Carlisle Companies Incorporated (NYSE:CSL) reported net sales
from continuing operations of $709.4 million for the quarter ended
June 30, 2010, an 11% increase from net sales of $636.7 million in
the second quarter of 2009. The Interconnect Technologies segment’s
acquisitions of Jerrik and Electronic Cable Specialists (ECS) and
the Engineered Transportation Solutions segment’s acquisition of
Japan Power Brake contributed $15.7 million in sales, or 2.5%, in
the second quarter of 2010. Organic sales increased by 8.6% from
the same quarter in the prior year, with sales growth primarily in
the Construction Materials, Engineered Transportation Solutions and
Interconnect Technologies segments.
Income from continuing operations decreased 32% to $38.9
million, or $0.62 per diluted share, in the second quarter 2010
compared with $57.2 million, or $0.93 per diluted share, in the
second quarter of 2009. The decrease in year-over-year income was
primarily the result of an after-tax gain recorded in the second
quarter of 2009 of $15.2 million, or $0.25 per diluted share,
related to insurance recoveries. Also contributing to the reduction
was an increase in the effective tax rate from 31% in the second
quarter of 2009 to 38% in the second quarter of 2010 due to higher
taxes with respect to foreign operations. In the second quarter of
2010, income was negatively impacted by higher raw material costs
as compared to the same period in the prior year as well as
reductions in selling prices which, although relatively level with
the first quarter of 2010, were lower than the second quarter of
2009. The second quarter of 2010 was favorably impacted by higher
sales volumes, efficiencies from the Carlisle Operating System and
a year-over-year reduction in after-tax restructuring charges.
Comment
David A. Roberts, Chairman, President and Chief Executive
Officer, said, “During the second quarter, our organic revenue
increased by 8.6% and, despite the impact of rising raw material
costs, we were able to achieve 9.0% EBIT (Earnings Before Interest
and Income Taxes) margin through continued emphasis on the Carlisle
Operating System.
“Our Construction Materials segment achieved a 10% sales
increase over the same period in 2009 and, notwithstanding
significant increases in some of its key raw materials, slightly
increased EBIT. Leveraging a 60% increase in net sales, our
Interconnect Technologies segment achieved a 122% increase in EBIT,
resulting in EBIT margins rising from 6.9% in the second quarter
2009 to 9.6% in the second quarter 2010. Despite softness in sales,
our FoodService Products segment increased its EBIT margin from
9.2% to 10.3% in the second quarter year-over-year through
continued efficiency improvements gained through the Carlisle
Operating System.
“Our EBIT performance in the Engineered Transportation Solutions
segment was lower during the second quarter primarily due to the
impact from a $24.5 million insurance gain recorded in the second
quarter of last year. In addition, we continue to face significant
increases in raw material costs within this segment and continue to
address production inefficiencies related to the consolidation of
our Buji and Meizhou, China tire plants which we expect to resolve
in the third quarter. The consolidation of the U.S. tire operations
into the Jackson, Tennessee plant by the end of 2010 remains on
track. These consolidation activities and the continued integration
of the tire and wheel, power transmission, and industrial brake and
friction product lines are expected to drive improvements in EBIT
margin in 2011.”
Roberts continued, “During the second quarter of 2010, we
incurred company-wide consolidation and plant closure pre-tax costs
of $4.0 million. We estimate an additional $13 million in related
costs for the balance of year. We expect to achieve company-wide
savings of approximately $9 million in 2010, most of which is
expected in the latter half of this year, and an additional $15
million in 2011 from our consolidation efforts.
“Our balance sheet remains strong and we continue to be
well-positioned to maintain our focus on expanding through bolt-on
acquisitions and new product development.”
Roberts concluded by stating, “We continue to plan for revenue
growth for full year 2010. Our most significant EBIT challenge will
be the uncertainty regarding raw material costs and potential
start-up issues as we bring our Jackson, Tennessee tire plant
on-line. Of the two, the impact of raw materials is the largest
unknown. We have not seen any relief on the horizon so we are
implementing cost reduction programs and price increases to offset
these costs. If they cannot be fully offset, it could be a
challenge to equal last year’s margin performance. We have plans in
place to mitigate the start-up costs at Jackson and we will
continue to vigorously pursue operating improvements through the
Carlisle Operating System to increase our EBIT margins.”
Segment Results
Construction Materials: Second quarter 2010 net sales of
$345.8 million increased by 10% from net sales of $314.4 million,
while EBIT increased to $51.3 million from $50.7 million for the
same period in 2009. Primarily driven by higher demand for
re-roofing, sales increased in all products lines with the
exception of the Insulfoam product line. The decline in Insulfoam
sales reflected the continued lower demand for new residential
construction. Despite higher sales volumes and efficiency gains
from the Carlisle Operating System, EBIT margin decreased from
16.1% to 14.8% for the quarter year-over-year. This was primarily
due to higher raw material costs and selling prices that remained
relatively flat with the first quarter of 2010 but declined when
compared to the same quarter of the prior year.
