Carlisle Companies Incorporated (NYSE:CSL) reported net sales
from continuing operations of $665.9 million for the third quarter
of 2010, a 10% increase from net sales of $604.2 million in the
third quarter of 2009. Organic sales increased by 7.9% from the
same quarter in the prior year. The Interconnect Technologies
segment’s acquisition of Jerrik and Electronic Cable Specialists
(ECS) and the Engineered Transportation Solutions segment’s
acquisition of Japan Power Brake contributed $14.0 million in
sales, or 2.3%, in the third quarter of 2010.
Income from continuing operations was $46.8 million, or $0.75
per diluted share, in the third quarter 2010 compared with $47.1
million, or $0.76 per diluted share, in the third quarter of 2009.
In the third quarter of 2010, income was positively impacted by a
reduction in the Company’s effective tax rate, higher sales
volumes, efficiencies from the Carlisle Operating System and
selling price increases. Offsetting these positive impacts were
higher raw material costs primarily in the Construction Materials
and Engineered Transportation Solutions segments.
Comment
David A. Roberts, Chairman, President and Chief Executive
Officer, said, “During the third quarter of 2010, all of our
business segments achieved organic growth, contributing to an
overall organic growth rate of 7.9%. Although still experiencing
higher raw material cost levels versus the prior year, EBIT
(Earnings Before Interest and Income Taxes) margins of 10% in the
third quarter of 2010 reflect continued emphasis on the Carlisle
Operating System and realization of pricing actions taken by our
businesses to address rising raw material costs.
“The consolidation of our US tire manufacturing operations into
our Jackson, Tennessee facility is expected to be substantially
complete by the end of 2010 and will provide a foundation for
margin growth in the Engineered Transportation Solutions segment in
2011. During the third quarter of 2010, we incurred costs of $3.4
million related to company-wide consolidation and plant closures.
We estimate an additional $6 million in related costs for the
fourth quarter of 2010. We expect to achieve company-wide savings
from our consolidation efforts of approximately $7 million in 2010,
with $3 million anticipated in the fourth quarter, and an
additional $14 million in 2011.”
Roberts continued, “We have recently taken several important
actions directed towards our long-term goals to reach $5 billion in
revenue, 15% EBIT margins, expand globally and produce strong free
cash flow. On October 4, 2010, we completed the sale of Trail King,
our non-core specialty trailer business, for proceeds of $35
million plus a $5 million earn-out potential. This divestiture
enables Carlisle management to focus on growing our core businesses
and provides additional capital which we intend to allocate to
investments that will generate greater returns for our
shareholders. Operating results for Trail King are now being
reported in Discontinued Operations.
“On October 15, 2010, we entered into a definitive agreement to
acquire Hawk Corporation, a leading global manufacturer of friction
materials for brakes, clutches and transmissions, for total
consideration of approximately $413 million. As indicated in our
related announcement, the acquisition of Hawk provides an excellent
growth opportunity in our industrial brake and friction product
line. We expect this acquisition to close by the end of 2010 and to
be accretive in 2011. We estimate costs associated with the
transaction and the change in control will be between $9 and $12
million during the fourth quarter of 2010.
“With a debt to capital ratio of 11% and available borrowings of
$469 million under our revolving credit facility, we are
well-positioned to carry out the Hawk acquisition and continue to
maintain our focus on growth through bolt-on acquisitions and new
product development.”
Roberts concluded by stating, “We continue to plan for revenue
growth for full year 2010 in our core operating segments but remain
cautious on our outlook for margin improvement for the remainder of
the year given current raw material cost levels and the general
economic environment. We will continue to respond with pricing
actions and pursuit of operating improvements through the Carlisle
Operating System.”
Segment Results
Construction Materials: Third quarter 2010 net sales of
$354.8 million increased by 4.3% from net sales of $340.1 million;
EBIT declined 10% to $54.1 million from $60.4 million for the same
period in 2009. The increase in sales primarily reflected higher
demand for re-roofing applications. The Company achieved an EBIT
margin of 15.2% for the third quarter 2010 partially attributable
to the realization of efficiency gains from the Carlisle Operating
System and other manufacturing improvements. This compared to
margin of 17.8% for prior year period, which reflected a period of
significantly lower raw material price levels. Selling prices
during the third quarter 2010 increased from the second quarter of
2010 but declined slightly when compared to the same quarter of the
prior year.
