Carlisle Companies Reports Third Quarter Results

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

• GAAP diluted EPS of $4.32 & adj EPS of $4.68 for the quarter, decreased 7.1% YoY
• Third quarter revenues of $1.3 billion, declined 15.8% YoY
• Operating margin of 24% & adj EBITDA margin improvement of 100 bps
  • CCM adj EBITDA margin above 30% for the second consecutive quarter
  • CWT adj EBITDA margin grew 890 bps
• Repurchased 1.2 million shares for $330 million in the quarter

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

“The third quarter marked a significant milestone in Carlisle’s 105-year history. With the recent announcement of the plan to sell CIT and it being reclassified to discontinued operations in the third quarter, we have effectively completed our restructuring of the Carlisle portfolio of businesses with what we have referred to as the “Pivot,” and become a pure-play building products company.

“In 2021, we made the strategic decision, as superior capital allocators, to focus our investments into our highest returning building products businesses. Our history of supplying premium products for the building envelope, our experience in the construction markets, and our deep understanding of the future drivers for this industry led us to believe that a pivot towards a more simplified and streamlined building products portfolio would provide our shareholders with the highest returns. We are also convinced that our new focus will reward our employees, customers and communities in many ways as our strategic initiatives will leverage significant and positive trends in: greenhouse gas reduction; energy efficiency and demand for “green” products; labor reduction in installation of building envelope products; and waste reduction in our manufacturing operations.

“The third quarter results reinforced our conviction that a focused building products portfolio is the correct strategic path forward. Our building products portfolio demonstrated our resilience and ability to deliver superior returns in a challenging environment. We are pleased by the Carlisle team’s strong margin results, achieving an adjusted EBITDA margin of 27.0% and adjusted EPS of $4.68 for the third quarter of 2023. We maintained pricing levels while delivering consistent share, evidenced by our ability to expand adjusted EBITDA margin by 100 basis points year-over year. This adjusted EBITDA margin expansion is a testament to our ability to sustain strong margins throughout economic cycles and reflects our team’s unwavering dedication to providing the Carlisle Experience to end users and our commitment to continuous improvement through the Carlisle Operating System (COS).

“In the quarter, the CCM team led with a spirit of continuous improvement, reinforcing their efforts in driving innovation, investing in world class manufacturing and supply chain capabilities and refocusing our sales efforts. Their hard work delivered a significant earnings result, despite a difficult macro environment. Of note, adjusted EBITDA margin not only remains above 30%, but also improved sequentially. This performance continues to prove the margin resiliency of our business through economic cycles.

“Our CWT team delivered another quarter of exceptional results. Adjusted EBITDA margin reached a record 23.4%, surging 890 basis points higher than the previous year, and 90 basis points higher than the previous quarter. CWT continues to expand margins from Henry integration synergies, operating efficiencies through the implementation of COS, and system selling initiatives.

“Looking ahead to the fourth quarter, we acknowledge the headwinds that are present in the residential and non-residential construction markets, posed by the Federal Reserve’s tightening actions and a desire to reduce inflation. However, we remain confident in our long-term vision and strategies, and our strong positioning within the building products industry. Both CCM and CWT are poised to capitalize on the growing demand for green building solutions and energy-efficient systems, as well as the increasing need for innovative products that simplify installation processes and reduce labor. Additionally, CCM derives approximately 70% of its revenue from non-discretionary re-roofing demand, providing a reliable and sustainable growth path, particularly with the vast majority of destocking now behind us.

“Our Vision 2025 strategy has provided us with a clear direction, forming a solid foundation that has produced excellent results. With Vision 2025 largely complete, and the Pivot effectively finished, we now turn to Vision 2030, a strategic vision that will continue to build upon Vision 2025, but with a focus on building products. Vision 2030 will be released in December and will provide comprehensive details about our path to further value creation for all our stakeholders. We are excited about the future of Carlisle, the many opportunities for continued growth, and a strong path forward.”

Third Quarter 2023

Revenue for the third quarter of $1.3 billion decreased 15.8% year-over-year. Organic revenue decreased 16.1% (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 third quarter of $299.9 million decreased 7.4% from $324.0 million in the third quarter of 2022. Income from continuing operations for the third quarter of $216.9 million decreased 7.0% from $233.3 million in the third quarter of 2022. Adjusted EBITDA for the third quarter of $339.7 million decreased 12.8% from $389.5 million in the third quarter of 2022. Despite the decline in third quarter revenues, adjusted EBITDA margin improved 100 bps year-over-year.

Diluted earnings per share (“EPS”) from continuing operations for the third quarter of $4.32 decreased 2.3% from $4.42 in the third quarter of 2022. Adjusted diluted EPS for the third quarter of $4.68 decreased 7.1% from $5.04 in the third quarter of 2022. The decrease in EPS reflects the impact from lower volume, partially offset by raw material declines and share repurchases.

Third Quarter 2023 Segment Highlights

Carlisle Construction Materials (“CCM”)

• Revenue of $914.0 million, declined 16.2% (-16.5% organic) year-over-year, driven by the remaining destock that we expected and end market softness attributable to Fed actions.
• Operating income was $272.5 million and adjusted EBITDA was $289.4 million, down 18.3% year-over-year, reflecting an adjusted EBITDA margin of 31.7%. The 80 basis points decrease was driven by lower volumes, however, adjusted EBITDA margin expanded 50 basis points from the second quarter of 2023.
• We expect Q4 2023 revenues to decrease 3% to 5% year-over-year.

Carlisle Weatherproofing Technologies (“CWT”)

• Revenue of $345.8 million, declined 15.0% (-14.9% organic) year-over-year primarily due to residential demand weakness and project delays.
• Operating income was $58.8 million and adjusted EBITDA was $80.8 million, up 36.7% year-over-year reflecting an adjusted EBITDA margin of 23.4%. The 890 basis points increase was driven by operating efficiencies gained through targeted restructuring, strategic sourcing and realized synergies from the Henry acquisition.
• We expect Q4 2023 revenues to decrease approximately 10% year-over-year.

Cash Flow

Operating cash flow from continuing operations for the nine months ended September 30, 2023, was $661.9 million, an increase of $119.3 million versus the prior year. Free cash flow from continuing operations was $574.9 million, an increase of $143.8 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 nine months ended September 30, 2023, we deployed $580.0 million toward share repurchases, including $330.0 million in the current quarter, and paid $119.3 million in cash dividends, including $42.1 million in the current quarter. As of September 30, 2023, we had 8.6 million shares available for repurchase under our share repurchase program. Additionally, on September 1, 2023, we repaid $300.0 million in senior notes. As of September 30, 2023, we had $108.0 million of cash and cash equivalents and $1.0 billion of availability under our revolving credit facility.

For the full third quarter results, click here.

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. 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:

Mehul Patel – Vice President Investor Relations – mpatel@carlisle.com – (310) 592-9668

Source: Carlisle Companies Incorporated