Carlisle Companies Incorporated (NYSE:CSL) today announced its
financial results for the three month period ended March 31, 2020
and, in response to regulatory recommendations, will provide
details, including forward-looking information, on the impacts of
the coronavirus (COVID-19) pandemic on the Company.
Carlisle is closely monitoring developments in the coronavirus
pandemic and is managing the Company’s activities and responses
through a multi-disciplinary team that regularly assesses the
Company’s policies and procedures in light of this ever-changing
environment. The Company’s top priorities are assuring the health
and safety of our employees and supporting our essential businesses
so vital to our customers, our communities and our employees.
Comments from Chris Koch, President and
Chief Executive Officer
"Before we turn to our first quarter financial results, our
attention is drawn to the global human tragedy that continues to
unfold in front of us for millions of people, including our
co-workers, business partners, friends and families. At this time,
our thoughts are with those affected, their grief-stricken
families, and those on the front lines combating the coronavirus
for our collective well-being. While mindful of our challenges, I
am inspired by the spirit of our employees, grateful to them for
their dedication to Carlisle, and for delivering on our commitments
to our customers and to the communities they serve.
"First and foremost, our pledge is to provide a safe working
environment for our employees. The crisis management protocols we
have established, and are following today, were first developed as
the coronavirus threat began to impact our multiple facilities in
China. As the virus spread across the globe, our next significant
area of impact was the Lombardy region of Italy where we have an
important presence in Orzinouvi. The global and diversified nature
of our businesses ultimately helped us prepare in the United States
for what is turning out to be a devastating impact to the U.S.
economy. We are following best practices and guidance from
recognized authorities on employee health and safety measures,
including safe hygiene and social distancing, enhanced facility
cleaning, travel and facility access restrictions and a
telecommuting policy for eligible employees. We will continue to
update these policies as necessary.
"Our operations have been deemed essential in many countries,
states and local jurisdictions. This is a testament to the
importance of our products and the employees who design and produce
them. We are very pleased to be able to provide uninterrupted
service to our customers who need our products to maintain critical
infrastructure and supply vital medical and transportation products
at this time.
"While we are rightly adjusting our business operating norms in
response to necessary health and safety guidelines, we also intend
to stay on a course of responsible business activity to maintain a
stable foundation for the post-COVID-19 business recovery that we
know will arrive. Fortunately, all but a very few of our
manufacturing facilities continue to operate as essential business.
Our efforts to protect our employees at these facilities by
implementing recognized COVID-19 health and safety measures and
providing sick and family leave benefits have not had, and are not
expected to have, a material adverse effect on our operations.
However, potentially prolonged declines in customer demand are
negatively impacting our operations by decreasing sales, increasing
operating costs, reducing efficiencies and increasing employee
absenteeism. We are unable to predict the full extent or duration
of these impacts at this time.
"We will turn the corner on this crisis. In the meantime, all
companies, including Carlisle, must brace for prudent adjustments
to business structures, employment, and pay policies as this global
calamity continues. While Carlisle is in a strong position to
weather the economic toll being inflicted by the coronavirus, doing
the right things now to ensure we emerge from this crisis in the
best possible position is key to our future security. I have every
confidence we will do so."
Financial Strength
Carlisle's strong balance sheet and liquidity position the
company to weather the current severe global economic downturn and
maintain our commitment to achieving Vision 2025. As always, we
remain very focused on maintaining our financial and strategic
optionality and flexibility to be able to best leverage future
opportunities. Specific highlights include:
- As of March 31, 2020, we had cash-on-hand of $1.2 billion and
$500 million undrawn on our credit facility.
- No principal payments are due on outstanding debt until
November 15, 2022.
- We expect to generate free cash flow conversion in excess of
125% in 2020.
- We paid our first quarter dividend totaling $28.3 million on
March 2nd, fully expect to pay our dividend in June, and anticipate
increasing our dividend in September for the 44th consecutive
year.
