acquisitions brought just a little bit there. New manufacturing footprints, and that did not affect us like it affected a lot of the industry that is in Mexico. So we did not have the impact there.

That does not mean that, you know, you do not have the indirect impact, of course. But that direct tariff impact should not impact us. In terms of protecting margin, obviously, the long term goal is to protect margin. We have always said within contractor solutions that our goal is to protect the margin dollars, so we really just pass on what we need to. Think our customers appreciate that. We have been pretty forthright about that in the market. Obviously, over time, your goal is to find ways to reduce cost to get that margin percentage back. You know, something like ocean freight going up the last few months is impacting us.

We have found some savings, in fact, in domestic. Internal group has done a really good job with logistics. But the savings they picked up has kind of been offset by diesel costs going up. So we have been working hard to find ways to cut costs to achieve those margin Certainly, the goal would be to get back there. dollars and get back to the margin percentage, but there is been a bit of a headwind. Within SRS, we have, I think, done a more direct job on protecting the margins. You see that we were above 20% and have a long term goal and plan to be above 20% with the acquisitions. Restructuring we have done.

And the team has done a great job protecting margins with pricing there.

Analyst (Jon Tanwanteng): Got it. Thank you. I was also wondering if you could go a little bit more into detail on the rationalization of products within MARS number 1 and the wind down of the GRD business. Just what impact will both of those items have on the revenue going forward?

James E. Perry: Sure. Let me address let me address the impact Joe may wanna talk a little more big picture on GRD specifically, John. The rationalization when we bought Mars, there was clearly some overlap with legacy products that Contractor Solutions had. You know, as always with acquisitions, you do a, you know, who is got the better product, the better margins, the better relationships, those kind of things. You know, when we do it on the smaller acquisitions, it is not as impactful, but some and Aspen did not have that. There was not overlap, of course. We were not in the oil and air handler business. But Mars, there were several product lines where we both carried that.

We knew that going in. So as a result, we you kinda pick the best product, and the legacy products more often than not were the product line that we kept obviously on things like motors, capacitors, those kind of things. Mars had the great industry leadership type product. So you lean towards that. But areas like surge protection, a couple other areas, the legacy products were there. So as a result, you will see some of that revenue shift from ours over to contractor solutions. Overall, a net positive at the margin line. So it is a it is a good thing for us.

But what we tried to preface a little bit in my remarks was you may see Mars will show some revenue deterioration but the legacy business going forward, you will have a little more organic growth on contractor solutions. Once we hit the November anniversary, all that is behind us and it is all organic, but we have a couple more quarters till we see that. So overall, it is nothing but a net positive. You will see some revenue shift from Mars over to legacy But, again, the decision in every case is going to be where's the higher profitability opportunity to the better margin margins.

In terms of GRD, strategic decision that we made to wind down the business given the market there. I will let Jon address that. We do think there is a viable business that we can sell in the south of the business we have down in Florida. it is just not core to us. So you will see revenues come down. I kinda gave you the new numbers. Kinda what the fourth quarter looked like with and without.

Joseph Brooks Armes: You can kind of run the math there. And see what that is. But the net result is you know, that was a business that simply did not have the margins that our other businesses, Smoke Guard and VACO do. And we have always talked about we need to have a 20% plus margin in that business given our consolidated margins are in the mid twenties, of course, and contract solution well above 30. And the hurdle just was not there. Probably makes sense for somebody else for that type of business, but what I gave you for the fourth quarter is pretty good indicator. Joe, you wanna talk about high level on a little more? Yeah.

Joe, the executive summary is that, you know, things have changed in Canada since we acquired the Canadian GRD business. Their economy is in a in a bit of a recession. Their multifamily housing industry is in a depression. And so that was a big part of our business about a third of that business, when we acquired it was done south of the border in the Upper Midwest of The United States. that is gotten tougher Aluminum prices have obviously, you know, been a tough input cost for a while. And so as James said, rationalization of that business based on all those changes, we do not see that improving meaningfully north of the border for some time.

