Carlisle Companies Incorporated (NYSE:CSL) today announced its
financial results for the three month period ended September 30,
2019.
- Third quarter revenue increased 8.4% year-over-year to a
record $1.3 billion
- Operating income reached a record $191.0 million, an
increase of 36.4% year-over-year
- Strong execution at CCM drove 15% year-over-year revenue
growth and 380 basis points of margin expansion
- Recently announced agreements on Providien and Draka Fileca,
strengthening our CIT Medical Technology and Aerospace
platforms
Third Quarter 2019
Revenue of $1.28 billion increased 8.4% from $1.18 billion in
the third quarter of 2019. Organic revenue grew 3.4% (organic
revenue defined as revenue excluding acquired revenues within the
last twelve months and the impact of changes in foreign exchange
rates versus the U.S. Dollar). Acquired revenues contributed a
total of 5.4% in the quarter. Changes in foreign exchange rates had
a negative (0.4)% impact on revenues.
Operating income of $191.0 million was up 36.4% from the third
quarter of 2018. Operating income performance was driven by
continued price leadership, raw materials savings, higher sales
volume and contributions from the Carlisle Operating System (COS),
partially offset by wage inflation.
CEO Comment
Chris Koch, President and Chief Executive Officer, said,
“Carlisle's record third quarter sales and diluted EPS results
demonstrate continued progress towards our Vision 2025 goals of: $8
billion in revenues, 20% operating income, and 15% ROIC.
Third quarter revenue growth was concentrated in our two largest
business segments that deliver approximately 85% of overall
revenues for Carlisle. At CCM and CIT, demand remains strong within
Commercial Roofing, Architectural Metals, Commercial Aerospace, and
our Medical Technologies platforms. We drove solid incremental
margins by leveraging our volume growth, combined with continued
pricing traction, a favorable raw material environment,
efficiencies gained from prior years' restructuring efforts, and
savings from COS.
At CCM we continue to be encouraged by the underlying demand,
backlog, and re-roofing momentum in the North American
non-residential roofing markets. These factors, along with tight
labor markets, a historically wet spring, and tightening
manufacturing capacity in the industry are driving contractors and
distributors to the Carlisle Experience, which delivers the right
product at the right place at the right time.
At CIT, despite 737 MAX 8 issues at Boeing, the aerospace
environment is strong and backlog at major OEMs remains at record
levels. Additionally, the Medical Technology markets remain robust,
continuing to reflect the needs of an aging population and
increased preference for minimally invasive surgical
procedures.
However, throughout the year we have seen increasingly negative
impact on the global economy related to indecision and uncertainty
produced by a failure to resolve both Brexit and the U.S./China
trade negotiations. Late in the second quarter, we began to feel
the effects in our most global businesses, CFT and CBF, which
accelerated into the third quarter. Having delivered 3.4% third
quarter organic growth in this environment, we remain optimistic
that meaningful progress toward resolution would bolster confidence
in global economies and provide fuel for growth in the near-term,
assisting us in driving our Vision 2025 goals of 5% organic
growth.
On the M&A front, we are pleased to announce our commitments
to acquire Providien and Draka Fileca, both within our CIT
segment.
Providien, based in San Diego, California, is a leading provider
of comprehensive solutions for global medical device OEMs,
including: medical device contract manufacturing, precision
machining & metals, thermoforming, and medical injection
molding. Providien demonstrates Carlisle's commitment to Vision
2025 where we seek to build out our Medical Technology platform,
transitioning CIT to a more balanced portfolio of interconnnect
solutions.
Draka Fileca, based in Sainte-Genevieve, France, is a leader in
highly engineered interconnect solutions for harsh environments,
providing high-end cable solutions to important European Aerospace,
Space and Defense customers. With this commitment to acquire Draka
Fileca, we continue to increase our share of the airframe at
European customers.
Finally, earlier in the third quarter we acquired Swedish based
Ecco Finishing, which adds key low and high pressure painting
equipment and sealing applicators within CFT's Sealants and
Adhesives platform.
We are excited by our year-to-date progress towards Vision 2025,
including: pivoting to acquisitions at CFT and CIT, pricing resolve
throughout the organization, and generating strong free cash flow
that affords us the flexibility to achieve our near and long-term
objectives."
Third Quarter 2019 Segment
Highlights
Carlisle Construction Materials (CCM)
- Revenues of $893.5 million, up 15.0% (+8.8% organic)
year-over-year, were driven by continued strength in U.S.
commercial roofing demand, new product introductions and
contributions from acquisitions.
