CSL Carlisle Companies Inc

Carlisle Companies Incorporated (NYSE:CSL) reported income from continuing operations of $54.6 million, or $1.76 per diluted share, for the quarter ended June 30, 2006, an increase of 30% above $42.1 million, or $1.34 per diluted share, for the second quarter of 2005. Earnings before interest and income taxes ("EBIT") for the second quarter of 2006 was $84.2 million or 12.2% expressed as a percent of net sales. EBIT for the second quarter of 2005 was $66.0 million or 11.1% expressed as a percent of sales. Richmond McKinnish, Carlisle President and CEO, commented, "The second quarter of 2006 met our expectations. We continue to see strength in many of our end markets; therefore, we are increasing our guidance for income from continuing operations for the full year 2006 to the range of $5.25 to $5.45 per diluted share from the previous range of $5.00 to $5.20 per diluted share." Net sales of $692.7 million in the second quarter of 2006 were $101.1 million, or an increase of 17%, as compared to net sales of $591.6 million in the second quarter of 2005. Organic sales growth accounted for $84.1 million, or 83%, of the improvement over the prior-year quarter, primarily as a result of strong organic growth in the Construction Materials segment and the Diversified Components segment. The organic sales growth rate was 14.2% for the second quarter of 2006 as compared to an organic growth rate of 9.6% for the second quarter 2005. Acquisitions in the Diversified Components segments accounted for $13.4 million, or 13%, of the growth over the second quarter of 2005, while changes in foreign currency exchange rates contributed $3.6 million, or 4%. Construction Materials: Net sales of $292.9 million in the second quarter of 2006 were 29% above $227.9 million of net sales in the second quarter of 2005 primarily related to higher volumes of TPO (thermoplastic polyolefin) membrane and insulation reflecting Carlisle's expanded geographic reach within the U.S. and focus on total system sales. Second quarter 2006 EBIT of $46.6 million was 20% above second quarter 2005 EBIT of $38.8 million. Prior year results included pre-tax gains of $1.3 million on the sale of property and $1.3 million of insurance proceeds related to a fire at a small coatings and waterproofing plant that occurred in 2002. Segment EBIT for the second quarter of 2006 and 2005 included earnings related to the Company's equity share of income at its European roofing joint venture, Icopal, of $0.7 million and $0.6 million, respectively. Industrial Components: Net sales of $214.7 million for the three months ended June 30, 2006 represented a 3% increase over net sales of $209.2 million for the same period in 2005. The tire and wheel business increased revenues on higher commercial outdoor power equipment, ATV (all-terrain vehicles) and high speed trailer tire sales as well as increased sales to the replacement market. Improvement in the tire and wheel business was slightly offset by lower sales in the power transmission belt business driven by reduced volumes for the agricultural market. EBIT of $23.4 million in the second quarter of 2006 was 18% above EBIT of $19.8 million reported in the same quarter of 2005. Earnings in the current-year quarter included a $5.6 million gain resulting from the curtailment of certain retiree medical benefits and $1.5 million of proceeds related to certain legal actions initiated by the Company. Negatively impacting results in the second quarter of 2006 were charges of $1.3 million related to a lease termination and $1.2 million related to the impairment of certain assets at the closed Red Wing, MN facility. Earnings in the prior year included $3.6 million related to certain legal actions. Diversified Components: Net sales of $185.1 million in the second quarter of 2006 were 20% higher than net sales of $154.5 million for the same period of 2005 while EBIT in the second quarter of 2006 of $21.5 million was 41% higher than EBIT of $15.3 million in the second quarter of 2005. Results for the current-year quarter were negatively impacted by pre-tax charges of $2.5 million related to an arbitration proceeding concerning the termination of a supply agreement in the Company's high-performance wire and cable business. Strong demand in the specialty trailer business and the wire and cable business, as well as acquisitions in the two brake businesses accounted for a significant portion of the increase in net sales. The Company's refrigerated truck body business also experienced favorable comparisons to the prior year, which was negatively impacted by a labor dispute in 2005. Discontinued Operations In the fourth quarter of 2005, the