And so we have a long history of just saying, listen. You either meet our return, parameters that we expect here, our expectations, or that is that is not a business that is gonna be a long term, you know, hold for us. So the North business, the GRD Canada business will go away. In South in the South, as James said, it is a good business. They will have attractive returns and attractive margins for a typical building products business and in someone else's hands, that will be that will be a perfectly fine business for them.

The location, the Sunbelt in Florida, all those things work together and make that a viable business that we will sell and move away and really focus time, attention, and investment in the other 2 businesses, which as you can see, a very attractive growth and margin metrics.

Analyst (Jon Tanwanteng): Understood. Thank you. If I could sneak in 1 more. Just, with the interest guidance for the year, are you assuming any capital allocation in that, or is that just a run rate from what you did in Q4? Yeah, John.

James E. Perry: it is pretty much gonna be a run rate. We, when we look forward, do not forecast acquisitions. And do not necessarily forecast outside share repurchases. We have certainly taken advantage of what we thought was a depressed stock price, and you heard what we did in Q4 and for the full year. If the market were to have some dislocation, we are certainly not shy about share repurchases. We continue to look for acquisitions, certainly tuck ins over the next couple of quarters, more importantly, and we have a bit of a pipeline for those. We are always looking for that. But that generally assumes minimal capital allocations of those type things, John.

So it is a bit of a run rate. The only hesitation I will give is we do assume that if you do not have that capital allocation towards acquisitions and share repurchase, you are gonna pay down debt. And right now, you know, 5.5 percent interest rate or so is not a high interest rate in the grand scheme of things, but we will allocate cash flow towards paying down debt for lack of other capital allocation opportunities. So that kind of goes down each quarter as you go along.

Analyst (Jon Tanwanteng): Got it. You very much, guys.

Operator: Our next question comes from Tomohiko Sano with JPMorgan.

Analyst (Tomohiko Sano): Hi, everyone, and congrats on the quarter, and congrats, Jeff, for the promotion.

Joseph Brooks Armes: Thank you, Tomo.

James E. Perry: Thanks, Tomo.

Analyst (Tomohiko Sano): Thank you. So, on CS business, you mentioned improvement in monthly demand from March to May. How have trends in order sales and shipments developed during this period? And I am also curious with the Mars and Aspen acquisitions increasing your mix of repair parts how is the current balance between repair and replace demand evolving, and when do you expect the shift back to replacement? Thank you.

James E. Perry: Yeah, Tom. it is James. Thanks for being on as always. it is a great question. I think it is a little early to see if we are a shift from repair to replacement. I think as existing home sales and new housing starts remain soft for now, interest rates remain where they are. With no real expectation of rates going down. And a follow-up to what John asked too, we assume a flat interest rate curve for the rest of the calendar year. Just kind of given what the dot plot and those things look like. Donal't think you see necessarily strong replacement demand coming back. We have not seen that necessarily yet, but it is May.

As we said, we have had nice order volume. In March and April as people stocked up. I think as we said last quarter, I think it is it is come true that the destocking seems to be behind us at both the distributor level, and we were pleased with that. saw normal stock up returning to normal levels in March and April. As we said, the momentum has maintained in May, and we have seen stabilization. Last year was anything but stable. So the word I use stabilization was very, very direct in that respect. Nice order volumes. Team's done a great job getting things out the door. Really proud of that with the distribution system that we have.

Talked about what we did at the distribution center for Mars in Missouri. We made a lot of changes there, and that team's done a good job. Have a lot of boots on the ground helping them there. So I think we are pleased with that. So I would say it is a little early to get to get too predictive on what the summer looks like, but so far, we have nice momentum. Certainly, things got hot rather early and then stabilized a bit. You had you had nice demand early, things are starting to get warm again. Certainly down here they are. in the Sunbelt.

In terms of replacement versus repair, the good thing is to your point with the acquisitions we made we have got balance there. Last year, we had just bought Aspen in May. Did not have Mars yet until November, so we did not get to take advantage of that nearly as much. This year, whichever direction it goes, we have got really good momentum and the ability to meet either demand. But I would say it is early to tell. Think a lot of folks out there and their earnings calls for their first quarter at least talked about, you know, again, early to say whether it is replacement or repair. Again, we are in a good place.

