CSW Industrials Announces Definitive Agreement to Acquire Aspen Manufacturing for $313.5 Million, Executing Disciplined Capital Allocation and Strategic Expansion in the HVAC/R End Market

Rhea-AI Summary

CSW Industrials (CSWI) has announced a definitive agreement to acquire Aspen Manufacturing for $313.5 million in cash. Aspen, based in Humble, Texas, is a leading manufacturer of evaporator coils and air handlers for the HVAC/R industry, with estimated 2024 revenues of $122.4 million and adjusted EBITDA of $28.5 million.

The acquisition price represents approximately 11x Aspen's estimated 2024 adjusted EBITDA. CSWI plans to fund the transaction through a combination of cash and existing credit facility. The deal is expected to close in Q1 of CSWI's 2026 fiscal year, subject to customary conditions.

Aspen's product portfolio includes residential and light commercial evaporator coils, blowers, and air handling units. The company is uniquely positioned in the market with capabilities to manufacture both legacy (R-410a) and new refrigerant (R-32 and R-454B) rated products, using copper and aluminum heat transfer technologies.

Positive

• Immediate EPS and EBITDA accretion expected
• Expands HVAC/R product portfolio with complementary offerings
• Aspen's estimated 2024 revenue of $122.4M and EBITDA of $28.5M
• Capability to manufacture both legacy and new refrigerant products
• Leverages existing distribution channels

Negative

• Significant cash outlay of $313.5M impacts balance sheet
• Increased debt burden through credit facility utilization
• Integration risks with existing operations

Insights

Financial Analyst

CSW Industrials' acquisition of Aspen Manufacturing represents a disciplined expansion into the HVAC/R market with compelling economics. The $313.5 million purchase price at 11x EBITDA is reasonable for a high-margin business - Aspen's $28.5 million EBITDA on $122.4 million revenue implies an impressive 23% EBITDA margin. This transaction immediately enhances CSWI's earnings profile while utilizing existing financial capacity efficiently.

What makes this acquisition particularly valuable is its positioning during the industry-wide refrigerant transition. Aspen's capability to produce both legacy R-410a and next-generation R-32/R-454B systems creates dual revenue streams: servicing the vast installed base of existing systems while also capturing new installation market share. This positions CSWI for sustained growth throughout the multi-year refrigerant transition period.

The deal structure preserves CSWI's financial flexibility - funding through cash and existing credit facilities maintains balance sheet strength for future opportunities. At approximately 6.4% of CSWI's market cap, this acquisition is material without being overleveraging. The immediate EPS accretion suggests efficient capital allocation that should drive shareholder value.

Strategically, CSWI is obtaining enhanced scale in a profitable sector while expanding its product portfolio through complementary offerings that can leverage existing distribution channels - creating cross-selling opportunities across their RectorSeal family of products.

HVAC Industry Expert

This acquisition significantly strengthens CSWI's competitive positioning in the evolving HVAC/R landscape. Aspen's product portfolio of evaporator coils and air handlers fills a strategic gap in CSWI's offering, enabling the company to deliver more comprehensive solutions to distributors and contractors.

The timing is particularly advantageous given the ongoing refrigerant transition in the industry. As regulations phase out legacy refrigerants, Aspen's dual capability to manufacture both R-410a and next-generation R-32/R-454B compatible components gives CSWI a substantial competitive edge. Many HVAC manufacturers are struggling with this transition, creating market disruption that well-positioned companies can capitalize on.

Additionally, Aspen's domestic manufacturing focus (all products designed, engineered and assembled in the US) provides supply chain advantages amid ongoing global logistics challenges while potentially appealing to the growing "Buy American" sentiment among contractors and end-users.

The strategic integration with RectorSeal positions CSWI to increase wallet share with existing customers by providing complementary product categories through established distribution channels. This creates efficiency advantages over competitors who must maintain separate sales and distribution infrastructures.

Aspen's ability to manufacture service coils for legacy systems addresses a critical market need - as older systems fail, property owners often prefer component replacement rather than full system upgrades, especially in challenging economic environments. This positions CSWI to capture revenue in both replacement and new installation markets simultaneously.

Aspen Manufacturing Acquisition Highlights

• Continues the expansion of existing product portfolio in the profitable heating, ventilation, air conditioning, and refrigeration (HVAC/R) end market with the addition of evaporative coils and air handler offerings
• Aligns with previously established acquisition criteria to leverage existing distribution channels, increase our market share in HVAC/R end market, expand products offerings, and grow share of wallet with our existing customers
• All of Aspen’s products are designed, engineered and manufactured in the United States
• Valuation represents approximately 11x Aspen Manufacturing’s estimated 2024 adjusted EBITDA
• Expected to be immediately accretive to CSWI’s EPS and EBITDA
• Transaction economics allow CSWI to maintain a strong balance sheet and ample liquidity to continue executing on growth strategy