- Operating income was $173.0 million, up +43.1% year-over-year.
Operating margin of 19.4%, a 380 basis point improvement, benefited
from positive volume leverage, price realization, raw material
savings, savings from COS, and contributions from acquisitions,
partially offset by wage inflation and foreign exchange
headwinds.
- Items affecting comparability were costs of $0.8 million versus
$1.0 million in the third quarter of 2018.
- We continue to expect CCM to achieve low double digit revenue
growth in 2019.
Carlisle Interconnect Technologies (CIT)
- Revenues of $241.9 million, up 0.7% (-0.7% organic)
year-over-year were driven by strength in commercial aerospace,
medical and space/defense markets.
- Operating income was $36.0 million, up 22.9% year-over-year.
Operating margin of 14.9%, a 270 basis point improvement, benefited
from favorable mix, price realization, prior years' restructuring,
and savings from COS, partially offset by wage inflation, higher
raw material costs and higher restructuring costs.
- Items affecting comparability were costs of $2.5 million flat
to $2.5 million in the third quarter of 2018.
- We now expect CIT to achieve our original 2019 forecast of
mid-single digit revenue growth.
Carlisle Fluid Technologies (CFT)
- Revenues of $68.5 million, down (5.4)% (-17.1% organic)
year-over-year, reflected volume declines, particularly in the
general industrial and global automotive sectors, partially offset
by acquisitions and price realization.
- Operating income was $4.2 million, down (63.8)% year-over-year.
Operating margin of 6.1%, a 990 basis point decline, reflected
impacts from lower volumes, wage and raw material inflation, and
acquisition related charges, partially offset by price realization,
lower restructuring costs and savings from COS.
- Items affecting comparability were costs of $1.0 million versus
income of $2.0 million in the third quarter of 2018.
- We now expect CFT revenues to decline low-to-mid single digits
in 2019.
Carlisle Brake & Friction (CBF)
- Revenues of $76.7 million, down (16.6)% (-15.0% organic)
year-over-year, reflected difficult year-over-year comparisons
(3Q18 organic revenue +14.9%) in off-highway vehicle end markets,
and foreign currency translation headwinds.
- Operating income was $5.7 million, up 618.2% year-over-year.
Operating margin of 7.4%, a 860 basis point improvement, was driven
by efficiencies gained from the Tulsa, Oklahoma to Medina, Ohio
plant consolidation, lower restructuring costs and savings from
COS, partially offset by lower volumes, wage inflation and foreign
exchange headwinds.
- Items affecting comparability were costs of $0.5 million versus
$4.8 million in the third quarter of 2018.
- We now expect CBF revenues to decline low double digits in
2019.
Cash Flow
Free cash flow (defined as cash provided by operating activities
less capital expenditures, and comprised of continuing and
discontinued operations) was $432.9 million for the nine months
ended September, 30 2019, an increase of $426.4 million versus the
prior year. The increase in free cash flow was primarily
attributable to higher cash earnings, efficient use of working
capital, lower capital expenditures, and payments made in 2018
related to tax on the sale of Carlisle FoodService Products and
U.S. tax reform. Year-to-date free cash flow conversion was 117%,
up significantly from 1.2% through the first nine months of
2018.
During the three months ended September 30, 2019, we redeployed
our free cash flow towards acquisitions and $28.3 million in
dividends paid. As of September 30, 2019, we had $658.1 million of
cash and $1.0 billion of availability under our revolving credit
facility.
Table 1. Revenue Breakdown
Three Months Ended September
30, 2019
CCM
CIT
CFT
CBF
Change in Organic Revenues
8.8
%
(0.7
)%
(17.1
)%
(15.0
)%
Net Impact from Acquisitions
6.5
%
1.5
%
12.8
%
—
%
Impact from FX
(0.3
)%
(0.1
)%
(1.1
)%
(1.6
)%
Change in Revenues
15.0
%
0.7
%
(5.4
)%
(16.6
)%
EPS referenced in this release is from continuing operations
unless otherwise noted.