Company announced it was exiting the businesses of Carlisle Systems & Equipment which include Carlisle Process Systems and the Walker Group. On April 10, 2006, Carlisle announced it had signed a definitive agreement to sell Carlisle Process Systems to Tetra Pak, a division of the Tetra Laval Group, a private industrial group headquartered in Switzerland. The sale of the Carlisle Process Systems businesses is subject to regulatory approvals as well as other customary closing conditions. The Company is actively marketing the Walker Group businesses. The sale of Carlisle Process Systems and the Walker Group businesses are expected to be completed by December 31, 2006. Income from discontinued operations, net of tax, in the second quarter of 2006 was $1.4 million as compared to losses from discontinued operations in the second quarter of 2005 of $7.4 million. Net Income Net income for the second quarter ended June 30, 2006 of $56.0 million, or $1.80 per diluted share, was 61% higher than net income in the second quarter ended June 30, 2005 of $34.7 million, or $1.11 per diluted share. The increase in net income for the second quarter 2006 was due primarily to the improved income from continuing operations as well as the second quarter 2005 including the aforementioned losses from discontinued operations. Cash Flow Cash provided by continuing operations of $55.7 million for the six months ended June 30, 2006 was significantly stronger than $19.8 million provided in the first half of 2005 due primarily to increased operating income and a reduction in cash required to fund working capital levels. Cash used in investing activities was $46.9 million in 2006 compared to $46.1 million in 2005. Capital expenditures of $50.9 million in the first half of 2006 were comparable to capital expenditures of $50.7 million in the first six months of 2005 with the Construction Materials segment representing the majority of the expenditures for both periods. Cash used in financing activities of $15.1 million in the six months ended June 30, 2006 compared to cash provided by financing activities of $41.9 million in the first half of 2005. The year-over-year change in financing cash flow is due primarily to a reduction in short-term borrowings in 2006 on stronger cash flow from operating activities. Financing cash flows in 2005 included the use of $16.4 million to purchase 200,000 shares of common stock. Backlog Backlog from continuing operations at June 30, 2006 of $269.9 million was below the backlog of $295.4 million at March 31, 2006 and slightly higher than the backlog of $261.3 million at June 30, 2005. Increased backlog for the Construction Materials segment was more than offset by decreased backlog in the Industrial Components segment reflecting the seasonality of the lawn and garden market. Conference Call and Webcast The Company will discuss second quarter 2006 results on a conference call for investors on Tuesday, July 25, 2006 at 11:00 a.m. Eastern. The call may be accessed live at http://www.carlisle.com/investors/conference_call.html, or the taped call may be listened to shortly following the live call at the same website location until August 8, 2006. A PowerPoint presentation will also be available for viewing and/or printing at the same website location. Forward-Looking Statements This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in global economic, business, competitive, market and regulatory factors. More detailed information about these factors is contained in the Company's filings with the Securities and Exchange Commission. The Company undertakes no duty to update forward-looking statements. Carlisle is a diversified global manufacturing company serving the construction materials, commercial roofing, specialty tire and wheel, power transmission, heavy-duty brake and friction, heavy-haul truck trailer, foodservice, and data transmission industries. -0- *T CARLISLE COMPANIES INCORPORATED Financial Results For the periods ended June 30 (In millions, except per share data) (Unaudited) Second Quarter Six Months ------------------------- --------------------------- 2006 2005* % Change 2006 2005* % Change ------------------------- --------------------------- Net sales $692.7 $591.6 17% $1,313.8 $1,129.3 16% Income from continuing operations, net of tax $54.6 $42.1 30% $93.7 $70.8 32% Income (loss) from discontinued operations, net of tax 1.4 (7.4) NM 3.5 (7.9) NM ---------------- ------------------ Net income $56.0 $34.7 62% $97.2 $62.9 54% ================ ================== Basic earnings per share Continuing operations $1.78 $1.36 31% $3.07 $2.29 34% Discontinued operations 0.05 (0.24) NM 0.11 (0.26) NM ---------------- ------------------ Net income $1.83 $1.12 63% $3.18 $2.03 57% ================ ================== Diluted earnings per share Continuing operations $1.76 $1.34 31% $3.02 $2.26 34% Discontinued operations 0.04 (0.23) NM 0.12 (0.25) NM ---------------- ------------------ Net income $1.80 $1.11 62% $3.14 $2.01 56% ================ ================== SEGMENT FINANCIAL DATA (Continuing Operations) (In millions) Second Quarter 2006 2005* ------------------------- --------------------------- Sales EBIT % Sales Sales EBIT % Sales ------------------------- --------------------------- Construction Materials $292.9 $46.6 15.9% $227.9 $38.8 17.0% Industrial Components 214.7 23.4 10.9% 209.2 19.8 9.5% Diversified Components 185.1 21.5 11.6% 154.5 15.3 9.9% ---------------- ------------------ Subtotal 692.7 91.5 13.2% 591.6 73.9 12.5% Corporate - (7.3) - (8.0) ---------------- ------------------ Total $692.7 $84.2 12.2% $591.6 $65.9 11.1% ================ ================== Six Months 2006 2005* ------------------------- --------------------------- Sales EBIT % Sales Sales EBIT % Sales ------------------------- --------------------------- Construction Materials $520.8 $78.9 15.1% $399.4 $53.4 13.4% Industrial Components 438.8 45.2 10.3% 431.3 44.6 10.3% Diversified Components 354.2 39.2 11.1% 298.6 29.3 9.8% ---------------- ------------------ Subtotal 1,313.8 163.3 12.4% 1,129.3 127.3 11.3% Corporate - (16.5) - (15.1) ---------------- ------------------ Total $1,313.8 $146.8 11.2% $1,129.3 $112.2 9.9% ================ ================== * 2005 figures have been revised to reflect discontinued operations and conform with the 2006 segment presentation. NM = Not Meaningful CARLISLE COMPANIES INCORPORATED Supplemental Financial Information For the periods ended June 30 (Unaudited) Income from continuing operations of $1.76 per diluted share for the second quarter of 2006 and $1.34 for the second quarter of 2005 included the following items on a per diluted share basis: Second Second Quarter Quarter 2006 2005 -------- -------- Consolidated: Tax benefit related to U.S. federal tax audit $0.04 $- Construction Materials segment: Gain on sale of property 0.03 Gain on insurance proceeds 0.03 Industrial Components: Curtailment gain on retiree medical benefits 0.12 Award for arbitration proceedings concerning 0.03 0.08 termination of a supply agreement Lease termination costs (0.03) Asset impairment charges on closed facility (0.03) Diversified Components: Legal settlement on supply agreement (0.06) -------- -------- $0.07 $0.14 ======== ======== CARLISLE COMPANIES INCORPORATED Consolidated Statement of Earnings For the periods ended June 30 (In thousands except per share data) (Unaudited) Second Quarter ------------------------------- 2006 2005* % Change --------- --------- --------- Net sales $692,704 $591,596 17.1% --------- --------- --------- Cost and expenses: Cost of goods sold 545,908 470,469 16.0% Selling and administrative expenses 60,675 55,740 8.9% Research and development expenses 3,701 3,812 -2.9% Other (income) expense, net (1,781) (4,393) NM --------- --------- --------- Earnings before interest & income taxes 84,201 65,968 27.6% Interest expense, net 5,363 4,133 29.8% --------- --------- --------- Earnings before income taxes 78,838 61,835 27.5% Income taxes 24,190 19,753 22.5% --------- --------- --------- Income from continuing operations, net of tax 54,648 42,082 29.9% --------- --------- --------- Percent of net sales 7.9% 7.1% Income (loss) from discontinued operations, net of tax 1,400 (7,406) NM --------- --------- --------- Net income $56,048 $34,676 61.6% ========= ========= ========= Basic earnings per share ------------------------ Continuing operations $1.78 $1.36 30.9% Discontinued operations 0.05 (0.24) NM --------- --------- --------- Basic earnings per share $1.83 $1.12 63.4% ========= ========= ========= Diluted earnings per share -------------------------- Continuing operations $1.76 $1.34 31.3% Discontinued operations 0.04 (0.23) NM --------- --------- --------- Diluted earnings per share $1.80 $1.11 62.2% ========= ========= ========= Average shares outstanding (000's) - basic 30,640 30,977 --------- --------- Average shares outstanding (000's) - diluted 31,059 31,335 --------- --------- Dividends $7,704 $7,163 --------- --------- --------- Dividends per share $0.250 $0.230 8.7% --------- --------- --------- * 2005 figures have been revised to reflect discontinued operations. NM = Not Meaningful Consolidated Statement of Earnings For the periods ended June 30 (In thousands except per share data) (Unaudited) Six Months ---------------------------------- 2006 2005* % Change ---------------------------------- Net sales $1,313,809 $1,129,334 