Repair seems to have a little more momentum probably just given the factor I mentioned at the early part of my answer, but that can only go on for so long. And so is that later this year? Is it next year? Is it a couple years out that replacement demand comes screaming back? there is clearly a housing shortage. At some point, rates will come down. And we will be prepared to pivot either direction.

Analyst (Tomohiko Sano): Thank you. And just 1 more. You talk about the margin aspen synergies are tracking about the initial $10 million target. Could you talk about realized synergies and potential upside and breakdown the sales of the synergies cost versus cross selling, please?

James E. Perry: Yeah. Sure. Yeah. So we have always advertised when we made the acquisition or reiterated it last quarter, $10 million of synergies and an inherent 30% run rate EBITDA margin by the time of the anniversary in November. We are ahead of that. We were we were willing today to talk about $12 million of synergies We have always had higher internal targets We have already actioned 10 million and we were we were ready to publicly talk about 12, and we will update that again next quarter. But the team's really doing a good job. You know, a lot of those synergies were day 1, just overhead that was not brought over those kind of things.

Some of that, was some pricing that was implemented as since the time of the acquisition. We are just now starting to really see that cross selling. Jeff and his team has really doing a good job of earning new business. You know, when you have a market that continues to show volumes down for the year from the peer folks that are out there, the comparators that are out there in the residential HVAC space, Tom. We gotta do better than that. We have always we have always been measurably above what the market says. And part of that is we are in fast growing markets like ductless and surge protection, those kind of things.

Part of it is winning new business and cross selling of things like Mars, winning new customers for Aspen. You know, we bought them in middle of the busy season last year, so that was hard to do. But that cross selling impact is real. That was always part of what we talked about. But the biggest part of the synergies in the 30% was really just what we saw a week ago going into it, but now we are executing very well. So we expect that business to continue to do really well. They have posted really good month after month. I am proud of how those acquisitions are going.

Getting them integrated in our ERP system in January was really important. We now have the front end of Aspen integrated as well. From a customer facing standpoint, that was done literally just a few weeks ago. And then the back end will be integrated later this year. So we have really got the momentum now for Jeff and his team to cross sell and win over new business with customers that can order anything from Contractor Solutions very easily now.

Analyst (Tomohiko Sano): Thank you. All the best.

James E. Perry: Tom.

Operator: Our next question comes from Susan Maklari with Goldman Sachs. Your line is now live.

Analyst (Charles Brown): Good morning, everyone. This is Charles Brown in for Susan. Thanks for taking my question. First, I would like to touch on the outlook for contracted Solutions. So I understand you are not providing guidance per se, but how do you think about your organic growth rate outlook for 2027?

Analyst: What are some of the puts and takes you are monitoring that could lead your performance to diverge versus the historical mid to high single digit cadence that you provided in the past?

Joseph Brooks Armes: Yeah, Charles. Thanks for thanks for the question. This is Joe. You know, we are not immune to the market. Right? I mean, last year, the OEMs were down pretty dramatically on volume. And we outperformed them meaningfully. Our expectation is we will outperform the market meaningfully. We have an assumption of a market that is flattish, but you know, we do not have a crystal ball for the market. Our commitment is that we will outperform the market, the end markets we serve by a meaningful basis You saw that this past quarter that we are reporting on. We would expect that going forward.

Beyond that, you know, we are just unwilling to, to commit to, you know, a guidance range or anything like that. But we have a long track record of outperforming the markets we serve, and I would expect for you to see that again.

Analyst (Charles Brown): Gotcha. Okay. No. that is helpful color. And just talking about price in general, how do you approach the decision to get pricing in Contractor Solutions? I understand that you I do not think you have announced anything as you mentioned in previous prepared remarks But you know, are you seeing any trade-down in certain categories, and how do you make sure you remain competitive as well against your competitors in both markets?

James E. Perry: Yeah, Charles. This is James. We certainly watch the market, of course. We act independently. And our decision to raise pricing midyear is based on input costs. And if we see cost of sales going up and that is where it is, of course, with input costs going up, I mentioned some you know, petroleum related products in that business that are that are plastic focused. You certainly have indirect impact of tariffs here and there. So as we see our costs go up, obviously, diesel costs going up in over the road trucking for domestic shipments, the ocean freight's been up 25-30% in the last few months since the conflict started in The Middle East.