Conference Call and
Webcast
The Company will discuss third quarter 2019 results on a
conference call at 5:00 p.m. ET today. The call may be accessed
live by going to the Investor Relations section of the Carlisle
website
(http://www.carlisle.com/investor-relations/events-and-webcasts/default.aspx),
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. Forward-looking statements generally use words such as
“expect,” “foresee,” “anticipate,” “believe,” “project,” “should,”
“estimate,” “will,” “plans,” “forecast,” and similar expressions,
and reflect our expectations concerning the future. It is possible
that our future performance may differ materially from current
expectations expressed in these forward-looking statements, due to
a variety of factors such as: increasing price and product/service
competition by foreign and domestic competitors, including new
entrants; technological developments and changes; the ability to
continue to introduce competitive new products and services on a
timely, cost-effective basis; our mix of products/services;
increases in raw material costs which cannot be recovered in
product pricing; domestic and foreign governmental and public
policy changes including environmental and industry regulations;
threats associated with and efforts to combat terrorism; protection
and validity of patent and other intellectual property rights; the
successful integration and identification of our strategic
acquisitions; the cyclical nature of our businesses; and the
outcome of pending and future litigation and governmental
proceedings. In addition, such statements could be affected by
general industry and market conditions and growth rates, the
condition of the financial and credit markets, and general domestic
and international economic conditions including interest rate and
currency exchange rate fluctuations. Further, any conflict in the
international arena may adversely affect general market conditions
and our future performance. We refer you to the documents we file
from time to time with the Securities and Exchange Commission, such
as our reports on Form 10-K, Form 10-Q and Form 8-K, for a
discussion of these and other risks and uncertainties that could
cause our actual results to differ materially from our current
expectations and from the forward-looking statements contained in
this press release. We undertake no obligation to update any
forward-looking statement.
About Carlisle Companies
Incorporated
Carlisle Companies Incorporated is a diversified, global
portfolio of niche brands and businesses that manufactures highly
engineered products and solutions for our customers. Carlisle is
committed to generating superior shareholder returns by combining a
unique management style of decentralization, entrepreneurial
spirit, active M&A, and a balanced approach to capital
deployment, all with a culture of continuous improvement as
embodied in the Carlisle Operating System. Carlisle’s markets
include: commercial roofing, specialty polyurethane, architectural
metal, aerospace, medical, defense, transportation, industrial,
protective coating, auto refinishing, agriculture, mining, and
construction. Carlisle’s worldwide team of employees generated $4.5
billion in revenues in 2018. Learn more about Carlisle at
www.carlisle.com.
Carlisle Companies
Incorporated Unaudited Condensed Consolidated Statements of
Income
Three Months Ended September
30,
Nine Months Ended September
30,
(in millions except per share amounts)
2019
2018
2019
2018
Revenues
$
1,280.6
$
1,181.4
$
3,667.3
$
3,402.2
Cost of goods sold
900.4
867.1
2,604.3
2,506.3
Selling and administrative expenses
175.0
164.8
511.5
473.3
Research and development expenses
15.2
12.3
45.0
40.4
Other operating (income) expense, net
(1.0
)
(2.8
)
(6.4
)
(12.2
)
Operating income
191.0
140.0
512.9
394.4
Interest expense, net
16.7
16.3
49.6
49.2
Interest income
(1.7
)
(3.3
)
(6.2
)
(7.5
)
Other non-operating (income) expense,
net
(1.2
)
5.1
(2.2
)
6.3
Income from continuing operations before
income taxes
177.2
121.9
471.7
346.4
Provision for income taxes
37.9
25.0
102.0
76.9
Income from continuing operations
139.3
96.9
369.7
269.5
