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Carlisle Companies Reports Record First Quarter Diluted EPS of $1.33, a 45% Increase from Prior Year

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Carlisle Companies Incorporated (NYSE:CSL) today announced its financial
results for the three month period ended March 31, 2019.

  • First quarter revenue increased 8.9% to a record $1.1 billion, of
    that 5.9% was organic
  • Operating income reached a record $114.7 million, an increase of
    21.1% year-over-year
  • Diluted EPS from continuing operations for the quarter included
    $0.08 of restructuring, facility rationalization, and acquisition
    related costs
  • Repurchased 1.4 million shares for $157.1 million in the quarter

First Quarter 2019

Revenues of $1.1 billion increased 8.9% from $984.7 million in the first
quarter of 2019. Organic revenue grew 5.9% (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 3.9% in the quarter. Changes in
foreign exchange rates had a negative (0.9%) impact on revenues.

Operating income of $114.7 million was up 21.1% from the first quarter
of 2018. Operating income performance was driven by higher sales volume,
price realization, and contributions from the Carlisle Operating System
(COS), partially offset by increases in labor-related costs, unfavorable
mix, and higher restructuring at Carlisle Interconnect Technologies
(CIT).

In addition to the factors driving operating income improvement, diluted
EPS from continuing operations was beneficially impacted by lower taxes
and share count.

During the first quarter of 2019, Carlisle completed the acquisition of
Petersen Aluminum Corporation, a manufacturer of high-quality
architectural metal products, and subsequently on April 1, 2019,
acquired MicroConnex, a manufacturer of highly engineered microminiature
flex circuits and sensors.

Carlisle repurchased 1.4 million shares of common stock for $157.1
million in the first quarter.

Comment

Chris Koch, President and Chief Executive Officer, said, "Our record
results in the first quarter reflected: continued healthy demand across
many of our key end markets, price discipline, efficiencies gained from
COS, contributions from acquisitions, and solid execution of our
operating plans by Carlisle's employees around the globe. Building on
the solid momentum we gained during the fourth quarter of 2018, we drove
record first quarter revenues, operating income, and diluted EPS. We
also continue to gain traction on the key objectives of Vision 2025,
including:

  • Achieving 5.9% organic revenue growth, in excess of our long-term
    growth target of 5%
  • Leveraging revenue growth to deliver a 21% increase in operating income
  • Maintaining strong price discipline across businesses, leading to
    positive price realization at all four segments
  • Delivering cost savings of 1.3% of sales through COS, within our
    targeted range of 1-2%
  • Utilizing our strong cash flow and balance sheet to deploy over $180
    million into share repurchases and dividends paid, now totaling almost
    $1.1 billion since the beginning of 2017
  • Continuing to reshape the portfolio and build out our capabilities by
    acquiring Petersen Aluminum Corporation within CCM, and on April 1,
    2019, MicroConnex within CIT

We are pleased with the strong start to 2019 and are optimistic about
both our near and long-term prospects for growth despite persistent
uncertainties around the China trade negotiations and Brexit.

We remain focused on executing Vision 2025 objectives: exceeding 5%
organic growth, utilizing COS to deliver efficiencies and operating
leverage, building scale with synergistic acquisitions, continuing to
invest in exceptional talent, and deploying over $3 billion into capital
expenditures, share repurchases and dividends."

First Quarter 2019 Segment Highlights

Carlisle Construction Materials (CCM)

  • Revenues of $671.1 million, up 12.1% (organic +6.3%) year-over-year,
    were driven by continued strength in U.S. roofing demand, growth in
    Europe, new product introductions and contributions from acquisitions,
    despite challenging weather that reduced available roofing days to
    contractors.
  • Operating income was $92.9 million, up 22.6% year-over-year. Operating
    margin of 13.8%, a 110 basis point improvement, benefited from
    price/cost realization, savings and benefits from COS, and operational
    improvements, offset by higher labor and acquisition related costs.
  • Items affecting comparability were costs of $1.6 million versus income
    of $1.8 million in the first quarter of 2018.
  • We now expect CCM to achieve low-double digit revenue growth in 2019,
    vs. up high-single to low-double digits prior.

Carlisle Interconnect Technologies (CIT)

  • Revenues of $246.4 million, up 9.9% (+10.0% organic) year-over-year
    were driven by strength in Aerospace, Test & Measurement, and
    Space/Defense.
  • Operating income was $30.6 million, up 12.5% year-over-year. Operating
    margin of 12.4%, a 30 basis point improvement, benefited from higher
    volumes, price/cost realization, and savings and benefits from COS,
    partially offset by higher restructuring and labor charges, and
    unfavorable mix.
  • Items affecting comparability were costs of $4.9 million versus $2.6
    million in the first quarter of 2018.
  • We now expect CIT to achieve mid-to-high single digit revenue growth
    in 2019, vs. up mid-single digits prior.