We will we will push pricing if we need to. As I mentioned earlier, we have a several month lag. You know, by the time something gets on a boat overseas and gets over here and works its way through revenue, that is a few months. So we certainly see that coming in certain areas, you do not have to react the next day and knee jerk We have not found ourselves needing to do that and customers appreciate the thoughtful approach. it is really if we need to push pricing, we will. We have seen some folks do that.

As I mentioned, the $2.32 tariff impact that came out a few weeks ago some of the folks in the industry have gone ahead and pushed price because they had significant Mexico input costs. We do not have that, so we did not need to react to that. But we watched the market. We watched competitively. I think we have seen a trade down in products. Always say that we have got the best in class products. We are the highest quality product out there. And as a result, you pay a premium for that, and our customers will do it. Because the contractors know our brand name and our products, and we believe strongly in that.

So, you know, we will very carefully and thought push pricing as we need to, but, no, we have not announced anything to date.

Analyst (Charles Brown): Gotcha. Okay. That makes sense. And maybe lastly, can you talk about what you are seeing in terms of M&A pipeline given the macro volatility you are seeing today? And also more broadly, how do you think about using excess capital in terms of capital allocation and share repurchases?

Joseph Brooks Armes: Sure. This is Joe. We you know, saw a very active year last year in M&A, not only for us, but also in the industry. As we have talked about in some depth, you know, there were 7 or 8 potential transactions last year that we saw coming to market. And we were we were very active. I would say, you know, we continue to be committed to digesting these large acquisitions that we have done and getting them fully integrated fully executing on all the synergies that we have committed to, getting to the margin rates that we have committed to, and making sure that our customers are well taken care of.

So that is priority number 1. that is the most accretive thing we can do right now. Secondly, I would say we continue to be active. We closed on an acquisition called Duck Strip. This last quarter. And we continue to invest We continue to invest in our share repurchases. So capital allocation is top priority here. We continue to be active on all fronts. I would say that the industry has not had a major M&A going on yet this year. there is been an IPO. there is been some other talk of other capital markets transactions. But no big transactions that we have passed on or anything like that.

So we are ready, willing, and able to continue especially, as James mentioned, on the smaller add on bolt on acquisitions, that is those are very accretive and easy to integrate. And so those are those are a top priority. But investment of the of our excess cash, will be you know, all the levers are available to us. There will be debt pay down. There will be share repurchases at appropriate levels. And you have seen that this quarter. And we continue to be open for business on the M&A front.

Analyst (Charles Brown): Got it. Thank you for the color, guys, and good luck with next quarter.

Operator: Thank you. Thanks, Charles. Our next question comes from Tom Wojs with Baird. Your line is now live.

Analyst: Hey, everybody. Good morning. Nice job.

Joseph Brooks Armes: Thanks.

Analyst: Maybe just the first question on pricing in the contractor business. I think just kind of back of the envelope math, you are probably up mid single digits. Maybe a little bit better in the March quarter. Is that a reasonable kind of run rate that we should think about for fiscal 2027? Or do you actually see a little bit of I guess, step up as maybe kind of the quarterly run rate kind of annualizes into the June quarter?

James E. Perry: Yeah. Ask anything else, Tom. You are you are in the ballpark. Yeah. it is obviously a little different product to product and with the acquisitions we brought in and kind of how that lapsed. But yeah, mid single, you know, mid single digits is appropriate for that. You know, absent any future action later in the year. Okay. Okay.

And then I guess just bigger picture, if we kind of step back and we think about kind of the portfolio with Mars and the portfolio with Aspen now, Is there any examples that you could give us just in terms of the cross selling opportunity or just kind of what you are hearing from customers about buying more from CSW and Rector Steel. Has there been any sort of kind of tangible improvement that you could talk about related to those conversations?

You know, I would not give specific examples, but I would certainly tell you that as Jeff and his team presented their budget for the year a couple months ago, you know, we assume, as Jon talked about and we talked about, the market relatively flat this year. You know, I think third party folks and other folks in the industry, the bigger folks on the residential side, especially, which we have to parse out, as you well know, as well as anybody, you know, expect the market to be, you know, flat at best, maybe.