Engineered Transportation Solutions: Second quarter 2010
net sales of $218.2 million increased by 10% compared to net sales
of $197.8 million, while EBIT of $9.2 million compared to $39.0
million for the same period in 2009. Sales from the acquisition of
Japan Power Brake contributed $2.1 million to net sales in the
second quarter of 2010. The segment achieved organic sales growth
of 53% and 24% in its heavy duty brake and friction, and power
transmission product lines, respectively. Growth in the outdoor
power equipment market was offset by declines in agriculture,
construction and power sports markets. The reduction in EBIT in
2010 was primarily due to a gain of $24.5 million from a fire
insurance recovery which occurred in the second quarter of 2009,
higher raw material costs experienced in 2010 and continued
start-up expenses associated with the Company’s consolidation of
its tire manufacturing operations in China. Plant restructuring
expenses in the second quarter of 2010 of $3.6 million compared to
asset impairment and restructuring expenses of $4.7 million for the
same period in 2009.
Interconnect Technologies: Second quarter 2010 net sales
of $62.4 million increased by 60% from net sales of $39.1 million,
and EBIT increased 122% to $6.0 million from $2.7 million for the
same period in 2009. The acquisitions of Jerrik and ECS contributed
$13.6 million, or 35%, to net sales in the second quarter 2010.
Organic sales increased by 25% in the second quarter of 2010,
primarily due to growth within the aerospace market of 32% and in
particular, increased sales from the Boeing 787 program. Sales in
the test and measurement market, which had been experiencing
declines in previous quarters, were relatively flat during the
second quarter of 2010. EBIT margin increased to 9.6% in the second
quarter 2010 from 6.9% in the second quarter 2009, as a result of
the increase in organic sales volume and cost efficiencies driven
by the Carlisle Operating System.
FoodService Products: Second quarter 2010 net sales
declined 4.2% to $61.3 million compared to net sales of $64.0
million in the prior year period, and EBIT increased to $6.3
million from $5.9 million for the same period in 2009. The decline
in sales was primarily due to reduced demand in the foodservice
product line. Despite the sales decline, EBIT margin increased to
10.3% in the second quarter 2010 from 9.2% in the second quarter
2009, due primarily to efficiency gains from the Carlisle Operating
System.
Specialty Products: Second quarter 2010 net sales of
$21.7 million compared to net sales of $21.4 million and EBIT was
$0.2 million, compared to a loss of $3.3 million for the same
period in 2009. Sales volume improved on increased demand within
the specialized and material hauling trailer market, offset by
lower selling prices as compared to the second quarter of the prior
year. The improvement in EBIT from 2009 to 2010 was primarily
related to asset impairment charges of $3.8 million recorded during
the second quarter of 2009 related to the Company’s decision to
exit its Brookville, Pennsylvania facility, which was subsequently
closed last year.
Corporate
Expense
Corporate expense declined from $10.1 million for the second
quarter 2009, which had included $1.7 million in senior management
restructuring charges, to $8.8 million for the second quarter of
2010.
Discontinued
Operations
Loss from discontinued operations of $0.3 million for the second
quarter 2010 compared with a loss of $1.7 million for the second
quarter 2009.
Net Income
Net income for the second quarter 2010 was $38.6 million, or
$0.62 per diluted share, compared to net income of $55.5 million,
or $0.90 per diluted share, for the second quarter 2009. Second
quarter net income of 2009 includes an after-tax gain of $15.2
million, or $0.25 per diluted share, related to insurance
recoveries. 2010 net income was negatively impacted by an increase
in the effective tax rate, higher raw material costs and
year-over-year reductions in selling prices, partially offset by
organic sales growth and efficiency gains from the Carlisle
Operating System. After-tax expense of $2.4 million, or $0.04 per
diluted share, in plant restructuring charges in the second quarter
of 2010 compared to after-tax expense of $8.3 million, or $0.14 per
diluted share, related to asset impairment and restructuring
charges in the second quarter of 2009.
Year-to-Date
Net sales of $1.27 billion for the six months ended June 30,
2010 increased 8.9% as compared with $1.17 billion for the same
period in 2009. Acquisitions in the Interconnect Technologies and
Engineered Transportation Solutions segments contributed $31.9
million, or 2.7%, of additional sales in the first six months of
the current year as compared to the same period of 2009. For the
first six months of the year, organic sales increased by 5.6% from
the prior year period, with organic growth generated by the
Construction Materials, Engineered Transportation Solutions and
Interconnect Technologies segments.
June 30, 2010 year-to-date income from continuing operations of
$61.8 million, or $0.99 per diluted share, compared with $68.2
million, or $1.11 per diluted share, for the same period in 2009.
