Carlisle Companies Incorporated (NYSE:CSL) today announced its
financial results for the three and twelve month periods ended
December 31, 2019.
- Delivered operating income of a record $141 million in the
fourth quarter, an increase of 23.3% year-over-year
- Grew full year operating cash flow 107% to $703 million,
generating free cash flow of $614 million, an increase of 181%
year-over-year, representing 130% free cash flow conversion for the
full year
- Repurchased approximately 1 million shares for $150 million
in the fourth quarter and 2.8 million shares for $382 million for
the full year
CEO Comment
Chris Koch, President and Chief Executive Officer, commented:
“Driven by strong underlying demand in North American
non-residential roofing markets, Carlisle delivered record fourth
quarter sales, operating income and diluted EPS. We accomplished
these results despite the continued negative impact in the global
economy driven by US/China trade negotiations, Brexit uncertainty,
global industrial production declines and significant commercial
aerospace production delays at a key customer.
We continue to gain traction on the key pillars of Vision 2025,
under which we target: $8 billion in revenues, 20% operating
margin, and 15% ROIC, all driving to $15 of earnings per share.
As we embark on year three of Vision 2025, we will build on the
achievements of our first two years and continue to drive towards
our objectives of: achieving 5% organic growth with leverage,
utilizing the Carlisle Operating System (COS) to deliver
efficiencies and annual cost savings of 1-2% of revenues, deploying
$3 billion to build scale with synergistic acquisitions, continuing
to invest in exceptional talent and allocating over $3 billion into
capital expenditures, share repurchases and dividends.
Full year 2019 highlights include:
- Delivered 2.8% organic revenue growth despite significant
global headwinds; leveraged this growth to expand operating margins
220 basis points
- Drove organic revenue growth of 5.0% since launching Vision
2025, in line with our long-term target
- Maintained strong price discipline, leading to positive price
realization across all businesses
- Achieved gross savings and benefits from COS within our
targeted range of 1-2% of revenues
- Deployed over $600 million of capital into 8 strategic and
synergistic acquisitions
- Leveraged our strong cash flow and balance sheet by deploying
over $485 million into share repurchases and dividends paid; 3-year
total of $1.4 billion
In addition to our strong financial performance, we are pleased
about the continued momentum our team has generated around
Environmental Social and Governance (ESG) issues. In 2019 we
established an ESG steering committee, developed an ESG reporting
process, elevated the position of Director of Sustainability to
report directly to the CEO and established a plan to publish our
first ESG report in 2020. Additionally, we made progress in
diversifying our Board of Directors and have made commitments to
ensuring a $15 per hour minimum wage in our U.S. operations, gender
pay equity, and a gender-balanced management team.
We are pleased with our significant accomplishments and strong
performance in a challenging 2019. Supported by COS, our teams
focused on and executed numerous continuous improvement projects to
help overcome these challenges. Finally, we recognize that
Carlisle's achievements are the culmination of efforts by our
employees, customers, channel partners and suppliers, and we
appreciate their contribution to our record results in 2019."
4th Quarter 2019
Revenue of $1.14 billion increased 6.2% from $1.08 billion in
the fourth quarter of 2019. Organic revenue was flat (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 6.4% in the quarter. Changes in foreign exchange rates had
a negative (0.2)% impact on revenues.
Operating income of $141.3 million increased 23.3% from the
fourth quarter of 2018. Operating income performance was driven by
raw material savings, contributions from COS, lower restructuring
charges, and acquisitions, partially offset by wage inflation and
lower volume at CIT, CFT and CBF.
During the fourth quarter of 2019, Carlisle completed the
purchase of Providien and announced an agreement to acquire Fileca,
strengthening our CIT Medical Technologies and Aerospace
platforms.
Consistent with our Vision 2025 strategy, Carlisle repurchased
approximately 1 million shares of common stock for $150.0 million
and paid $28.4 million in dividends in the fourth quarter.
