A diversified industrial manufacturer whose products range from evaporator coils, motors, and installation supplies for HVAC and plumbing contractors to high-performance lubricants and sealants for harsh mining, rail, and energy environments, plus fire and smoke curtains and architectural railings for commercial buildings. The company was spun off from the Dallas investment firm Capital Southwest in 2015, which had built its portfolio over decades by buying brands like RectorSeal, a Houston maker of thread sealants founded in 1937. Its products reach customers in over 100 countries.
Q1 FY2027 revenue rose 33% to $350.7M with organic growth turning positive at 5.3%
Organic sales turned positive for the first time in a year. rose 33% to $350.7M and expanded to 22.8% as acquisitions added $73.0M and pricing and volume lifted organic sales 5.3%, while improved to 44.9% from 43.8%. The acquisition-led growth story is back on its own footing, but $557.5M of unhedged remains a live cost.
Key takeaways
Organic grew 5.3% to $14.0M, the first organic increase after four straight quarters of decline, as pricing and higher volumes offset prior volume softness.
rose 33.0% to $350.7M, with $73.0M from MARS Parts, Aspen Manufacturing, Hydrotex, and ProAction Fluids acquisitions and the rest from .
improved to 44.9% from 43.8% a year earlier, driven by pricing actions and favorable product mix partly offset by higher material and freight costs.
Section summaries
Management's Discussion and Analysis
Q1 FY2027 revenue rose 33% to $350.7M, driven by acquisitions and 5.3% organic growth; operating margin expanded to 22.8%.
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Net increased $87.0M (33.0%) to $350.7M, with $73.0M from acquisitions (MARS Parts, Aspen Manufacturing, Hydrotex, ProAction Fluids) and $14.0M (5.3%) from pricing and higher volumes.
margin improved to 44.9% from 43.8%, driven by pricing actions and favorable product mix, partially offset by higher material and freight costs.
expanded to 22.8% from 20.8% as gains and expense outpaced cost growth; rose 102.0% to $79.9M from $39.5M in Q1 FY2026.
Contractor Solutions grew 40.3% to $276.0M on MARS Parts and Aspen Manufacturing; Specialized Reliability Solutions rose 30.9% to $48.2M on Hydrotex and ProAction Fluids.
Engineered Building Solutions declined 9.3% to $28.9M on residential Greco softness, though its improved on a shift to higher-margin Smoke Guard products.
was $75.6M; the company repaid $14.0M of , repurchased $25.5M of shares, and paid $4.9M in dividends.
What changed
Organic reversed from the -2.1% FY2026 full-year decline and three straight quarterly drops (-2.8%, -5.6%, -2.9%) to +5.3% growth, settling the flagged watch on whether volumes would turn.
Contractor Solutions , flagged from the 21.7% FY2026 level, was not stated for the this quarter but consolidated operating margin rose to 22.8% from 12.8% a year earlier.
against the 41.9% FY2026 rate improved to 44.9%, easing the flagged tariff and material cost pressure as pricing actions and mix helped.
Unhedged stood at $557.5M at 5.7% as of June 30, 2026, down from $571.5M at FY2025 end but still the central interest-rate exposure flagged in the FY2026 10-K.
was $826.0M at quarter-end, down 1.6% from $839.8M at FY2026 end, after the $800.1M acquisition-funded borrowings of the prior year.
What to watch
Contractor Solutions next quarter from the FY2026 21.7% level as Aspen, MARS, and PF WaterWorks integration and tariff mitigation proceed.
Unhedged of $557.5M at 5.7% and the $300M swap as rate moves shift annual interest ~$1.4M per quarter-point; track drawdowns and hedge additions.
Engineered Building Solutions trajectory after the 9.3% Q1 decline to see if Greco residential softness persists or Smoke Guard mix sustains margin.
sustainability after the 5.3% Q1 figure to confirm the volume turn is durable rather than a single-quarter pricing effect.
expanded to 22.8% from 20.8%, benefiting from gains and operating expense as grew faster than expenses.
Contractor Solutions grew 40.3% to $276.0M, primarily from MARS Parts and Aspen Manufacturing acquisitions; Specialized Reliability Solutions revenue rose 30.9% to $48.2M, led by Hydrotex and ProAction Fluids.
Engineered Building Solutions declined 9.3% to $28.9M due to residential market softness in the Greco business, though improved on a mix shift toward higher-margin Smoke Guard products.
was $75.6M; the company repurchased $25.5M in shares and paid $4.9M in dividends, while repayments on the RCF and TLA totaled $14.0M.
Quantitative and Qualitative Disclosures About Market Risk
Interest-rate risk from unhedged variable debt and foreign-currency exposure from non-U.S. operations are the primary market risks.
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The company hedged the first $300.0 million of TLA borrowings with an entered on November 4, 2025.
At June 30, 2026, $557.5 million in unhedged variable-rate debt at 5.7% average rate remains; each quarter-point rate change moves annual by about $1.4 million.
Foreign-currency risk arises mainly from translation of non-U.S. operations (Australia, UK, Canada, Vietnam) and from transaction gains/losses.
A 10% adverse move in all foreign exchange rates would have impacted by roughly 5%, per a sensitivity analysis as of June 30, 2026.
The company does not use derivatives for trading or speculation and seeks to minimize credit risk by dealing with high-quality counterparties.
Rapidly changing global trade policies, including tariffs, are flagged as a risk to manufacturing and distribution operations in the U.S., Vietnam, Canada, Australia, and the UK.
The disclosure contained in Note 14 to our consolidated financial statements included in “Item 1. Financial Statements” of this Quarterly Report is incorporated by reference into this “Item 1. Legal Proceedings.” In addition to the foregoing, we and our subsidiaries are from tim…
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The disclosure contained in Note 14 to our consolidated financial statements included in “Item 1. Financial Statements” of this Quarterly Report is incorporated by reference into this “Item 1. Legal Proceedings.” In addition to the foregoing, we and our subsidiaries are from time to time named defendants in certain lawsuits incidental to our business, including product liability claims that are insured, subject to applicable deductibles, and are involved from time to time as parties to governmental proceedings, all arising in the ordinary course of business. Although the outcome of lawsuits or other proceedings involving us and our subsidiaries cannot be predicted with certainty, and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, management does not currently expect the amount of any liability that could arise with respect to these matters, either individually or in the aggregate, to have a material adverse effect on our financial position, results of operations or cash flows.
There are numerous factors that affect our business and results of operations, many of which are beyond our control. In addition to other information set forth in this Quarterly Report, careful consideration should be given to “Item 1A. Risk Factors” in Part I and “Item 7. Manag…
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There are numerous factors that affect our business and results of operations, many of which are beyond our control. In addition to other information set forth in this Quarterly Report, careful consideration should be given to “Item 1A. Risk Factors” in Part I and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II of our Annual Report, which contain descriptions of significant factors that may cause the actual results of operations in future periods to differ materially from those currently expected or desired.
There have been no material changes in the risk factors discussed in our Annual Report and subsequent SEC filings. The risks described in this Quarterly Report, our Annual Report and in our other SEC filings or press releases from time to time are not the only risks we face. Additional risks and uncertainties are currently deemed immaterial based on management’s assessment of currently available information, which remains subject to change; however, new risks that are currently unknown to us may arise in the future that could materially adversely affect our business, financial condition, results of operations or cash flows.