2010 EBIT year-to-date declined from 2009 due to a gain of $27.0
million recorded in 2009 from fire insurance recoveries, higher raw
material costs experienced in 2010 and reductions in selling
prices, which remained relatively level from the first quarter of
2010 to the second quarter of 2010, but declined on a
year-over-year basis. Partially offsetting these impacts were
higher sales volumes, efficiencies gained through the Carlisle
Operating System and a year-over-year reduction in plant and
corporate restructuring charges from $14.7 million in the first
half of 2009 to $6.9 million in the first half of 2010.
Net income for the six months ended June 30, 2010 was $62.8
million, or $1.01 per diluted share. Net income for the six months
ended June 30, 2009 was $62.1 million, or $1.01 per diluted share,
and included after-tax severance, asset write-down and impairment
charges of $3.7 million related to the 2009 exit of the Motion
Control business.
Cash flow provided by operations of $20.5 million for the six
months ended June 30, 2010 compared with $269.0 million for the
same period in 2009. Cash used for working capital and other assets
and liabilities was $72.0 million for the six months ended June 30,
2010, which compared to cash provided of $151.9 million for the six
months ended June 30, 2009. Cash flow provided by operations for
the first six months of 2009 includes $54.5 million from the
proceeds relating to the insurance recovery from the fire at the
Bowdon, Georgia, facility. Capital expenditures were $31.6 million
in the first six months of 2010 compared to capital expenditures of
$20.1 million in the first six months of 2009.
Conference Call and
Webcast
The Company will discuss second quarter 2010 results on a
conference call at 10:00 a.m. ET today. The call may be accessed
live by going to the Investor Relations section of the Carlisle
website (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.
Forward-Looking
Statements
This press 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.
About Carlisle
Companies
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, aerospace, and test and
measurement industries.
CARLISLE COMPANIES
INCORPORATEDConsolidated Statements of Earnings(In
millions, except share and per share
amounts)(Unaudited)
Second Quarter Six
Months 2010 2009 % Change
2010
2009 % Change Net sales
$ 709.4 $ 636.7 11 %
$ 1,271.4 $
1,168.0 9 % Cost and expenses: Cost of goods sold
562.8
491.3 15 %
1,011.2 930.1 9 % Selling and administrative
expenses
76.5 74.4 3 %
148.8 143.5 4 % Research and
development expenses
6.5 4.0 63 %
11.0 8.3 33 % Gain
related to fire settlement
- (24.5 ) NM
- (27.0 ) NM
Other (income) expense, net
(0.6 )
6.6 NM
(2.3 )
8.8 NM Earnings before
interest and income taxes
64.2 84.9 -24 %
102.7 104.3
-2 % Interest expense, net
1.8
2.3 -22 %
3.7 5.0
-26 % Earnings before income taxes
62.4
82.6 -24 %
99.0 99.3 0 % Income tax expense
23.5 25.4 NM
37.2 31.1 NM
Income from continuing operations, net of tax
38.9 57.2 -32 %
61.8 68.2 -9 %
Income (loss) from discontinued operations, net of tax
(0.3 ) (1.7 ) NM
1.0 (6.1 ) NM Net
income
$ 38.6 $ 55.5 -30
%
$ 62.8 $ 62.1 1 %
Basic earnings (loss) per share (1)
Continuing operations
$ 0.63 $ 0.93 -32 %
$
1.00 $ 1.11 -10 % Discontinued operations
-
(0.02 ) NM
0.02
(0.10 ) NM Basic earnings per
share
$ 0.63 $ 0.91 -31 %
$ 1.02 $ 1.01 1 %
Diluted earnings (loss) per share (1)
Continuing operations
$ 0.62 $ 0.93 -33 %
$
0.99 $ 1.11 -11 % Discontinued operations
-
(0.03 ) NM
0.02
(0.10 ) NM Diluted earnings per
share
$ 0.62 $ 0.90 -31 %
$ 1.01 $ 1.01 0 %
Average shares outstanding - in thousands Basic
60,832 60,584
60,811 60,576 Diluted
61,686 60,926
61,678 61,016 Dividends
$ 9.9 $ 9.5 4 %
$
19.7 $ 19.0 4 % Dividends per
share
$ 0.160 $ 0.155 3 %
$ 0.320 $ 0.310 3 %
(1) Numerator for basic and diluted EPS calculated based on
"two class" method of computing earnings per share: Income
from continuing operations
$ 38.5 $
56.6
$ 61.1 $ 67.5 Net
income
$ 38.2 $ 54.9
$
62.1 $ 61.4 NM = Not Meaningful
* 2009 figures have been restated
to reflect the reclassification of Power Transmission from
discontinued operations to continuing operations and Johnson Truck
Bodies as a discontinued operation.