Discontinued operations:
(Loss) income before income taxes
(1.8
)
2.6
(1.8
)
300.3
(Benefit from) provision for income
taxes
(0.4
)
(0.2
)
(2.3
)
46.8
(Loss) income from discontinued
operations
(1.4
)
2.8
0.5
253.5
Net income
$
137.9
$
99.7
$
370.2
$
523.0
Basic earnings per share attributable to
common shares:
Income from continuing operations
$
2.45
$
1.61
$
6.46
$
4.40
(Loss) income from discontinued
operations
(0.02
)
0.05
0.01
4.15
Basic earnings per share
$
2.43
$
1.66
$
6.47
$
8.55
Diluted earnings per share attributable to
common shares:
Income from continuing operations
$
2.42
$
1.59
$
6.40
$
4.37
(Loss) income from discontinued
operations
(0.02
)
0.05
0.01
4.12
Diluted earnings per share
$
2.40
$
1.64
$
6.41
$
8.49
Average shares outstanding (in
thousands):
Basic
56,657
59,826
57,073
60,712
Diluted
57,335
60,329
57,621
61,176
Dividends declared and paid per share
$
0.50
$
0.40
$
1.30
$
1.14
(1) Basic and diluted EPS calculated based on "two-class"
method of computing earnings per shareusing the following income
attributable to common shareholders:
Income from continuing operations
$
138.9
$
96.1
$
368.6
$
267.4
Net income
137.5
98.9
369.1
519.3
Carlisle Companies
Incorporated Unaudited Segment Information
Three Months Ended September
30,
Increase (Decrease)
Nine Months Ended September
30,
Increase (Decrease)
(in millions, except percentages)
2019
2018
Amount
Percent
2019
2018
Amount
Percent
Revenues
Carlisle Construction Materials
$
893.5
$
776.8
$
116.7
15.0
%
$
2,479.6
$
2,204.0
$
275.6
12.5
%
Carlisle Interconnect Technologies
241.9
240.2
1.7
0.7
%
733.7
702.2
31.5
4.5
%
Carlisle Fluid Technologies
68.5
72.4
(3.9
)
(5.4
)%
198.9
209.2
(10.3
)
(4.9
)%
Carlisle Brake & Friction
76.7
92.0
(15.3
)
(16.6
)%
255.1
286.8
(31.7
)
(11.1
)%
Total
$
1,280.6
$
1,181.4
$
99.2
8.4
%
$
3,667.3
$
3,402.2
$
265.1
7.8
%
Operating Income (Loss)
Carlisle Construction Materials
$
173.0
$
120.9
$
52.1
43.1
%
$
448.4
$
338.1
$
110.3
32.6
%
Carlisle Interconnect Technologies
36.0
29.3
6.7
22.9
%
102.5
84.0
18.5
22.0
%
Carlisle Fluid Technologies
4.2
11.6
(7.4
)
(63.8
)%
13.9
25.1
(11.2
)
(44.6
)%
Carlisle Brake & Friction
5.7
(1.1
)
6.8
618.2
%
20.5
6.3
14.2
225.4
%
Segment Totals
218.9
160.7
58.2
36.2
%
585.3
453.5
131.8
29.1
%
Corporate and unallocated (1)
(27.9
)
(20.7
)
(7.2
)
(34.8
)%
(72.4
)
(59.1
)
(13.3
)
(22.5
)%
Total
$
191.0
$
140.0
$
51.0
36.4
%
$
512.9
$
394.4
$
118.5
30.0
%
Operating Margin Percentage
Carlisle Construction Materials
19.4
%
15.6
%
380 bps
18.1
%
15.3
%
280 bps
Carlisle Interconnect Technologies
14.9
%
12.2
%
270 bps
14.0
%
12.0
%
200 bps
Carlisle Fluid Technologies
6.1
%
16.0
%
(990) bps
7.0
%
12.0
%
(500) bps
Carlisle Brake & Friction
7.4
%
(1.2
)%
860 bps
8.0
%
2.2
%
580 bps
Total
14.9
%
11.9
%
300 bps
14.0
%
11.6
%
240 bps
Depreciation and Amortization
Carlisle Construction Materials
$
23.4
$
19.6
$
3.8
19.4
%
$
69.2
$
58.2
$
11.0
18.9
%
Carlisle Interconnect Technologies
15.7
14.3
1.4
9.8
%
45.9
43.6
2.3
5.3
%
Carlisle Fluid Technologies
6.2
5.7
0.5
8.8
%
17.9
17.1
0.8
4.7
%
Carlisle Brake & Friction
5.3
5.6
(0.3
)
(5.4
)%
16.2
17.1
(0.9
)
(5.3
)%
Corporate and unallocated (1)
0.7
0.7
—
—
%
2.2
2.1
0.1
4.8
%
Total
$
51.3
$
45.9
$
5.4
11.8
%
$
151.4
$
138.1
$
13.3
9.6
%
(1) Includes general corporate expenses and other unallocated
costs.
Carlisle Companies Incorporated
Unaudited Items Affecting Comparability Information
Items affecting comparability include costs, and losses or gains
related to, among other things, growth and profitability
improvement initiatives and other events outside of core business
operations (such as asset impairments, exit and disposal and
facility rationalization charges, costs of and related to
acquisitions, litigation settlement costs, gains and losses from
and costs related to divestitures, and discrete tax items). Because
these items affect Carlisle's, or any particular operating
segment's, financial condition or results in a specific period in
which they are recognized, we believe it is appropriate to present
the total of these items to provide information regarding the
comparability of results of operations period to period.