Full Year 2019
2019 revenues of $4.8 billion increased 7.4% from $4.5 billion
for 2018. Acquired revenues contributed a total of 5.1%. Organic
revenues grew 2.8%. Foreign exchange had a negative impact of
0.5%.
2019 operating income of $654.2 million increased 28.5% from
2018, resulting in operating margins of 13.6%. Operating income
performance was driven by higher sales volume at CCM and CIT, price
realization, raw materials savings, lower restructuring charges and
contributions from COS. Operating Income performance was partially
offset by wage inflation and lower volume at CFT and CBF.
For the full year 2019, Carlisle delivered diluted EPS of $8.21.
In addition to drivers of operating income, Carlisle's EPS
benefited from a reduced share count. Carlisle repurchased 2.8
million shares of common stock for $382.1 million and returned a
record $102.9 million to shareholders in the form of dividends.
Fourth Quarter 2019 Segment
Highlights
Carlisle Construction Materials (CCM)
- Revenues of $753.7 million, up 11.4% (+5.1% 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 $127.6 million, up +31.1% year-over-year.
Operating margin of 16.9%, a 250 basis point improvement, benefited
from positive volume leverage, raw material savings, contributions
from acquisitions and savings from COS, partially offset by wage
inflation.
- Items affecting comparability were benefits of $0.4 million
versus costs of $0.5 million in the fourth quarter of 2018.
- We expect CCM to achieve mid-single digit revenue growth in
2020.
Carlisle Interconnect Technologies (CIT)
- Revenues of $239.2 million, up 3.3% (-3.1% organic)
year-over-year were driven by acquisitions and strength in
commercial aerospace and medical markets.
- Operating income was $29.1 million, down (12.6)%
year-over-year. Operating margin of 12.2%, a 220 basis point
decline, was affected by higher restructuring and acquisition
costs, lower volumes and wage and raw material inflation, partially
offset by savings from COS and price realization.
- Items affecting comparability were costs of $6.9 million versus
$2.2 million in the fourth quarter of 2018.
- We expect CIT revenue to grow high single digits in 2020.
Carlisle Fluid Technologies (CFT)
- Revenues of $79.5 million, down (3.5)% (-16.1% organic)
year-over-year, reflected volume declines, particularly in the
general industrial and automotive sectors, especially in China,
partially offset by acquisitions.
- Operating income was $10.1 million, down (15.8)%
year-over-year. Operating margin of 12.7%, a 190 basis point
decline, reflected impacts from lower volumes and wage inflation,
partially offset by savings from COS.
- Items affecting comparability were benefits of $0.6 million
versus costs of $0.4 million in the fourth quarter of 2018.
- We expect CFT to achieve low-to-mid single digit revenue growth
in 2020.
Carlisle Brake & Friction (CBF)
- Revenues of $71.9 million, down (17.4)% (-16.6% organic)
year-over-year, reflected headwinds in off-highway vehicle end
markets and foreign currency translation headwinds.
- Operating income was $0.8 million, up 111.3% year-over-year.
Operating margin of 1.1%, a 930 basis point improvement, was driven
by efficiencies gained from the 2018 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
$9.1 million in the fourth quarter of 2018.
- We expect CBF revenues to decline mid-single digits in
2020.
Cash Flow
Free cash flow (defined as cash provided by operating activities
less capital expenditures, and comprised of continuing and
discontinued operations) was $614.2 million for the twelve months
ended December, 31 2019, an increase of $395.7 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. 2019 full year free cash flow conversion was 130%,
up significantly from 2018.
During the three months ended December 31, 2019, we redeployed
our free cash flow towards acquisitions, $150.0 million in share
repurchases and $28.4 million in dividends paid. As of December 31,
2019, we had $351.2 million of cash and $1.0 billion of
availability under our revolving credit facility.
