CSW INDUSTRIALS, INC.CSW

CSW INDUSTRIALS, INC. Fair Value Disclosure

10-KFiled May 26, 20263 min read
FAIR VALUE MEASUREMENTS
The carrying amounts of cash, accounts receivable, net and accounts payable approximate their fair values at March 31, 2026 and 2025 due to their short-term nature. Cash equivalents generally consist of money market funds invested with a reputable and highly diversified global bank in instruments issued or guaranteed by the U.S. Treasury. The fair value of these cash equivalents is based on quoted market price, which is a Level I input. The fair value of interest rate swaps discussed in Note 11 are determined using Level II inputs. The carrying value of our debt, included in Note 9, approximates fair value as it bears interest at floating rates.

The long-term investments with no readily determinable fair value are measured using the alternative for fair value and the investment's carrying value is reported at cost, adjusted for impairments or any observable price changes in ordinary transactions with identical or similar investments. As of March 31, 2026 and 2025, the long-term investments reported in the balance sheets were $7.3 million and $2.5 million, respectively.

The redeemable noncontrolling interest is recorded at the higher of the redemption value or carrying value each reporting period. The redemption value of the redeemable noncontrolling interest is estimated using a discounted cash flow analysis, which requires management judgment with respect to future revenue, operating margins, growth rates and discount rates and is classified as Level III under the fair value hierarchy. The redemption value of the redeemable noncontrolling interest is discussed in Note 3.

The fair value of the contingent consideration liability is determined using either a scenario-based analysis on forecasted future results or an option pricing model simulation that determines an average projected payment value across numerous iterations. The contingent consideration liability is recorded at fair value on the acquisition date and is remeasured quarterly based on the then assessed fair value. The increases or decreases in the fair value of the contingent consideration can result from changes in future operations, forecasted revenue and in assumed discount rates. The fair value measurement is based on significant inputs that are not observable in the market and is classified as Level III under the fair value hierarchy. As of March 31, 2026 and 2025, the contingent consideration liability reported in the balance sheets was $16.7 million and $24.4 million, respectively.
The following table presents the fair values of the Company's assets and liabilities measured on a recurring basis:

March 31, 2026March 31, 2025
(in thousands)Carrying ValueFair ValueCarrying ValueFair Value
Significant Other Observable Inputs (Level II):
Interest rate swap$1,208 $1,208 $— $— 
Unobservable Inputs (Level III):
Acquisition-related contingent consideration liabilities16,655 16,655 24,385 24,385 

The following table presents the changes in the estimated fair values of the Company's contingent consideration liabilities measured using significant unobservable inputs (Level III):

(in thousands)March 31, 2026March 31, 2025
Balance at beginning of the year:$24,385 $7,445 
Cash payments(11,730)(160)
Change in fair value of contingent consideration liabilities— 2,100 
Additions4,000 15,000 
Ending balance$16,655 $24,385 
Free Sentinel

Want the next CSW INDUSTRIALS, INC. fair value disclosure the moment it drops?

Set a Sentinel and we'll alert you the moment CSW INDUSTRIALS, INC.'s next filing hits EDGAR. No credit card, your email never gets sold.

Track for free

Historical Timeline

Fiscal YearFiled
2026May 26, 2026Showing above
2025May 22, 2025
2024May 23, 2024
2023May 25, 2023
2022May 18, 2022
2021May 20, 2021
2020May 20, 2020
2019May 22, 2019
2018May 30, 2018
2017Jun 14, 2017
2016Jun 8, 2016

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

Income TaxesRevenueEarnings Per SharePP&EGoodwill & IntangiblesLeasesSegmentsDebtCommitmentsStock CompensationNew StandardsPay vs Performance