- Acquisition of a best-in-class provider of Building Envelope
Systems (BES) that control the flow of water, vapor, air and energy
to optimize building sustainability
- Proven track record of high single-digit revenue growth (7%
CAGR during 2015-2020)
- Diverse and well-balanced portfolio of products for new
construction and repairs & restoration with a national
presence
- Complementary solutions that strengthen Carlisle’s positioning
in integrated Building Envelope Solutions that improve energy
efficiency
- Meaningful cost synergies of $30 million (or 7% of sales)
expected by 2025
- Immediately accretive to Carlisle’s growth outlook, EBITDA
margin, and adds $1.25+ of adjusted EPS in 2022
- Transaction accelerates execution of Vision 2025
Carlisle Companies Incorporated (NYSE:CSL) today announced that
it has entered into a definitive agreement to acquire Henry Company
(“Henry”), a leading provider of building envelope systems, from
affiliates of American Securities LLC, a leading U.S. private
equity firm. Under the terms of the agreement, Carlisle will
purchase Henry for $1.575 billion in cash. The purchase price
represents 10.5x Henry’s adjusted EBITDA for the twelve months
ending May 31, 2021, when including run-rate cost synergies.
Henry is widely recognized as a best-in-class provider of
building envelope systems that control the flow of water, vapor,
air and energy in a building. Its premium portfolio is comprised of
a well-balanced assortment of complementary products boasting the
strong and trusted Henry brands with more than 80 years of history.
As a leading innovator in building envelope systems, Henry serves
the full spectrum of customers across both new construction and
repair & restoration projects within the residential, light
commercial, and commercial end-markets. Henry generated revenue of
$511 million and adjusted EBITDA of $119 million, representing an
adjusted EBITDA margin of 23%, for the twelve months ending May 31,
2021.
The acquisition is consistent with Carlisle’s Vision 2025 to
simplify our portfolio and strategically build scale with
synergistic acquisitions in order to achieve $15 of earnings per
share. Henry augments CCM’s growth and innovation efforts in
commercial construction and increases its presence in residential
construction in North America. Henry’s complementary solutions
strengthen CCM’s positioning in integrated building envelope
solutions that reduce installation times and improve energy
efficiency. Henry’s innovative culture aligns with that of CCM,
enhancing the companies’ combined value proposition to drive
superior growth.
Chris Koch, Chairman, President and Chief Executive Officer,
said, “The acquisition of Henry, together with the announced
divestiture of our Brake and Friction business in May, marks
another meaningful evolution of our portfolio. These portfolio
moves are consistent with our stated strategy to invest in CCM and
diversify into a broader building products platform with a focus on
the building envelope. More than half of Henry’s revenue is derived
from products that improve energy efficiency, elevating Carlisle’s
existing ESG narrative. By acquiring Henry and leveraging the
Carlisle Experience across the business, I am confident that we
will create significant value for all our stakeholders.”
Nick Shears, President of CCM, added “I am delighted to add
Henry’s premium product portfolio, with its well-recognized and
trusted brands with more than 80 years of history, to our existing
portfolio. Henry accelerates our growth strategy and is highly
complementary to our core CCM business as it expands our range of
building envelope products into residential construction. The
combination will benefit from strong secular tailwinds as demand
for energy efficient building solutions continues to increase. In
addition, we share a common focus on innovation, which has been
core to both companies’ long-term success. We look forward to
welcoming Henry’s talented team to Carlisle.”
The acquisition is expected to generate pre-tax cost synergies
of approximately $30 million by 2025. Additional revenue synergies
from cross-selling a broader product portfolio through Carlisle’s
existing relationships and sales channels are also expected. The
transaction is expected to be approximately $1.25+ accretive to
adjusted EPS in the first full fiscal year.
The acquisition, which is subject to customary closing
conditions, is expected to close in the third quarter of 2021.
Conference Call and
Webcast
The Company will hold a conference call to discuss this
announcement at 9:00 a.m. ET today. The call may be accessed live
by going to the Investor Relations section of the Carlisle website,
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.
Advisors
Goldman Sachs & Co. LLC is serving as financial advisor and
Kirkland & Ellis LLP is serving as legal counsel to
Carlisle.
Forward-Looking
Statements
This press release contains forward-looking statements,
including those with respect to the acquisition of Henry and the
anticipated timing of the closing of the transaction. These
statements represent only Carlisle’s current belief regarding
future events, many of which, by their nature, are inherently
uncertain and outside of Carlisle’s control. Actual results could
differ materially from those reflected in this press release for
various reasons, including the failure of the parties to meet or
waive closing conditions and the failure to receive required
regulatory approvals. Carlisle disclaims any obligation to update
forward-looking statements except as required by law.
