CSW Industrials disclosed several financial projections during its fourth-quarter earnings call for fiscal year 2026 on Tuesday, including an estimated interest expense of approximately $46 million for fiscal year 2027. The company also announced it has raised its annual synergy target for MARS Parts to over $12 million and aims to achieve a pro forma EBITDA margin exceeding 30% for this business segment by the one-year anniversary of the acquisition in November 2026.
During the earnings call, the company's Chairman, President, and CEO stated that fourth-quarter revenue grew 34% year-over-year to a record $309 million, with adjusted earnings per share reaching $3.14, significantly surpassing market expectations of $2.41. Full-year revenue surpassed the $1 billion mark for the first time, achieving a 15% compound annual growth rate since the company's spin-off.
Regarding the integration of MARS Parts, which has been a key focus, the company has made substantial progress. The CEO revealed that realized synergies to date exceed $10 million, and the annual target has been increased to over $12 million. The company is confident it can elevate the EBITDA margin for this business to above 30% by the acquisition's one-year anniversary in November. This goal will be pursued through product SKU optimization, channel integration, and operational efficiency improvements.
The projected interest expense of about $46 million for fiscal 2027 reflects the financial costs associated with the company's active acquisition strategy in recent years. Over the past year, CSW completed several acquisitions, including MARS Parts and Aspen Manufacturing, with a total investment of approximately $1 billion. The company's Chief Financial Officer noted that CSW has executed an interest rate swap on the first $300 million of its Term Loan A, locking in a SOFR rate of 3.416% to manage the risk of interest cost volatility.
Analysts observed that while the acquisitions have led to short-term earnings dilution and increased financial expenses, the company's net leverage ratio remains at 2.55x, within its target range of 1x to 3x. As synergies from core acquisitions like MARS and Aspen are progressively realized, the company is positioned for a significant recovery in profitability by fiscal year 2027.