Koch concluded, "Despite geopolitical and economic
uncertainties, we are confident that Carlisle's employees across
the globe remain committed to our continued execution of the
strategies and key actions that support the progress of Vision
2025. While we are still dealing with the effects of the China
trade negotiations and a continued industrial production recession,
we are very optimistic about the North American non-residential
markets, our emerging Medical Technologies platform, and a return
to normalcy at our largest North American aerospace customer. In
addition to these strengths, we anticipate that we will continue to
deploy capital for strategic acquisitions and opportunistic share
repurchases. We expect to achieve mid-single digit revenue growth
in 2020."
Table 1. Revenue Breakdown
Three Months Ended December
31, 2019
CCM
CIT
CFT
CBF
Change in Organic Revenues
5.1
%
(3.1
)%
(16.1
)%
(16.6
)%
Net Impact from Acquisitions
6.5
%
6.4
%
12.5
%
—
%
Impact from FX
(0.2
)%
—
%
0.1
%
(0.8
)%
Change in Revenues
11.4
%
3.3
%
(3.5
)%
(17.4
)%
EPS referenced in this release is from continuing operations
unless otherwise noted.
Conference Call and
Webcast
The Company will discuss fourth 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 $4.8
billion in revenues in 2019. Learn more about Carlisle at
www.carlisle.com.
Carlisle Companies
Incorporated
Unaudited Condensed Consolidated
Statements of Income
Three Months Ended December
31,
Twelve Months Ended December
31,
(in millions except per share amounts)
2019
2018
2019
2018
Revenues
$
1,144.3
$
1,077.3
$
4,811.6
$
4,479.5
Cost of goods sold
835.6
798.5
3,439.9
3,304.8
Selling and administrative expenses
155.6
152.1
667.1
625.4
Research and development expenses
15.9
14.7
60.9
55.1
Other operating income, net
(4.1
)
(2.6
)
(10.5
)
(14.8
)
Operating income
141.3
114.6
654.2
509.0
Interest expense, net
16.5
15.5
66.1
64.7
Interest income
(1.7
)
(3.7
)
(7.9
)
(11.2
)
Other non-operating expense, net
2.9
3.3
0.7
9.6
Income from continuing operations before
income taxes
123.6
99.5
595.3
445.9
Provision for income taxes
19.6
10.4
121.6
87.3
Income from continuing operations
104.0
89.1
473.7
358.6
Discontinued operations:
(Loss) income before income taxes
—
(0.2
)
(1.8
)
300.1
Provision for (benefit from) income
taxes
1.4
0.8
(0.9
)
47.6
(Loss) income from discontinued
operations
(1.4
)
(1.0
)
(0.9
)
252.5
Net income
$
102.6
$
88.1
$
472.8
$
611.1
Basic earnings per share attributable to
common shares:
Income from continuing operations
$
1.84
$
1.50
$
8.30
$
5.92
(Loss) income from discontinued
operations
(0.03
)
(0.02
)
(0.02
)
4.17
Basic earnings per share
$
1.81
$
1.48
$
8.28
$
10.09
Diluted earnings per share attributable to
common shares:
Income from continuing operations
$
1.81
$