Engineered Transportation Solutions: Third quarter 2010
net sales of $186.0 million increased by 17% compared to net sales
of $158.3 million in the same prior year period. EBIT of $8.4
million increased by 11% compared to EBIT of $7.6 million for the
same period in 2009. Sales from the acquisition of Japan Power
Brake contributed $2.9 million to net sales in the third quarter of
2010. The segment achieved double digit organic sales growth in all
of its major product lines, most notably 48% in its industrial
brake and friction product line and, within its power sports
product line, ATV sales growth of 28%. During the third quarter of
2010, EBIT margin remained relatively flat at 4.5% when compared to
4.8% for the third quarter of 2009. EBIT was negatively impacted by
higher costs for natural and synthetic rubber and steel, which were
significantly offset by increased selling prices during the third
quarter. Plant restructuring expenses in the third quarter of 2010
of $3.3 million compared to restructuring expenses of $3.4 million
for the same period in 2009.
Interconnect Technologies: Third quarter 2010 net sales
of $61.4 million increased by 43% from net sales of $43.1 million,
and EBIT increased 67% to $8.2 million from $4.9 million for the
same period in 2009. The acquisition of Jerrik and ECS contributed
$11.1 million, or 26%, to net sales in the third quarter 2010.
Organic sales increased by 17% in the third quarter of 2010,
primarily due to growth within the aerospace and RF microwave
markets. EBIT margin increased to 13.4% in the third quarter of
2010 from 11.4% in the third quarter of 2009 as a result of organic
sales growth and cost efficiencies driven by the Carlisle Operating
System.
FoodService Products: Third quarter 2010 net sales
increased by 1.6% to $63.7 million compared to net sales of $62.7
million in the prior year period. EBIT declined 25% to $6.3 million
from $8.4 million for the same period in 2009. Despite continued
softness in restaurant traffic, sales demand in the foodservice
market was higher on increased inventory replenishment orders. This
increase was offset by lower demand in the healthcare foodservice
market. EBIT margin decreased to 9.9% in the third quarter of 2010
from 13.4% in the third quarter of 2009, due primarily to higher
transportation costs and higher raw material costs, which were
relatively level with the second quarter of 2010, but higher in
comparison to the prior year period.
Corporate Expense
Corporate expense increased from $7.3 million for the third
quarter of 2009 to $10.5 million for the third quarter of 2010. The
increase primarily reflects higher costs related to the ramp-up of
sales and sourcing support service in the Asia Pacific region,
which has seen increased sales of 81% during the first nine months
of 2010 versus the prior year period. Corporate expense was also
impacted by higher foreign currency exchange rate losses incurred
during the third quarter of 2010 as compared to the third quarter
of 2009.
Discontinued Operations
Income from discontinued operations of $3.7 million for the
third quarter of 2010 compared with a loss of $0.5 million for the
third quarter of 2009. Income from discontinued operations for the
third quarter of 2010 reflects higher operating earnings from the
specialty trailer business, Trail King, which was sold on October
4, 2010 and classified as held for sale in the balance sheet at
September 30, 2010. The specialty trailer business’ related results
of operations for all periods have been reclassified into
Discontinued Operations. During the third quarter 2009, the
specialty trailer business operated at a loss.
Net Income
Net income for the third quarter of 2010 was $50.5 million, or
$0.81 per diluted share, compared to net income of $46.6 million,
or $0.75 per diluted share, for the third quarter of 2009. Third
quarter 2010 net income was positively impacted by a reduction in
the effective tax rate, higher sales volumes, operating
improvements from the Carlisle Operating System and income from
Discontinued Operations. These positive impacts were partially
offset by higher raw material costs.
Year-to-Date
Net sales of $1.90 billion for the first nine months of 2010
increased 10% as compared with $1.73 billion for the same period in
2009. For the first nine months of 2010, organic sales increased by
6.6% from the prior year period, with organic growth generated by
all business segments with the exception of FoodService Products.
Acquisitions in the Interconnect Technologies and Engineered
Transportation Solutions segments contributed $45.9 million, or
2.6%, in sales in the first nine months of 2010 as compared to the
same period of 2009.
Income from continuing operations for the first nine months of
2010 of $108.7 million, or $1.75 per diluted share, decreased 9% as
compared with $119.2 million, or $1.93 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
reduction in selling prices, which have been increasing throughout
2010, but have declined on a year-over-year basis. Partially
offsetting these impacts were higher sales volumes and efficiencies
gained through the Carlisle Operating System. Plant and corporate
restructuring charges of $10.3 million in the first nine months of
2010 compared to charges of $14.7 million in the first nine months
of 2009.
Income from Discontinued Operations of $4.7 million in first
nine months of 2010 compared to a Loss from Discontinued Operations
of $10.5 million in the first nine months of 2009.
Net income for the first nine months of 2010 was $113.4 million,
or $1.83 per diluted share. Net income for the first nine months of
2009 was $108.7 million, or $1.76 per diluted share.