- In the first quarter, we deployed over $120 million
repurchasing 950 thousand shares. Consistent with our past capital
deployment strategy, we will remain balanced and opportunistic on
this front.
- We continue to work an active M&A pipeline and are
committed to sustaining internal organic investments.
- We expect to maintain our strong investment grade ratings of
BBB/Baa2.
Responding to the Increasing Economic Uncertainties Created
by COVID-19
In response to declining demand, we are making necessary
adjustments to our business activities, including measures to
manage our costs where appropriate. We remain committed to emerging
from this crisis in a strong financial position, able to
significantly leverage ensuing growth longer-term. Our value
creation potential remains very much intact. Highlights
include:
- Vision 2025 is our long-term focus: growing annual revenues to
$8 billion, expanding operating margins to 20%, and generating 15%
ROIC, all ultimately driving to our targeted $15 of earnings per
share.
- CCM's business is positioned to perform well in this market
downturn given the significant need for maintaining critical
infrastructure, coupled with a strong and growing industry backlog
and evidence that demand is merely delayed. Additionally, CCM is
benefiting from lower input costs and a highly variable
manufacturing cost structure. Most importantly, we are focused on
maintaining the premium Carlisle Experience which our customers
have come to rely on, and as we emerge from this crisis, will
become even more important.
- The unprecedented downturn in the commercial aerospace industry
caused by the severe decline in passenger airline travel negatively
impacts CIT's business, but also provides an opportunity to
accelerate and complete restructuring actions, many of which were
contemplated in Vision 2025. Recent news from aerospace
manufacturers and major airlines, including Boeing resuming
operations, airlines deferring and not canceling orders, and a
continued multi-year backlog, are encouraging signs despite the
current situation.
- We intend to continue building our Medical Technologies
platform, organically and via a robust M&A pipeline. CIT
supplies components to customers making critical medical equipment
to combat COVID-19. We believe CIT’s end market mix will improve
dramatically as a result.
- We continue to evaluate opportunities to deploy capital into
strategic and synergistic acquisitions across CCM, CIT, and
CFT.
- The Carlisle Operating System (COS), which has delivered
significant savings over the last decade, will continue to be an
essential tool for our businesses to rely on as they seek new
opportunities to make our operations and business processes more
efficient.
- We remain committed to being a customer of choice, and being a
reliable piece of our supply chain across businesses.
In light of current economic uncertainty caused by COVID-19, we
have decided to withdraw full-year 2020 revenue guidance until a
clearer picture emerges for our businesses. We are hopeful that the
major airlines and commercial aerospace manufacturers will find
improved financial stability soon in order to improve our ability
to make accurate forecasts in the future.
As we enter the second quarter, I remain confident in Carlisle's
businesses given our strong financial foundation, cash generating
capabilities, unwavering commitment to our Vision 2025 strategic
plan, and our outstanding employees across the globe who continue
to provide products and services essential to the world's
needs.”
First Quarter 2020
Revenue of $1.03 billion decreased (3.9)% from $1.07 billion in
the first quarter of 2020. Organic revenue declined (7.0%) (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 3.4% in the quarter. Changes in foreign exchange rates had
a negative (0.3)% impact on revenues.
Operating income of $102.7 million decreased (10.5)% from the
first quarter of 2019. Operating income performance was driven by
volume declines at CIT, CFT and CBF and wage inflation, partially
offset by raw material savings, lower SG&A and contributions
from COS.
First Quarter 2020 Segment
Highlights
Carlisle Construction Materials (CCM)
- Revenues of $676.4 million, up 0.8% (+0.7% organic)
year-over-year, were driven by continued U.S. commercial roofing
demand, Architectural Metals platform growth and new product
introductions.
- Operating income was $107.7 million, up +15.9% year-over-year.
Operating margin of 15.9%, a 210 basis point improvement, benefited
from favorable raw material pricing, positive volume leverage and
savings from COS, partially offset by wage inflation and
unfavorable mix.
- Items affecting comparability were costs of $0.6 million versus
$1.6 million in the first quarter of 2019.