1.49
$
8.21
$
5.88
(Loss) income from discontinued
operations
(0.03
)
(0.02
)
(0.02
)
4.14
Diluted earnings per share
$
1.78
$
1.47
$
8.19
$
10.02
Average shares outstanding (in
thousands):
Basic
56,432
59,156
56,913
60,393
Diluted
57,232
59,457
57,547
60,786
Dividends declared and paid per share
$
0.50
$
0.40
$
1.80
$
1.54
(1) Basic and diluted EPS calculated based
on "two-class" method of computing earnings per share using the
following income attributable to common shareholders:
Income from continuing operations
$
103.8
$
88.8
$
472.4
$
357.4
Net income
102.4
87.8
471.5
609.2
Carlisle Companies
Incorporated
Unaudited Segment Information
Three Months Ended December
31,
Increase
(Decrease)
Twelve Months Ended December
31,
Increase (Decrease)
(in millions, except percentages)
2019
2018
Amount
Percent
2019
2018
Amount
Percent
Revenues
Carlisle Construction Materials
$
753.7
$
676.3
$
77.4
11.4
%
$
3,233.3
$
2,880.3
$
353.0
12.3
%
Carlisle Interconnect Technologies
239.2
231.6
7.6
3.3
%
972.9
933.8
39.1
4.2
%
Carlisle Fluid Technologies
79.5
82.4
(2.9
)
(3.5
)%
278.4
291.6
(13.2
)
(4.5
)%
Carlisle Brake & Friction
71.9
87.0
(15.1
)
(17.4
)%
327.0
373.8
(46.8
)
(12.5
)%
Total
$
1,144.3
$
1,077.3
$
67.0
6.2
%
$
4,811.6
$
4,479.5
$
332.1
7.4
%
Operating Income (Loss)
Carlisle Construction Materials
$
127.6
$
97.3
$
30.3
31.1
%
$
576.0
$
435.4
$
140.6
32.3
%
Carlisle Interconnect Technologies
29.1
33.3
(4.2
)
(12.6
)%
131.6
117.3
14.3
12.2
%
Carlisle Fluid Technologies
10.1
12.0
(1.9
)
(15.8
)%
24.0
37.1
(13.1
)
(35.3
)%
Carlisle Brake & Friction
0.8
(7.1
)
7.9
111.3
%
21.3
(0.8
)
22.1
2,762.5
%
Segment Totals
167.6
135.5
32.1
23.7
%
752.9
589.0
163.9
27.8
%
Corporate and unallocated (1)
(26.3
)
(20.9
)
(5.4
)
25.8
%
(98.7
)
(80.0
)
(18.7
)
23.4
%
Total
$
141.3
$
114.6
$
26.7
23.3
%
$
654.2
$
509.0
$
145.2
28.5
%
Operating Margin Percentage
Carlisle Construction Materials
16.9
%
14.4
%
250 bps
17.8
%
15.1
%
270 bps
Carlisle Interconnect Technologies
12.2
%
14.4
%
(220) bps
13.5
%
12.6
%
90 bps
Carlisle Fluid Technologies
12.7
%
14.6
%
(190) bps
8.6
%
12.7
%
(410) bps
Carlisle Brake & Friction
1.1
%
(8.2
)%
930 bps
6.5
%
(0.2
)%
670 bps
Total
12.3
%
10.6
%
170 bps
13.6
%
11.4
%
220 bps
Depreciation and Amortization
Carlisle Construction Materials
$
24.7
$
19.7
$
5.0
25.4
%
$
93.9
$
77.9
$
16.0
20.5
%
Carlisle Interconnect Technologies
17.1
14.7
2.4
16.3
%
63.0
58.3
4.7
8.1
%
Carlisle Fluid Technologies
6.2
5.8
0.4
6.9
%
24.1
22.9
1.2
5.2
%
Carlisle Brake & Friction
5.5
6.4
(0.9
)
(14.1
)%
21.7
23.5
(1.8
)
(7.7
)%
Corporate and unallocated (1)
0.5
0.8
(0.3
)
(37.5
)%
2.7
2.9
(0.2
)
(6.9
)%
Total
$
54.0
$
47.4
$
6.6
13.9
%
$
205.4
$
185.5
$
19.9
10.7
%
(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 non-comparable tax items).
