Carlisle Companies Reports Second Quarter Results

Carlisle Companies Incorporated (“Carlisle”) announced its second quarter 2023 financial results.

• Second quarter revenues of $1.5 billion, declined 14.0% year-over-year
• Reported second quarter GAAP diluted EPS from continuing operations of $4.71 and adjusted EPS of $5.18, down 13.7% year-over-year
• CCM operating income margin was 29.6% and adjusted EBITDA margin returned to 30%+
• CWT operating income margin grew 350 basis points year-over-year to 16.6%, and adjusted EBITDA margin grew 390 basis points to 22.5%, driven by integration and efficiency gains
• Announced an agreement to sell CFT, completing another major step in our portfolio optimization strategy
• Repurchased 900 thousand shares for $200 million in the quarter

Comments from Chris Koch, Chair, President and Chief Executive Officer

“The second quarter proved to be a nice recovery story for us at Carlisle with greater evidence of our collective efforts to improve earnings and create value for all stakeholders. Our teams continue to provide compelling energy-efficient solutions to building owners and improve upon Carlisle’s leadership position as the manufacturer of choice to contractors and our distribution partners. Despite the channel destocking activity in the second quarter, our teams collectively drove excellent profitability from a combination of price discipline, cost management and efficiency gains through COS.

“We continue to see strong underlying demand for our building products, particularly in non-residential construction markets. New construction is buoyed by growth in manufacturing construction projects and government-funded activity. Notably, CCM generates two-thirds of its revenue from non-discretionary re-roofing demand that provides sustainable growth runway. Contractor backlogs remain strong, and new products that remove labor from the job site are strongly desired. That said, rising interest rates, concerns of an economic slowdown, weather disruptions and labor constraints are watch items that may hinder construction activity.

“The CWT team continues to demonstrate outstanding performance by driving operational efficiencies, pricing to value, and executing its multi-pronged commercial and operational integration. Despite year-over-year volume declines in residential markets, the team achieved a remarkable 390 basis points of adjusted EBITDA margin expansion to 22.5% in the second quarter.

“CIT continues to benefit from healthy aerospace demand while reaping benefits from past restructuring actions. With its position as a leading aerospace components supplier, CIT is poised to leverage increasing aircraft production rates of both Boeing and Airbus. Additionally, CIT is improving the profitability of its medical and industrial platforms through customer and product line rationalization, as well as enhanced efficiencies through COS. The CIT team drove impressive adjusted EBITDA margin expansion of 520 basis points year-over-year to 17.9% in the second quarter, and we expect significant year-over-year margin improvement for the full year 2023 and beyond.

“In line with our strategy to ‘pivot’ to a pure-play premier building products company, we signed a definitive agreement to sell Carlisle Fluid Technologies for $520 million. This move represents a significant step forward in our efforts to build a diversified portfolio of premier energy-efficient building envelope solutions and demonstrates our commitment to be superior capital allocators.

“Vision 2025 continues to provide Carlisle clear direction. We have stayed the course on our strategy to leverage above-average organic growth in our markets and optimize our business portfolio. This continues to drive higher margins, higher returns, and greater earnings power for Carlisle in an accelerated timeframe. While the pillars of Vision 2025 are still very much in place, we continue to work on our new strategic plan, Vision 2030, and intend to share in greater detail our path to further value creation for all our stakeholders by the end of the year.”

Second Quarter 2023

Revenue for the second quarter of $1.5 billion decreased 14.0% year-over-year. Organic revenue decreased 13.9% (organic revenue defined as revenue excluding acquired revenues within the last 12 months and the impact of changes in foreign exchange rates versus the U.S. Dollar).

Operating income for the second quarter of $327.6 million decreased 18.8% from $403.6 million in the second quarter of 2022. Income from continuing operations for the second quarter of $241.5 million decreased 17.0% from $290.8 million in the second quarter of 2022. Adjusted EBITDA for the second quarter of $385.4 million decreased 16.3% from $460.2 million in the second quarter of 2022. Despite the decline in second quarter revenues, adjusted EBITDA margin was relatively consistent year-over-year.