Cash flow provided by operating activities of $62.4 million for
the first nine months of 2010 compared with $333.4 million for the
same period in 2009. Cash used for working capital and other assets
and liabilities of $102.3 million for the first nine months of 2010
primarily reflected an increase in receivables and inventory due to
higher sales activity, as compared to cash provided by working
capital and other assets and liabilities of $178.3 million for the
first nine months of 2009. For the first nine months of 2010,
average working capital (defined as the average of the quarter end
balances of receivables, plus inventory less accounts payable) as a
percentage of annualized sales (defined as year-to-date net sales
calculated on an annualized basis) was 21.6%, as compared to a
percentage of 25.1% for the nine months ended September 30,
2009.
Capital expenditures were $46.8 million in the first nine months
of 2010 compared to capital expenditures of $34.9 million in the
first nine months of 2009. The increase in capital expenditures
primarily reflects the Company’s consolidation of its US tire
manufacturing operations into a new facility in Jackson, Tennessee,
expected to be substantially completed by the end of 2010.
Conference Call and
Webcast
The Company will discuss third 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. A PowerPoint presentation will
accompany the call and can be found on the Carlisle website as
well.
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,
foodservice, commercial aerospace, defense and test and measurement
industries.
CARLISLE COMPANIES INCORPORATED Unaudited
Condensed Consolidated Statements of Earnings (In millions,
except share and per share amounts) Third
Quarter First Nine Months
2010 2009 % Change
2010 2009 % Change
Net sales
$ 665.9 $ 604.2 10 %
$ 1,900.8 $ 1,733.8 10 % Cost and expenses: Cost of
goods sold
522.3 460.1 14 %
1,501.6 1,355.7 11 %
Selling and administrative expenses
71.5 65.3 9 %
214.7 202.9 6 % Research and development expenses
6.0
3.9 54 %
16.8 12.3 37 % Gain related to fire settlement
- - NM
- (27.0 ) NM Other (income) expense, net
(0.4 ) 0.9 NM
(1.6 ) 5.6
NM Earnings before interest and income taxes
66.5 74.0 -10 %
169.3 184.3 -8 % Interest expense,
net
1.4 2.0 -30 %
5.1 7.0 -27 %
Earnings before income taxes
65.1 72.0 -10 %
164.2 177.3 -7 % Income tax expense
18.3
24.9 NM
55.5 58.1 NM
Income from continuing operations, net of tax
46.8 47.1 - %
108.7 119.2 -9 %
Income (loss) from discontinued operations, net of tax
3.7 (0.5 ) NM
4.7 (10.5 ) NM Net
income
$ 50.5 $ 46.6 8 %
$ 113.4 $ 108.7 4 %
Basic earnings
(loss) per share (1)
Continuing operations
$ 0.76 $ 0.77 -1 %
$
1.77 $ 1.95 -9 % Discontinued operations
0.06
(0.01 ) NM
0.08
(0.17 ) NM Basic earnings per
share
$ 0.82 $ 0.76 8 %
$ 1.85 $ 1.78 4 %
Diluted earnings
(loss) per share (1)
Continuing operations
$ 0.75 $ 0.76 -1 %
$
1.75 $ 1.93 -9 % Discontinued operations
0.06
(0.01 ) NM
0.08
(0.17 ) NM Diluted earnings per
share
$ 0.81 $ 0.75 8 %
$ 1.83 $ 1.76 4 %
Average shares outstanding - in thousands Basic
60,980 60,612
60,885 60,588 Diluted
61,527 61,237
61,639 61,153 Dividends
$ 10.4 $ 9.8 6 %
$
30.1 $ 28.8 5 % Dividends per
share
$ 0.17 $ 0.16 6 %
$ 0.49 $ 0.47 4 %
(1) Numerator for basic and diluted EPS calculated based on "two
class" method of computing earnings per share: Income from
continuing operations
$ 46.3 $ 46.6
$ 107.5 $ 117.9 Net
income
$ 50.0 $ 46.1
$
112.2 $ 107.4 NM = Not
Meaningful
* 2009 figures have been revised to
reflect the reclassification of Power Transmission from
discontinued operations to continuing operations and Johnson Truck
Bodies and specialty trailer businesses as discontinued
operations.