Because these items affect our, 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 December
31,
Twelve Months Ended December
31,
(in millions, except per share
amounts)
2019
2018
2019
2018
Impact to Operating Income
Exit and disposal costs
$
3.6
$
6.1
$
13.7
$
17.9
Other facility rationalization costs
2.2
5.6
5.7
13.2
Acquisition related costs:
Inventory step-up amortization
0.9
—
3.1
1.0
Other acquisition costs
2.0
1.7
8.3
4.6
Litigation costs
—
—
—
2.5
Gains from contingent consideration
(2.0
)
—
(5.0
)
—
Gains from divestitures
(2.1
)
—
(2.1
)
(6.6
)
Total
$
4.6
$
13.4
$
23.7
$
32.6
Impact to Diluted EPS from Continuing
Operations (1)
Exit and disposal costs
$
0.05
$
0.08
$
0.18
$
0.22
Other facility rationalization costs
0.03
0.07
0.08
0.16
Acquisition related costs:
Inventory step-up amortization
0.01
—
0.04
0.01
Other acquisition costs
0.04
0.02
0.12
0.06
Litigation costs
—
—
—
0.03
Gains from contingent consideration
(0.03
)
—
(0.09
)
—
Gains from divestitures
(0.03
)
—
(0.02
)
(0.08
)
Tax items (2)
(0.10
)
(0.14
)
(0.23
)
(0.20
)
Total
$
(0.03
)
$
0.03
$
0.08
$
0.20
Impact to Operating Income
Carlisle Construction Materials
$
(0.4
)
$
0.5
$
2.2
$
0.4
Carlisle Interconnect Technologies
6.9
2.2
16.7
9.2
Carlisle Fluid Technologies
(0.6
)
0.4
0.8
(0.1
)
Carlisle Brake & Friction
0.5
9.1
2.8
19.8
Corporate
(1.8
)
1.2
1.2
3.3
Total
$
4.6
$
13.4
$
23.7
$
32.6
Impact to Diluted EPS from Continuing
Operations (1)
Carlisle Construction Materials
$
—
$
0.01
$
0.04
$
0.01
Carlisle Interconnect Technologies
0.10
0.03
0.22
0.11
Carlisle Fluid Technologies
(0.02
)
—
(0.01
)
—
Carlisle Brake & Friction
0.01
0.12
0.04
0.24
Corporate
(0.12
)
(0.13
)
(0.21
)
(0.16
)
Total
$
(0.03
)
$
0.03
$
0.08
$
0.20
(1)
Tax effect is based on the rate of the jurisdiction where the
expense is deductible or income is taxable.
(2)
In order to provide better information to the user, items
affecting comparability include all non-comparable tax activity in
current periods and all comparative periods.
Carlisle Companies
Incorporated
Unaudited Condensed Consolidated
Statements of Cash Flows
Twelve Months Ended December
31,
(in millions)
2019
2018
Net cash provided by operating
activities
$
703.1
$
339.2
Investing activities:
Acquisitions, net of cash acquired
(616.4
)
(19.5
)
Capital expenditures
(88.9
)
(120.7
)
Proceeds from sale of discontinued
operation
—
758.0
Other investing activities, net
10.4
11.4
Net cash (used in) provided by investing
activities
(694.9
)
629.2
Financing activities:
Repurchase of common stock
(382.1
)
(459.8
)
Dividends paid
(102.9
)
(93.5
)
Proceeds from exercise of stock
options
37.0
22.7
Withholding tax paid related to
stock-based compensation
(10.4
)
(10.1
)
Other financing activities, net
(2.8
)
—
Net cash used in financing activities
(461.2
)
(540.7
)
Effect of foreign currency exchange rate
changes on cash and cash equivalents
0.6
(1.1
)
Change in cash and cash equivalents
(452.4
)
426.6
Less: change in cash and cash equivalents
of discontinued operations
—
1.3
Beginning of period
803.6
378.3
End of period
$
351.2
$
803.6
Carlisle Companies
Incorporated
Unaudited Selected Consolidated
Balance Sheet Data
(in millions)
December 31, 2019
December 31, 2018
Cash and cash equivalents
$
351.2
$
803.6
Long-term debt, including current
portion
1,591.6
1,587.8
Total shareholders' equity
2,642.8
2,597.4
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200206005950/en/
Jim Giannakouros, CFA Vice President of Investor Relations and
FP&A (480) 781-5135 jgiannakouros@carlisle.com
Carlisle Companies (NYSE:CSL)
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Carlisle Companies (NYSE:CSL)
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