Carlisle Fluid Technologies (CFT)

  • Revenues of $63.1 million, down 0.6% (+2.2% organic) year-over-year,
    reflected strength in standard products in Automotive Refinish and
    General Industrial markets, partially offset by softer Transportation
    sales in China and foreign currency translation headwinds.
  • Operating income was $6.4 million, up 12.3% year-over-year. Operating
    margin of 10.1%, a 110 basis point improvement, demonstrates CFT's
    continued execution of their plans to improve the margin profile of
    the business. Margins benefited from higher volumes, savings and
    benefits from COS, and price/cost realization, partially offset by raw
    material inflation, higher labor-related and restructuring charges.
  • Items affecting comparability were income of $0.9 million versus costs
    of $0.5 million in the first quarter of 2018.
  • We continue to expect CFT to achieve mid-single digit revenue growth
    in 2019.

Carlisle Brake & Friction (CBF)

  • Revenues of $91.3 million, down 7.1% (-3.8% organic) year-over-year,
    reflected difficult year-over-year comparisons (Q1 2018 organic
    revenue +28.5% y-o-y) in off-highway vehicle end markets, and foreign
    currency translation headwinds, partially offset by price realization
    and share gains.
  • Operating income was $6.5 million, up 44.4% year-over-year. Operating
    margin of 7.1%, a 250 basis point improvement, was driven by
    efficiencies gained by the Tulsa, Oklahoma to Medina, Ohio plant
    consolidation, lower restructuring costs, price realization, and
    savings and benefits from COS, partially offset by lower volumes and
    higher labor-related and raw material costs.
  • Items affecting comparability were costs of $1.3 million versus $2.0
    million in the first quarter of 2018.
  • We now expect CBF revenues to be flat in 2019, vs. up
    low-single-digits prior.

Cash Flow

Free cash flow (defined as cash provided by operating activities less
capital expenditures, and comprised of continuing and discontinued
operations) was $86.5 million for the first three months ended March 31,
2019, an increase of $95.8 million versus the prior year. The increase
in free cash flow was primarily attributable to higher cash earnings,
more efficient usage of working capital, and lower capital expenditures.

During the first three months ended March 31, 2019, we redeployed our
free cash flow towards the acquisitions of Petersen Aluminum
Corporation, the repurchase of Carlisle common stock for $157.1 million
and $23.3 million in dividends paid. As of March 31, 2019, we had $516.6
million of cash and $1 billion of availability under our revolving
credit facility.

     

Table 1. Revenue Breakdown

 
Three Months Ended
March 31, 2019
CCM     CIT     CFT     CBF
Change in Organic Revenues 6.3 % 10.0 % 2.2 % (3.8 )%
Net Impact from Acquisitions 6.3 % 0.2 % % %
Impact from FX (0.5 )% (0.3 )% (2.8 )% (3.3 )%
Change in Revenues 12.1 % 9.9 % (0.6 )% (7.1 )%
 

Conference Call and Webcast

The Company will discuss first 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, 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.

      Three Months Ended
March 31,
(in millions except per share amounts) 2019   2018
Revenues $ 1,071.9   $ 984.7
 
Cost of goods sold 783.3 735.3
Selling and administrative expenses 164.2 148.6
Research and development expenses 14.4 13.9
Other operating (income) expense, net (4.7

)

 

(7.8 )
Operating income 114.7 94.7
Interest expense, net 13.7 14.5
Other non-operating (income) expense, net (0.4

)

 

1.9  
Income from continuing operations before income taxes 101.4 78.3
Provision for income taxes 24.0   20.4  
Income from continuing operations 77.4 57.9
 
Discontinued operations:
Income before income taxes 299.0
(Benefit) provision for income taxes (2.0

)

 

47.3  
Income from discontinued operations 2.0   251.7  
Net income $ 79.4   $ 309.6  
 
Basic earnings per share attributable to common shares:
Income from continuing operations $ 1.34 $ 0.93
Income from discontinued operations 0.03   4.05  
Basic earnings per share $ 1.37   $ 4.98  
 
Diluted earnings per share attributable to common shares:
Income from continuing operations $ 1.33 $ 0.92
Income from discontinued operations 0.03   4.02  
Diluted earnings per share $ 1.36   $ 4.94  
 
Average shares outstanding (in thousands):
Basic 57,547   61,684  
Diluted 57,870   62,164  
 
Dividends declared and paid per share $ 0.40 $ 0.37
 

(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 $ 77.1 $ 57.3
Net income 79.1 307.3
 