CARLISLE COMPANIES INCORPORATEDSegment
Financial Data(In millions)(Unaudited)
Second Quarter Six Months 2010
2009 % Change
2010
2009 % Change
Net Sales
Construction Materials
$ 345.8 $ 314.4 10 %
$
562.3 $ 522.1 8 % Engineered Transportation Solutions
218.2 197.8 10 %
430.4 401.8 7 % Interconnect
Technologies
62.4 39.1 60 %
124.2 83.0 50 %
FoodService Products
61.3 64.0 -4 %
118.0 122.7 -4 %
Specialty Products
21.7 21.4
1 %
36.5 38.4 -5 %
Total Net Sales
$ 709.4 $ 636.7
11 %
$ 1,271.4 $ 1,168.0 9 %
Earnings Before Interest and Income Taxes
(EBIT) Construction Materials
$ 51.3 $
50.7 1 %
$ 70.6 $ 56.1 26 % Engineered Transportation
Solutions
9.2 39.0 -76 %
22.8 55.2 -59 % Interconnect
Technologies
6.0 2.7 122 %
13.8 6.8 103 % FoodService
Products
6.3 5.9 7 %
12.7 10.0 27 % Specialty
Products
0.2 (3.3 ) 106 %
- (6.0 ) 100 % Segment EBIT
73.0
95.0 -23 %
119.9 122.1 -2 % Corporate
(8.8
) (10.1 ) 13 %
(17.2 )
(17.8 ) 3 % Total EBIT
$ 64.2
$ 84.9 -24 %
$ 102.7 $
104.3 -2 %
EBIT Margins
Construction Materials
14.8 % 16.1 %
12.6
% 10.7 % Engineered Transportation Solutions
4.2
% 19.7 %
5.3 % 13.7 % Interconnect
Technologies
9.6 % 6.9 %
11.1 % 8.2 %
FoodService Products
10.3 % 9.2 %
10.8
% 8.1 % Specialty Products
0.9 %
-15.4 %
0.0 % -15.6 %
Segment EBIT Margin
10.3 % 14.9 %
9.4 %
10.5 % Corporate
-1.2 % -1.6 %
-1.4 % -1.5 % Total EBIT Margin
9.0 % 13.3 %
8.1
% 8.9 %
CARLISLE COMPANIES
INCORPORATED Comparative Condensed Consolidated Balance
Sheet (In millions) June
30, December 31,
2010 2009
Assets (Unaudited) Current Assets Cash
and cash equivalents
$
96.6
$
96.3
Receivables
414.5 292.5 Inventories
363.2 345.8
Prepaid expenses and other
66.9
65.2
Total current assets 941.2
799.8 Property, plant and equipment, net
474.9 482.6 Other assets
611.7 629.8 Non-current
assets held for sale
1.9 1.9
Total Assets $ 2,029.7 $
1,914.1
Liabilities and Shareholders' Equity
Current Liabilities Accounts payable
$ 207.3 $
135.7 Accrued expenses
159.8
165.4
Total current liabilities 367.1
301.1 Long-term debt
156.2 156.1
Other liabilities
236.6 238.3 Shareholders' equity
1,269.8 1,218.6
Total
Liabilities and Shareholders' Equity $ 2,029.7
$ 1,914.1
CARLISLE COMPANIES
INCORPORATED Comparative Condensed Consolidated Statements
of Cash Flows For the Six Months Ended June 30 (In
millions) (Unaudited)
2010 2009
Operating
activities Net income
$ 62.8 $ 62.1
Reconciliation of net income to operating cash flows: Depreciation
and amortization
36.3 34.3 Non-cash compensation
7.2
7.7 Loss on writedown of assets
- 10.5 Deferred taxes
(7.1 ) 3.6 Gain on sale of investments, property and
equipment, net
(3.6 ) (0.5 ) Change in working
capital and other assets and liabilities
(72.0 )
151.9 Other
(3.1 ) (0.6 )
Net
cash (used in) provided by operating activities
20.5 269.0
Investing
activities Capital expenditures
(31.6 ) (20.1 )
Proceeds from investments and disposal of property and equipment
5.2 2.6 Proceeds from sale of business
20.3 - Other
(0.2 ) 0.5
Net cash
provided by (used in) investing activities (6.3
) (17.0 )
Financing activities Net
change in short-term debt and revolving credit lines
(0.1
) (211.9 ) Dividends paid
(19.7 ) (19.0 )
Excess tax benefits on share-based compensation
1.5 (0.3 )
Treasury shares and stock options, net
5.0
(0.2 )
Net cash used in financing activities
(13.3 ) (231.4 )
Effect of
exchange rate changes on cash (0.6 )
0.3
Change in cash and cash equivalents
0.3 20.9
Cash and cash equivalents Beginning of
period
96.3 42.7 End of
period
$ 96.6 $ 63.6
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