Diluted earnings per share (“EPS”) from continuing operations for the second quarter of $4.71 decreased 14.7% from $5.52 in the second quarter of 2022. Adjusted diluted EPS for the second quarter of $5.18 decreased 13.7% from $6.00 in the second quarter of 2022. The decrease in EPS reflects the impact from lower volumes in our building products segments, partially offset by share repurchases.

Second Quarter 2023 Segment Highlights

Carlisle Construction Materials (CCM)

• Revenue of $947.5 million, declined 14.9% (all organic) year-over-year, as strong underlying demand was more than offset by channel destocking and unfavorable weather.
• Operating income was $280.7 million, down 21.8% year-over-year. Adjusted EBITDA was $295.7 million, down 20.4% year-over-year, reflecting an adjusted EBITDA margin of 31.2%, down 210 basis points given lower volumes year-over-year.
• We expect full year 2023 revenues to decrease low-teens year-over-year.

Carlisle Weatherproofing Technologies (CWT)

• Revenue of $359.5 million, declined 19.9% (-19.6% organic) year-over-year primarily due to residential demand weakness and project delays.
• Operating income was $59.5 million, increased 0.8% year-over-year. Adjusted EBITDA was $80.8 million, down 3.2% year-over-year reflecting an adjusted EBITDA margin of 22.5%, up 390 basis points, which was favorably impacted by efficiencies gained through targeted restructuring actions, automated manufacturing, and realized synergies from the Henry acquisition.
• We expect full year 2023 revenues to decrease low-teens year-over-year.

Carlisle Interconnect Technologies (CIT)

• Revenue of $218.9 million, increased 3.0% (+3.2% organic) year-over-year, driven by continued strengthening in the aerospace end market.
• Operating income was $19.7 million and adjusted EBITDA was $39.2 million, up 45.2% year-over-year reflecting an adjusted EBITDA margin of 17.9%, up 520 basis points, which was favorably impacted by higher volumes in the aerospace end market and benefits from past restructuring actions.
• We expect full year 2023 revenues to increase mid-single-digits year-over-year, as medical customers work to right-size inventory levels.

Cash Flow

Operating cash flow from continuing operations for the six months ended June 30, 2023, was $333.0 million, an increase of $110.8 million versus the prior year. Free cash flow from continuing operations was $263.4 million, an increase of $120.9 million versus the prior year (defined as cash provided by operating activities less capital expenditures and comprised of continuing operations). This increase was driven by a reduction in working capital uses as a result of lower sales volume, partially offset by lower income from continuing operations.

During the six months ended June 30, 2023, we deployed $250.0 million toward share repurchases, including $200.0 million in the current quarter, and paid $77.2 million in cash dividends, including $38.3 million in the current quarter. As of June 30, 2023, we had 2.3 million shares available for repurchase under our share repurchase program. Additionally, as of June 30, 2023, we had $379.3 million of cash and cash equivalents and $1.0 billion of availability under our revolving credit facility.

About Carlisle Companies Incorporated

Carlisle Companies Incorporated is a leading supplier of innovative building envelope products and solutions for more energy efficient buildings. Through its building products businesses – Carlisle Construction Materials (“CCM”) and Carlisle Weatherproofing Technologies (“CWT”) – and family of leading brands, Carlisle delivers innovative, labor-reducing and environmentally responsible products and solutions to customers through the Carlisle Experience. 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 is also a leading provider of products to the aerospace and medical technologies markets through its Carlisle Interconnect Technologies (“CIT”) business segment. Leveraging its culture of continuous improvement as embodied in the Carlisle Operating System (“COS”), Carlisle has committed to achieving net-zero greenhouse gas emissions by 2050.

Contact:

Jim Giannakouros, CFA – Vice President of Investor Relations – jgiannakouros@carlisle.com – (480) 781-5135

Source: Carlisle Companies Incorporated