And as Jon said, we expect to do better than that, and that is not that is not just magically done. that is done by leaning into higher growth markets like ductless and new product lines like surge protection and indoor air quality. But it is also done with new business. And Jeff and his team have targets for new business. Some of that is the cross selling of Aspen and Mars. Some of it is simply continuing to win over business. Make it easy easier for our customers to do more and more with us. And they have gotta deliver on that, and they already have.

We have executed several converted several customers here before the busy season this year that were on their you know, their list last year and some that were on their list this year, of course. You know, getting Mars converted over to the ERP system in January prior to the busy season. Now getting Aspen converted over at the beginning of May is a big deal. Customers can now log on to the system and order any product in the portfolio. You know? In terms of tangibles, again, I will not mention specific customers, but we continue to win business with folks more and more. Jeff's got great stories there all the time.

He and his team are really knocking it out of the park in that respect. Know, we have got a customer, you know, that a few years ago, we were not even in their top 20 and right now, we are number 1. And that is a result of bringing in these acquisitions, making it easier to do business with, making it easier for them to buy more product, implementing some AI tools so they can track their orders better. We can manage inventory better. We can collect receivables more efficiently. All these types of things that we have implemented without massive investments, we have stayed technologically ahead of everybody else.

We have done a great job delivering what they need and continuing to give them more products they can put in their basket and get a pallet a partial truckload or a truckload instead of having to buy from 3 or 4 different vendors. Yeah.

Joseph Brooks Armes: Tom, I think that is a really important vein that we are mining pretty successfully here, which is converting our existing customers to these new product categories that we are acquiring. that is an organic growth. You know, opportunity that is very accretive for us and works really well both for our customer and for us. And I think you are gonna be hearing more about that.

Analyst: Okay. Okay. Great. And then just, I will sneak the last 1 in. Just I know there is a, you know, a kind of year over year, you know, dilution from the acquisitions the last couple of quarters. As we anniversary Aspen and then, you know, kind of later in the year, anniversary Mars, would we expect to see margins expand in the back half of the year in Contractor as that occurs?

James E. Perry: Let me separate those. We have said all along that we have got a little bit of improvement we can do in Aspen. Some of that is obviously in the last year taking effect. But Aspen's Aspen's gonna be lower than your contractor solutions margins. You know, that is a mid twenties business. And we bought it in the lower twenties, getting it to the mid 20s, you know, kind of the goal. Maybe we continue over time. Working on that as we put more and more through that facility. The team is doing a great job with throughput. Those type of things. So I think you have got incremental opportunity with Aspen.

But Aspen's gonna be dilutive just kind of overall Mars, you know, we talked about Mars being a mid twenties business when we bought it, getting up to 30% run rate on the anniversary. We are gonna have months when it is well above that as you can imagine, in the busy season, especially if the repair market stays really strong. You will have months seasonally where it bumps around because it does not do as much in the winter months. that is gonna help. Now does Mars at 30%, you know, become accretive at some point to the historical kind of 32-33%. We will see. We are gonna continue to work on that. We would not promise that.

You are clearly gonna have accretion to the consolidated margin, to your point, I think you have the opportunity for the contractor margin to come up during the year. As you see that. Necessarily poke its head above where it was before. You have got so many other factors with tariffs and commodity prices and those kind of things. And if we see petroleum prices ease, obviously, there is an indirect impact there that can help us But, yeah, I think we should see contractor solutions margins have opportunity over time, but it is gonna bounce around given the nature of these acquisitions.

Analyst: Okay. Okay. Sounds good. Good luck on the next quarter. James E. Perry: Yeah.

Joseph Brooks Armes: Thank you.

Operator: We have reached the end of the question-and-answer session. I would now like to turn the call back over to Joe Armes for his closing comments.

Joseph Brooks Armes: Great, Rob. Thank you. We really appreciate everyone joining us for this call. Appreciate your support and look forward to reporting again relatively soon. after Q1. So thank you.

Operator: This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.

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