Carlisle Interconnect Technologies (CIT)
- Revenues of $224.5 million, down (8.9)% (-19.7% organic)
year-over-year were negatively impacted by lingering 737 MAX
issues. COVID-19 related impact was seen late in the quarter and
was minimal. This was partially offset by acquisitions.
- Operating income was $16.4 million, down (46.4)%
year-over-year. Operating margin of 7.3%, a 510 basis point
decline, was affected by lower volumes and wage and raw material
inflation, partially offset by savings from COS and price
realization.
- Items affecting comparability were costs of $5.3 million versus
$4.9 million in the first quarter of 2019.
Carlisle Fluid Technologies (CFT)
- Revenues of $58.3 million, down (7.6)% (-18.8% organic)
year-over-year, reflected COVID-19 related volume declines,
particularly in the general industrial and automotive refinish
markets, partially offset by acquisitions.
- Operating income was $2.8 million, down (56.3)% year-over-year.
Operating margin of 4.8%, a 530 basis point decline, reflected
impacts from lower volumes and wage and raw material inflation,
partially offset by savings from COS, contributions from
acquisitions and lower SG&A.
- Items affecting comparability were costs of $0.3 million versus
benefits of $0.9 million in the first quarter of 2019.
Carlisle Brake & Friction (CBF)
- Revenues of $71.0 million, down (22.2)% (-20.8% organic)
year-over-year, reflected COVID-19 related headwinds in off-highway
vehicle end markets and foreign currency translation
headwinds.
- Operating income was $(3.8) million, down (158.5)%
year-over-year. Operating margin of (5.4)%, a 1250 basis point
decline, was driven by lower volumes, higher restructuring, wage
and raw material inflation, and costs associated with idle plant
capacity, partially offset by savings from COS and lower
SG&A.
- Items affecting comparability were costs of $3.7 million versus
$1.3 million in the first quarter of 2019.
Cash Flow
Free cash flow (defined as cash provided by operating activities
less capital expenditures, and comprised of continuing and
discontinued operations) was $30.4 million for the three months
ended March, 31 2020, a decrease of $56.1 million versus the prior
year. Our priorities for the use of cash are to invest in growth
and performance improvement opportunities for our existing
businesses through capital expenditures, pursue strategic
acquisitions that meet shareholder return criteria, pay dividends
to shareholders and return value to shareholders through share
repurchases.
During the three months ended March 31, 2020, we redeployed our
free cash flow towards $120.6 million in share repurchases and
$28.3 million in dividends paid. As of March 31, 2020, we had $1.2
billion of cash and $0.5 billion of availability under our
revolving credit facility.
Table 1. Revenue Breakdown
Three Months Ended
March 31, 2020
CSL
CCM
CIT
CFT
CBF
Change in Organic Revenues
(7.0)
%
0.7
%
(19.7)
%
(18.8)
%
(20.8)
%
Net Impact from Acquisitions
3.4
%
0.3
%
10.9
%
12.0
%
—
%
Impact from FX
(0.3)
%
(0.2)
%
(0.1)
%
(0.8)
%
(1.4)
%
Change in Revenues
(3.9)
%
0.8
%
(8.9)
%
(7.6)
%
(22.2)
%
EPS referenced in this release is from continuing operations
unless otherwise noted.
Conference Call and
Webcast
The Company will discuss first quarter 2020 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, including statements regarding the potential or expected
impacts of the global coronavirus (COVID-19) pandemic.