Three Months Ended September
30,
Nine Months Ended September
30,
(in millions, except per share
amounts)
2019
2018
2019
2018
Impact to Operating Income
Exit and disposal costs
$
1.8
$
4.1
$
10.1
$
11.8
Other facility rationalization costs
1.2
2.7
3.5
7.6
Acquisition related costs:
Inventory step-up amortization
1.0
0.6
2.2
1.0
Other acquisition costs
3.4
1.3
6.3
2.9
Litigation costs
—
1.1
—
2.5
Gains from contingent consideration
—
—
(3.0
)
—
Gains from divestitures
—
(2.7
)
—
(6.6
)
Total
$
7.4
$
7.1
$
19.1
$
19.2
Impact to Diluted EPS from Continuing
Operations (1)
Exit and disposal costs
$
0.02
$
0.05
$
0.13
$
0.14
Other facility rationalization costs
0.02
0.04
0.05
0.10
Acquisition related costs:
Inventory step-up amortization
0.01
—
0.03
0.01
Other acquisition costs
0.05
0.02
0.08
0.04
Litigation costs
—
0.01
—
0.03
Gains from contingent consideration
—
—
(0.05
)
—
Gains from divestitures
0.01
(0.03
)
0.01
(0.08
)
Discrete tax items
(0.04
)
(0.01
)
(0.13
)
(0.06
)
Total
$
0.07
$
0.08
$
0.12
$
0.18
Impact to Operating Income
Carlisle Construction Materials
$
0.8
$
1.0
$
2.6
$
(0.1
)
Carlisle Interconnect Technologies
2.5
2.5
9.8
7.0
Carlisle Fluid Technologies
1.0
(2.0
)
1.4
(0.5
)
Carlisle Brake & Friction
0.5
4.8
2.3
10.7
Corporate
2.6
0.8
3.0
2.1
Total
$
7.4
$
7.1
$
19.1
$
19.2
Impact to Diluted EPS from Continuing
Operations (1)
Carlisle Construction Materials
$
0.02
$
0.01
$
0.05
$
—
Carlisle Interconnect Technologies
0.03
0.03
0.13
0.08
Carlisle Fluid Technologies
0.01
(0.02
)
—
—
Carlisle Brake & Friction
0.01
0.06
0.03
0.13
Corporate
—
—
(0.09
)
(0.03
)
Total
$
0.07
$
0.08
$
0.12
$
0.18
(1) Tax effect is based on the rate of the jurisdiction where
the expense is deductible or income is taxable.
Carlisle Companies
Incorporated Unaudited Condensed Consolidated Statements of
Cash Flows
Nine Months Ended September
30,
(in millions)
2019
2018
Net cash provided by operating
activities
$
489.5
$
102.6
Investing activities:
Acquisitions, net of cash acquired
(287.7
)
(19.5
)
Capital expenditures
(56.6
)
(96.1
)
Proceeds from sale of discontinued
operation
—
758.0
Other investing activities, net
2.2
11.4
Net cash (used in) provided by investing
activities
(342.1
)
653.8
Financing activities:
Repurchase of common stock
(232.1
)
(295.4
)
Dividends paid
(74.5
)
(69.7
)
Proceeds from exercise of stock
options
27.3
22.3
Withholding tax paid related to
stock-based compensation
(9.7
)
(9.7
)
Other financing activities, net
(2.7
)
—
Net cash used in financing activities
(291.7
)
(352.5
)
Effect of foreign currency exchange rate
changes on cash and cash equivalents
(1.2
)
(0.4
)
Change in cash and cash equivalents
(145.5
)
403.5
Less: change in cash and cash equivalents
of discontinued operations
—
1.3
Beginning of period
803.6
378.3
End of period
$
658.1
$
780.5
Carlisle Companies
Incorporated Unaudited Selected Consolidated Balance Sheet
Data
(in millions)
September 30, 2019
December 31, 2018
Cash and cash equivalents
$
658.1
$
803.6
Long-term debt
1,590.2
1,587.8
Total shareholders' equity
2,681.0
2,597.4
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191022006092/en/
Jim Giannakouros, CFA Vice President of Investor Relations and
FP&A (480) 781-5135 jgiannakouros@carlisle.com
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