DALLAS, March 18, 2025 (GLOBE NEWSWIRE) -- CSW Industrials, Inc. (Nasdaq: CSWI) and Aspen Manufacturing announced today the execution of a definitive agreement under which CSWI will acquire Aspen Manufacturing for approximately $313.5 million in cash, subject to customary post-closing adjustments. The proposed purchase price is approximately 11x Aspen Manufacturing’s estimated 2024 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $28.5 million. CSWI anticipates funding the transaction with a combination of cash on hand and debt under its existing $500 million credit facility, with closing expected to occur in the first quarter of CSWI’s 2026 fiscal year following the satisfaction of customary closing conditions, including the expiration or termination of any waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Aspen Manufacturing, based in Humble, Texas, with estimated 2024 revenues of $122.4 million, is one of the largest independent evaporator coil and air handler manufacturers for the HVAC/R industry and is a recognized leader in product quality and indoor comfort. All of Aspen’s products are designed, engineered, and assembled in the United States. Aspen’s current product suite includes a vast range of high-quality residential and light commercial evaporator coils, blowers, and air handling units for single-family, multi-family, and manufactured homes.

Aspen Manufacturing is uniquely positioned to serve its customers with the current refrigerant transition, having the ability to manufacture legacy (R-410a) and new refrigerant (R-32 and R-454B) rated products, leveraging both copper and aluminum heat transfer technologies. It is well positioned to enable distributors and contractors to service legacy air conditioning systems that have a failed coil or air handler without having to replace the overall system. Moreover, Aspen has been effective in supporting HVAC OEMs with the production of service coils and niche products to serve specific geographies and more effectively meet customer demand.

Joseph B. Armes, Chairman, President, and Chief Executive Officer of CSW Industrials, said, “I am pleased to announce that we have entered into a definitive agreement to acquire Aspen Manufacturing. This acquisition will allow CSWI to expand our existing HVAC/R product portfolio with an innovative portfolio of high-caliber evaporator coils and air handlers, while building on our existing HVAC/R end market leadership position. With our market knowledge and investment in people, systems, and processes, CSWI is uniquely positioned to accelerate Aspen’s growth strategy. This acquisition will enable us to continue driving above market, profitable growth, and deliver value to our shareholders.”

Jeff Underwood, Senior Vice President of CSWI and General Manager, Contractor Solutions, commented, “I am eagerly looking forward to Aspen joining the RectorSeal family and our lineup of high-quality HVAC/R, plumbing and electrical products. I have had a chance to form strong relationships with Aspen’s leadership team over the years and know that the team shares our values on how to treat customers and team members. The combined organization will allow us to better serve distributors and contractors with segment-leading products.”

A presentation with more information about this acquisition is available on CSW’s website at https://cswindustrials.gcs-web.com.

Safe Harbor Statement
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words or phrases such as "may," "should," "expects," "could," "intends," "plans," "anticipates," "estimates," "believes," "forecasts," "predicts" or other similar expressions are intended to identify forward-looking statements, which include, without limitation, earnings forecasts, effective tax rate, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations, and financial performance and condition.

The forward-looking statements included in this press release are based on our current expectations, projections, estimates, and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the risk factors described from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K.

This press release contains estimated results of Aspen Manufacturing for the calendar year 2024 (the “estimated results”). The estimated results are forward-looking statements based on Aspen Manufacturing’s management’s preliminary, unaudited results as of the date hereof, and Aspen Manufacturing’s actual results may be materially different from the estimated results. We assume no obligation to update any forward-looking statement as a result of new information, future events or other factors. Accordingly, you should not place undue reliance on the estimated results. Our independent registered public accounting firm has not audited, reviewed or performed any procedures with respect to the estimated results and does not express any opinion or any other form of assurance with respect thereto.

All forward-looking statements included in this press release are based on information currently available to us, and we assume no obligation to update any forward-looking statement except as may be required by law.

About CSW Industrials
CSW Industrials is a diversified industrial growth company with industry-leading operations in three segments: Contractor Solutions, Specialized Reliability Solutions, and Engineered Building Solutions. CSWI provides niche, value-added products with two essential commonalities: performance and reliability. The primary end markets we serve with our well-known brands include: HVAC/R, plumbing, electrical, general industrial, architecturally-specified building products, energy, mining, and rail transportation. For more information, please visit www.cswindustrials.com. 

Investor Relations

Alexa Huerta
Vice President, Investor Relations, & Treasurer
214-489-7113
alexa.huerta@cswindustrials.com

FAQ

What is the acquisition value of Aspen Manufacturing by CSWI?

CSWI is acquiring Aspen Manufacturing for $313.5 million in cash, representing approximately 11x Aspen's estimated 2024 adjusted EBITDA.

What are Aspen Manufacturing's projected financial metrics for 2024?

Aspen Manufacturing projects 2024 revenues of $122.4 million and adjusted EBITDA of $28.5 million.

When is the CSWI-Aspen Manufacturing acquisition expected to close?

The acquisition is expected to close in the first quarter of CSWI's 2026 fiscal year, pending customary closing conditions.

How will CSWI finance the Aspen Manufacturing acquisition?

CSWI will fund the acquisition through a combination of cash on hand and debt under its existing $500 million credit facility.

What products does Aspen Manufacturing bring to CSWI's portfolio?

Aspen brings residential and light commercial evaporator coils, blowers, and air handling units, compatible with both legacy and new refrigerant systems.