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: risks from the global coronavirus
(COVID-19) pandemic including, for example, expectations regarding
the impact of the coronavirus (COVID-19) on our businesses,
including on customer demand, supply chains and distribution
systems, production, our ability to maintain appropriate labor
levels, our ability to ship products to our customers, our ability
to obtain financial and tax benefits from the recently passed CARES
Act, our future results or our full-year financial outlook,
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 its customers. Driven by our
strategic plan, Vision 2025, Carlisle is committed to generating
superior shareholder returns by combining an entrepreneurial
management style under a center-led framework with a balanced
approach to capital deployment, all with a culture of responsible
stewardship and continuous improvement as embodied in the Carlisle
Operating System. Carlisle’s markets include: commercial roofing,
specialty polyurethane, architectural metal, aerospace, medical
technologies, defense, transportation, industrial, protective
coating, auto refinishing, agriculture, 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
March 31,
(in millions except per share amounts)
2020
2019
Revenues
$
1,030.2
$
1,071.9
Cost of goods sold
751.8
783.3
Selling and administrative expenses
161.9
164.2
Research and development expenses
14.4
14.4
Other operating income, net
(0.6
)
(4.7
)
Operating income
102.7
114.7
Interest expense, net
18.9
16.3
Loss on extinguishment of debt
8.8
—
Interest income
(0.7
)
(2.6
)
Other non-operating (income) expense,
net
(0.5
)
(0.4
)
Income from continuing operations before
income taxes
76.2
101.4
Provision for income taxes
14.4
24.0
Income from continuing operations
61.8
77.4
Discontinued operations:
Income before income taxes
—
—
Benefit from income taxes
—
(2.0
)
Income from discontinued operations
—
2.0
Net income
$
61.8
$
79.4
Basic earnings per share attributable to
common shares:
Income from continuing operations(1)
$
1.10
$
1.34
Income from discontinued operations
—
0.03
Basic earnings per share
$
1.10
$
1.37
Diluted earnings per share attributable to
common shares:
Income from continuing operations(1)
$
1.09
$
1.33
Income from discontinued operations
—
0.03
Diluted earnings per share
$
1.09
$
1.36
Average shares outstanding (in
thousands):
Basic
55,819
57,547
Diluted
56,472
57,870
Dividends declared and paid per share
$
0.50
$
0.40
(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
$
61.6
$
77.1
Net income
61.6
79.1
Carlisle Companies
Incorporated
Unaudited Segment Information
Three Months Ended
March 31,
Increase
(Decrease)
(in millions, except percentages)
2020
2019
Amount
Percent
Revenues
Carlisle Construction Materials
$
676.4
$
671.1
$
5.3
0.8
%
Carlisle Interconnect Technologies
224.5
246.4
(21.9
)
(8.9
)
%
Carlisle Fluid Technologies
58.3
63.1
(4.8
)
(7.6
)
%
Carlisle Brake & Friction
71.0
91.3
(20.3
)
(22.2
)
%
Total
$
1,030.2
$
1,071.9
$
(41.7
)
(3.9
)
%
Operating Income (Loss)
Carlisle Construction Materials
$
107.7
$
92.9
$
14.8
15.9
%
Carlisle Interconnect Technologies
16.4
30.6
(14.2
)
(46.4
)
%
Carlisle Fluid Technologies
2.8
6.4
(3.6
)
(56.3
)
%
Carlisle Brake & Friction
(3.8
)
6.5
(10.3
)
(158.5
)
%
Segment Totals
123.1
136.4
(13.3
)
(9.8
)
%
Corporate and unallocated (1)
(20.4
)
(21.7
)
1.3
(6.0
)
%
Total
$
102.7
$
114.7
$
(12.0
)
(10.5
)
%
Operating Margin Percentage
Carlisle Construction Materials
15.9
%
13.8
%
210 bps
Carlisle Interconnect Technologies
7.3
%
12.4
%
(510) bps
Carlisle Fluid Technologies
4.8
%
10.1
%
(530) bps