         
Carlisle Companies Incorporated

Unaudited Segment Information

 
Three Months Ended
March 31,
Increase
(Decrease)
(in millions, except percentages) 2019     2018 Amount     Percent
Revenues
Carlisle Construction Materials $ 671.1 $ 598.6 $ 72.5 12.1 %
Carlisle Interconnect Technologies 246.4 224.3 22.1 9.9 %
Carlisle Fluid Technologies 63.1 63.5 (0.4 ) (0.6 )%
Carlisle Brake & Friction 91.3   98.3   (7.0 ) (7.1 )%
Total $ 1,071.9   $ 984.7   $ 87.2   8.9 %
 
Operating Income (Loss)
Carlisle Construction Materials $ 92.9 $ 75.8 $ 17.1 22.6 %
Carlisle Interconnect Technologies 30.6 27.2 3.4 12.5 %
Carlisle Fluid Technologies 6.4 5.7 0.7 12.3 %
Carlisle Brake & Friction 6.5   4.5   2.0   44.4 %
Segment Totals 136.4 113.2 23.2 20.5 %
Corporate and unallocated (1) (21.7 ) (18.5 ) (3.2 ) (17.3 )%
Total $ 114.7   $ 94.7   $ 20.0   21.1 %
 
Operating Margin Percentage
Carlisle Construction Materials 13.8 % 12.7 % 110 bps
Carlisle Interconnect Technologies 12.4 % 12.1 % 30 bps
Carlisle Fluid Technologies 10.1 % 9.0 % 110 bps
Carlisle Brake & Friction 7.1 % 4.6 % 250 bps
Total 10.7 % 9.6 % 110 bps
 
Depreciation and Amortization
Carlisle Construction Materials $ 22.6 $ 19.1 $ 3.5 18.3 %
Carlisle Interconnect Technologies 14.5 14.6 (0.1 ) (0.7 )%
Carlisle Fluid Technologies 5.7 5.4 0.3 5.6 %
Carlisle Brake & Friction 5.4 6.1 (0.7 ) (11.5 )%
Corporate and unallocated (1) 0.8   0.7   0.1   14.3 %
Total $ 49.0   $ 45.9   $ 3.1   6.8 %
(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
March 31,
(in millions, except per share amounts) 2019     2018
Impact to Operating Income
Exit and disposal costs $ 6.8 $ 3.1
Other facility rationalization costs 1.4 2.2
Acquisition related costs:
Inventory step-up amortization 0.5
Other acquisition costs 1.5 1.1
Gains from contingent consideration (3.0 )
Gains from divestitures   (2.0 )
Total $ 7.2   $ 4.4  
 
Impact to Diluted EPS from Continuing Operations (1)
Exit and disposal costs $ 0.09 $ 0.04
Other facility rationalization costs 0.02 0.02
Acquisition related costs:
Inventory step-up amortization
Other acquisition costs 0.02 0.01
Gains from contingent consideration (0.05 )
Gains from divestitures   (0.02 )
Total $ 0.08   $ 0.05  
 
Impact to Operating Income
Carlisle Construction Materials $ 1.6 $ (1.8 )
Carlisle Interconnect Technologies 4.9 2.6
Carlisle Fluid Technologies (0.9 ) 0.5
Carlisle Brake & Friction 1.3 2.0
Corporate 0.3   1.1  
Total $ 7.2   $ 4.4  
 
Impact to Diluted EPS from Continuing Operations (1)
Carlisle Construction Materials $ 0.02 $ (0.02 )
Carlisle Interconnect Technologies 0.06 0.03
Carlisle Fluid Technologies (0.02 ) 0.01
Carlisle Brake & Friction 0.02 0.02
Corporate   0.01  
Total $ 0.08   $ 0.05  
(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

 
Three Months Ended
March 31,
(in millions) 2019     2018
Net cash provided by operating activities $ 109.8 $ 33.2
 
Investing activities:
Acquisitions, net of cash acquired (202.0 ) (0.7 )
Capital expenditures (23.3 ) (42.5 )
Proceeds from sale of discontinued operation 754.6
Other investing activities, net 0.9   3.6  
Net cash (used in) provided by investing activities (224.4 ) 715.0
 
Financing activities:
Repurchase of common stock (157.1 ) (122.0 )
Dividends paid (23.3 ) (23.1 )
Proceeds from exercise of stock options 10.6 1.7
Withholding tax paid related to stock-based compensation (3.3 ) (4.6 )
Net cash used in financing activities (173.1 ) (148.0 )
 
Effect of foreign currency exchange rate changes on cash and cash
equivalents
0.7   1.9  
 
Change in cash and cash equivalents (287.0 ) 602.1
Less: change in cash and cash equivalents of discontinued operations 1.3
Beginning of period 803.6   378.3  
End of period $ 516.6   $ 979.1  
 
         
Carlisle Companies Incorporated

Unaudited Selected Consolidated Balance Sheet Data

 
(in millions) March 31,
2019
December 31,
2018
Cash and cash equivalents $ 516.6 $ 803.6
Long-term debt 1,588.5 1,587.8
Total shareholders' equity 2,524.7 2,597.4
 

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