CARLISLE COMPANIES INCORPORATED Unaudited
Segment Financial Data (In millions)
Third Quarter First Nine Months
2010 2009 % Change
2010 2009 % Change
Net Sales Construction
Materials
$ 354.8 $ 340.1 4 %
$ 917.1 $
862.2 6 % Engineered Transportation Solutions
186.0 158.3 17
%
616.4 560.1 10 % Interconnect Technologies
61.4
43.1 43 %
185.6 126.1 47 % FoodService Products
63.7 62.7 2 %
181.7 185.4 -2 % Total Net Sales
$ 665.9 $ 604.2 10 %
$
1,900.8 $ 1,733.8 10 %
Earnings Before Interest and Income Taxes (EBIT)
Construction Materials
$ 54.1 $ 60.4 -10 %
$
124.8 $ 116.5 7 % Engineered Transportation Solutions
8.4 7.6 11 %
31.2 62.8 -50 % Interconnect
Technologies
8.2 4.9 67 %
22.0 11.7 88 % FoodService
Products
6.3 8.4 -25 %
19.0 18.4 3 % Segment
EBIT
77.0 81.3 -5 %
197.0 209.4 -6 % Corporate
(10.5 ) (7.3 ) -44 %
(27.7 ) (25.1 ) -10 % Total EBIT
$ 66.5 $ 74.0 -10 %
$
169.3 $ 184.3 -8 %
EBIT Margins Construction Materials
15.2
% 17.8 %
13.6 % 13.5 % Engineered
Transportation Solutions
4.5 % 4.8 %
5.1
% 11.2 % Interconnect Technologies
13.4 % 11.4
%
11.9 % 9.3 % FoodService Products
9.9
% 13.4 %
10.5 %
9.9 % Segment EBIT Margin
11.6 % 13.5 %
10.4 % 12.1 % Corporate
-1.6 %
-1.2 %
-1.5 % -1.4
% Total EBIT Margin
10.0 % 12.2
%
8.9 % 10.6 %
CARLISLE COMPANIES INCORPORATED Condensed Consolidated
Balance Sheet (In millions) September
30, December 31,
2010 2009
Assets
(Unaudited) Current Assets Cash and cash equivalents
$ 114.8 $ 96.3 Receivables
395.9 287.1
Inventories
382.5 338.3 Prepaid expenses and other
67.2 65.0 Current assets held for sale
23.5
13.1
Total current assets 983.9
799.8 Property, plant and equipment, net
455.8
460.9 Other assets
609.4 629.7 Non-current assets held for
sale
22.2 23.7
Total Assets
$ 2,071.3 $ 1,914.1
Liabilities and
Shareholders' Equity Current Liabilities Accounts
payable
$ 181.4 $ 132.6 Accrued expenses
168.4
160.9 Current liabilities associated with assets held for sale
9.7 7.6
Total current
liabilities 359.5 301.1 Long-term
debt
156.2 156.1 Other liabilities
236.9 238.3
Shareholders' equity
1,318.7 1,218.6
Total Liabilities and Shareholders' Equity $
2,071.3 $ 1,914.1
* 2009 figures have been revised to
reflect the classification of Trail King as held for sale
consistent with the current year presentation.
CARLISLE COMPANIES INCORPORATED Unaudited
Condensed Consolidated Statements of Cash Flows (In
millions) First Nine Months 2010
2009
Operating activities
Net income
$ 113.4 $ 108.7 Reconciliation of net
income to operating cash flows: Depreciation and amortization
53.8 50.8 Non-cash compensation
10.4 10.9 Gain on
insurance settlements related to property, plant and equipment
(24.3 ) Loss on writedown of assets
- 10.6 Deferred taxes
(5.6 ) 3.1 Gain on sale of investments, property and
equipment, net
(3.6 ) (1.4 ) Foreign exchange gain
(1.4 ) (1.5 ) Change in working capital and other
assets and liabilities
(102.3 ) 178.3 Other
(2.3 ) (1.8 )
Net cash (used in)
provided by operating activities 62.4
333.4
Investing activities Capital
expenditures
(46.8 ) (34.9 ) Proceeds from sale of
business
20.6 - Proceeds from investments and disposal of
property and equipment
5.7 6.7 Acquisitions, net of cash
acquired
- (33.0 ) Proceeds from insurance settlements
related to property, plant and equipment 30.0 Other
(0.2 ) 0.2
Net cash provided
by (used in) investing activities (20.7 )
(31.0 )
Financing activities Net change in
short-term debt and revolving credit lines
- (234.6 )
Dividends paid
(30.1 ) (28.8 ) Excess tax benefits on
share-based compensation
1.5 (0.2 ) Treasury shares and
stock options, net
5.1 (0.2 )
Net cash used in financing activities (23.5
) (263.8 )
Effect of exchange rate changes
on cash 0.3 (0.1 )
Change
in cash and cash equivalents 18.5 38.5
Cash and cash
equivalents Beginning of period
96.3
42.7 End of period
$ 114.8
$ 81.2
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