Non-GAAP Measures
This press release also contains certain financial measures such
as adjusted diluted earnings per share, adjusted EBITDA and
adjusted EBITDA margin, which are not recognized under U.S.
generally accepted accounting principles. Management believes that
adjusted diluted earnings per share, adjusted EBITDA, adjusted
EBITDA margin and organic revenue are useful to investors because
they allow for comparison to the Company’s and its segments'
performance in prior periods without the effect of items that, by
their nature, tend to obscure core operating results due to
potential variability across periods based on the timing, frequency
and magnitude of such items. Management also believes free cash
flow is useful to investors as an additional way of viewing the
Company's liquidity and provides a more complete understanding of
factors and trends affecting the Company's cash flows. As a result,
management believes that these measures enhance the ability of
investors to analyze trends in the Company’s business and evaluate
the Company’s performance relative to peer companies. As required
by SEC Regulation G, reconciliations of these measures to amounts
reported in Carlisle's consolidated financial statements are in the
supplemental schedules of this press release.
About Carlisle Companies
Incorporated
Carlisle Companies Incorporated is a leading supplier of
innovative Building Envelope products and energy-efficient
solutions for customers creating sustainable buildings of the
future. Through its Construction Materials (CCM) business and
family of leading brands, Carlisle delivers innovative,
labor-reducing and environmentally responsible products and
solutions to customers across the planet through the Carlisle
Experience. Over the life of a building, Carlisle’s products help
drive lower GHG emissions, improve energy savings for building
owners and operators, and increase a building’s resiliency to the
elements. Driven by our strategic plan, Vision 2025, Carlisle is
committed to generating superior shareholder returns and
maintaining a balanced capital deployment approach, including
investments in our businesses, strategic acquisitions, share
repurchases and continued dividend increases. Carlisle also is a
leading provider of products to the Aerospace, Medical Technologies
and General Industrial markets through its Interconnect
Technologies (CIT) and Fluid Technologies (CFT) business segments.
Carlisle is headquartered in Scottsdale, Arizona with more than 180
locations worldwide. Leveraging the talents of over 13,000
employees, Carlisle generated $4.2 billion in revenues in 2020.
Learn more about Carlisle at www.carlisle.com.
Carlisle Companies Incorporated
Transaction EBITDA and EBITDA Margin
Earnings before interest, taxes, depreciation and amortization
("EBITDA") transaction EBITDA and transaction EBITDA margin is
intended to provide investors and others with information about
performance without the effect of items that, by their nature, tend
to obscure core operating results due to potential variability
across periods based on the timing, frequency and magnitude of such
items. This information differs from net income determined in
accordance with U.S. GAAP and should not be considered in isolation
or as a substitute for measures of performance determined in
accordance with U.S. GAAP. Henry's EBITDA, transaction EBITDA and
transaction EBITDA margin follows, which may not be comparable to
similarly titled measures reported by other companies.
(in millions)
LTM 5/31/2021
Estimated Henry revenue (GAAP)
$
507
Adjustment to annualize acquired
revenue
4
Transaction revenue
$
511
Estimated Henry net income (GAAP)
$
32
Income tax expense
10
Interest expense
24
Depreciation and amortization
40
Henry EBITDA
106
Adjustment to annualize acquired
EBITDA
2
Transaction adjustments(1)
11
Transaction EBITDA
$
119
Transaction EBITDA margin
23
%
(1)
Transaction adjustments include other
adjustments related to gains and losses from acquisitions,
insurance, litigation, exit and disposal and other items.
Carlisle Companies Incorporated Adjusted
Earnings Per Share Accretion
Adjusted net income and adjusted diluted earnings per share is
intended to provide investors and others with information about
performance without the effect of items that, by their nature, tend
to obscure the Company’s core operating results due to potential
variability across periods based on the timing, frequency and
magnitude of such items. This information differs from net income
and diluted earnings per share determined in accordance with U.S.
GAAP and should not be considered in isolation or as a substitute
for measures of performance determined in accordance with U.S.
GAAP. Henry's projected adjusted net income and adjusted diluted
earning per share follows, which may not be comparable to similarly
titled measures reported by other companies.
(in millions except for per share
amounts)
Year 1(1)
Expected net income (GAAP)
$
12
Add, net of tax:
Acquisition amortization(2)
55
Expected incremental adjusted net
income
$
67
Diluted shares outstanding(3)
53.6
Expected adjusted EPS accretion
$
1.25
(1)
Year 1 defined as fiscal year ended December 31, 2022.
(2)
Acquisition-related amortization includes the amortization of
customer relationships, technology, trade names and other
intangible assets recorded in purchase accounting in connection
with a business combination. These intangible assets contribute to
revenue generation and the amortization of these assets will recur
until such intangible assets are fully amortized.
(3)
Carlisle diluted shares outstanding as of March 31, 2021.
Carlisle Companies
Incorporated
Purchase Price Multiple
(in millions except for ratios)
Purchase price
$
1,575
Transaction EBITDA
119
Add:
Estimated synergies
30
Total estimated adjusted transaction
EBITDA
$
149
Implied multiple (transaction EBITDA
divided by purchase price)
13.2x
Transaction multiple (adjusted transaction
EBITDA divided by purchase price)
10.5x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210719005218/en/
Jim Giannakouros, CFA Vice President of Investor Relations
Carlisle Companies Incorporated (480) 781-5135
jgiannakouros@carlisle.com
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