Carlisle Brake & Friction
(5.4
)
%
7.1
%
(1250) bps
Total
10.0
%
10.7
%
(70) bps
Depreciation and Amortization
Carlisle Construction Materials
$
24.8
$
22.6
$
2.2
9.7
%
Carlisle Interconnect Technologies
19.1
14.5
4.6
31.7
%
Carlisle Fluid Technologies
6.2
5.7
0.5
8.8
%
Carlisle Brake & Friction
5.9
5.4
0.5
9.3
%
Corporate and unallocated (1)
0.8
0.8
—
—
%
Total
$
56.8
$
49.0
$
7.8
15.9
%
(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, excess capacity and labor costs,
net of subsidies, losses on debt extinguishment and discrete 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
March 31,
(in millions, except per share
amounts)
2020
2019
Impact to Operating Income
Exit and disposal costs
$
4.8
$
6.8
Other facility rationalization costs
1.5
1.4
Acquisition related costs:
Inventory step-up amortization
0.2
0.5
Other acquisition costs
0.5
1.5
Excess capacity and labor costs, net of
subsidies
4.0
—
Gains from contingent consideration
—
(3.0
)
Gains from divestitures
(0.8
)
—
Total
$
10.2
$
7.2
Impact to Diluted EPS from Continuing
Operations (1)
Exit and disposal costs
$
0.06
$
0.09
Other facility rationalization costs
0.02
0.02
Acquisition related costs:
Inventory step-up amortization
—
Other acquisition costs
0.01
0.02
Excess capacity and labor costs, net of
subsidies
0.05
Gains from contingent consideration
—
(0.05
)
Gains from divestitures
(0.01
)
—
Loss on early extinguishment of debt
0.12
—
Indemnification losses
0.02
—
Tax items (2)
(0.07
)
—
Total
$
0.20
$
0.08
Impact to Operating Income
Carlisle Construction Materials
$
0.6
$
1.6
Carlisle Interconnect Technologies
5.3
4.9
Carlisle Fluid Technologies
0.3
(0.9
)
Carlisle Brake & Friction
3.7
1.3
Corporate
0.3
0.3
Total
$
10.2
$
7.2
Impact to Diluted EPS from Continuing
Operations (1)
Carlisle Construction Materials
$
0.03
$
0.02
Carlisle Interconnect Technologies
0.07
0.06
Carlisle Fluid Technologies
—
(0.02
)
Carlisle Brake & Friction
0.05
0.02
Corporate
0.05
—
Total
$
0.20
$
0.08
(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
Three Months Ended
March 31,
(in millions)
2020
2019
Net cash provided by operating
activities
$
53.2
$
109.8
Investing activities:
Capital expenditures
(22.8
)
(23.3
)
Acquisitions, net of cash acquired
(2.4
)
(202.0
)
Other investing activities, net
0.9
0.9
Net cash (used in) provided by investing
activities
(24.3
)
(224.4
)
Financing activities:
Proceeds from notes
740.7
—
Repayments of notes
(258.5
)
—
Proceeds from revolving credit
facility
500.0
—
Financing costs
(24.2
)
—
Repurchase of common stock
(120.6
)
(157.1
)
Dividends paid
(28.3
)
(23.3
)
Proceeds from exercise of stock
options
10.5
10.6
Withholding tax paid related to
stock-based compensation
(6.4
)
(3.3
)
Other financing activities, net
(0.2
)
—
Net cash used in financing activities
813.0
(173.1
)
Effect of foreign currency exchange rate
changes on cash and cash equivalents
(5.4
)
0.7
Change in cash and cash equivalents
836.5
(287.0
)
Beginning of period
351.2
803.6
End of period
$
1,187.7
$
516.6
Carlisle Companies
Incorporated
Unaudited Selected Consolidated
Balance Sheet Data
(in millions)
March 31, 2020
December 31,
2019
Cash and cash equivalents
$
1,187.7
$
351.2
Long-term debt, including current
portion
2,577.3
1,591.6
Total shareholders' equity
2,518.5
2,642.8
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200421005833/en/
Jim Giannakouros, CFA Vice President of Investor Relations and
FP&A (480) 781-5135 jgiannakouros@carlisle.com
Carlisle Companies (NYSE:CSL)
Historical Stock Chart
From Feb 2024 to Mar 2024
Carlisle Companies (NYSE:CSL)
Historical Stock Chart
From Mar 2023 to Mar 2024