16.3% ---------------------------------- Cost and expenses: Cost of goods sold 1,039,633 898,040 15.8% Selling and administrative expenses 122,034 110,755 10.2% Research and development expenses 7,585 7,733 -1.9% Other (income) expense, net (2,236) 654 NM ------------------------------- Earnings before interest & income taxes 146,793 112,152 30.9% Interest expense, net 9,619 8,038 19.7% ------------------------------- Earnings before income taxes 137,174 104,114 31.8% Income taxes 43,442 33,277 30.5% ------------------------------- Income from continuing operations, net of tax 93,732 70,837 32.3% ------------------------------- Percent of net sales 7.1% 6.3% Income (loss) from discontinued operations, net of tax 3,492 (7,908) NM ------------------------------- Net income $97,224 $62,929 54.5% =============================== Basic earnings per share ------------------------ Continuing operations $3.07 $2.29 34.1% Discontinued operations 0.11 (0.26) NM ------------------------------- Basic earnings per share $3.18 $2.03 56.7% =============================== Diluted earnings per share -------------------------- Continuing operations $3.02 $2.26 33.6% Discontinued operations 0.12 (0.25) NM ------------------------------- Diluted earnings per share $3.14 $2.01 56.2% =============================== Average shares outstanding (000's) - basic 30,543 30,960 ------------------- Average shares outstanding (000's) - diluted 31,010 31,340 ------------------- Dividends $15,360 $14,304 ---------------------------- Dividends per share $0.500 $0.460 8.7% ---------------------------- * 2005 figures have been revised to reflect discontinued operations. NM = Not Meaningful CARLISLE COMPANIES INCORPORATED Comparative Condensed Consolidated Balance Sheet (In thousands) (Unaudited) June 30, December 31, 2006 2005 ----------- ----------- Assets Current Assets Cash and cash equivalents $30,273 $38,745 Receivables 265,067 163,277 Inventories 359,456 336,090 Prepaid expenses and other 54,607 57,272 Current assets held for sale 57,156 65,788 ----------- ----------- Total current assets 766,559 661,172 ----------- ----------- Property, plant and equipment, net 453,173 432,749 Other assets 437,727 426,381 Non-current assets held for sale 44,115 42,955 ----------- ----------- $1,701,574 $1,563,257 =========== =========== Liabilities and Shareholders' Equity Current Liabilities Short-term debt, including current maturities $42,468 $57,993 Accounts payable 160,793 127,698 Accrued expenses 143,331 145,375 Current liabilities associated with assets held for sale 43,656 41,645 ----------- ----------- Total current liabilities 390,248 372,711 ----------- ----------- Long-term debt 282,004 282,426 Other liabilities 185,956 176,911 Non-current liabilities associated with assets held for sale 161 970 Shareholders' equity 843,205 730,239 ----------- ----------- $1,701,574 $1,563,257 =========== =========== CARLISLE COMPANIES INCORPORATED Comparative Condensed Consolidated Statement of Cash Flows For the Six Months Ended June 30 (In thousands) (Unaudited) 2006 2005* -------- -------- Operating activities Net income $97,224 $62,929 Reconciliation of net earnings to cash flows: (Income) loss from discontinued operations, net of tax (3,492) 7,908 Depreciation and amortization 28,351 26,848 Non-cash compensation 3,902 911 Loss on equity investments 2,269 3,141 Loss on writedown of assets 1,245 - Foreign exchange loss 551 418 Deferred taxes 2,574 (1,540) Loss (gain) on investments, property and equipment, net 1,195 (1,860) Receivables under securitization program (4,900) - Working capital (71,948) (77,909) Other (1,226) (1,015) -------- -------- Net cash provided by operating activities 55,745 19,831 -------- -------- Investing activities Capital expenditures (50,892) (50,704) Proceeds from investments, property and equipment 3,052 3,959 Other 922 608 -------- -------- Net cash used in investing activities (46,918) (46,137) -------- -------- Financing activities Net change in short-term debt and revolving credit lines (15,062) 68,147 Reductions of long-term debt - (260) Dividends (15,360) (14,304) Purchase of common shares - (16,428) Treasury shares and stock options, net 15,335 4,699 -------- -------- Net cash (used in) provided by financing activities (15,087) 41,854 -------- -------- Net cash used in discontinued operations (1,304) (3,583) -------- -------- Effect of exchange rate changes on cash (908) (86) -------- -------- Change in cash and cash equivalents (8,472) 11,879 Cash and cash equivalents Beginning of period 38,745 25,018 -------- -------- End of period $30,273 $36,897 -------- -------- * 2005 figures have been revised to reflect discontinued operations. *T