CARLISLE COMPANIES INC
For the period ended Jun 30, 2024. Filed Jul 25, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 25, 2024
CSL$375.74-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-26.
0000790051-24-000085
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-25.
0000790051-24-000166
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 72 previous paragraphs and 77 current paragraphs.
42 unchanged; 24 reworded; 8 added; 6 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 20 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
In the second quarter, Carlisle hit a major milestone in our 106 year history as we completed the final step in becoming a pure-play building products company with the sale of our Carlisle Interconnect Technologies ("CIT") business to Amphenol Corporation. CIT was part of a multi-decade value creation story for Carlisle, and one of Carlisle’s oldest businesses, which began with the purchase of the Tensolite company in 1959. We thank all of the CIT employees, and especially CIT President John Berlin, for their outstanding accomplishments over the years.
Current report
Our “Pivot” to a pure-play building products company has laid the foundation for Vision 2030. Consistent with the Vision 2030 goal of delivering $40 of adjusted EPS, we delivered another strong quarter of sales, operating income and adjusted EBITDA performance, reflecting the continued strength of our business model and our focus on executing the Vision 2030 strategies. CCM's and CWT's performances were driven by pent-up re-roofing demand, continued price discipline and operational efficiencies gained through the Carlisle Operating System ("COS").
Current report
CCM posted 15% year-over-year revenue growth and expanded operating margin and adjusted EBITDA margin by 220 basis points, benefiting from the end of destocking of inventory in the channels, a productive start to the commercial construction season driving solid contractor backlogs, and robust re-roofing activity. CCM’s 31.8% operating income margin and 33.4% adjusted EBITDA margin reflects the impact of the Carlisle Experience and excellent operating execution. CWT showcased its earnings resilience, delivering a 16.4% operating margin and a 22.5% adjusted EBITDA margin on essentially flat year-over-year revenue, as integration synergies and COS implementation helped offset investments in growth initiatives.
Current report
In addition to completing our pivot to a pure-play building products company with the sale of CIT for $2.025 billion, we continued to make progress on our Vision 2030 objectives during the second quarter. We completed the acquisition of MTL, establishing Carlisle as an industry leader in the $4 billion architectural metal category.
Current report
As we look ahead, we remain confident in the strength of our business and our ability to navigate complex market dynamics. We remain excited about the future for Carlisle, motivated by our new Vision 2030, and confident in our ongoing efforts to drive sustainable value creation for all our stakeholders.
Current report
Other Operating Income, net
Current report
The change in other operating income, net, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily reflected a $5.0 million gain from an insurance settlement received in the second quarter of 2024.
Current report
We generated operating cash flows of $346.9 million for the first six months of 2024 (including working capital uses of $208.9 million), compared to $370.7 million for the first six months of 2023 (including working capital uses of $133.5 million). Lower operating cash flows of $23.8 million for the first six months of 2024 primarily reflected lower operating cash provided by discontinued operations of $84.8 million and higher working capital uses of $75.4 million, partially offset by higher income from continuing operations of $145.8 million.
Removed paragraphs (6)
Previous report
We were pleased with our overall sales growth and margin expansion during the first quarter of 2024, which reinforces the underlying themes and key strategies we have outlined in Vision 2030. While still early in the year, we believe our general market feedback indicates the overall construction markets in which we participate will have a productive 2024 season. Re-roofing activity from pent-up demand, favorable weather conditions fostering healthy construction activity and normalized customer inventory levels all positively impacted our first quarter efforts. We are pleased that the margin expansion delivered in the second half of 2023 continued into the first quarter of 2024, as we benefit from synergies from the integration of Henry Company LLC ("Henry"), our on-going Carlisle Operating System ("COS") initiatives and operating efficiencies on higher volumes. Pricing continues to be in-line with our expectations, and we are optimistic on pricing for the balance of the year based on the recent price increases in the industry.
Previous report
After announcing our Vision 2030 plan in December 2023, we took the final step in delivering on our commitment to becoming a pure play building products company in January 2024 with our announced signing of a definitive agreement to sell Carlisle Interconnect Technologies ("CIT") to Amphenol Corporation for approximately $2.0 billion. Furthermore, in March 2024, we announced the signing of a definitive agreement to acquire MTL Holdings LLC ("MTL"), a specialty manufacturer of high-performance metal edge and wall systems. Both actions reinforce our commitment to our pure play building products strategy, our philosophy of superior capital allocation and ultimately driving best-in-class return on invested capital. We are very excited with the planned acquisition of MTL, which we believe aligns seamlessly with Carlisle’s Vision 2030 strategy to invest in and enhance our building envelope product portfolio.
Previous report
As we move through the rest of 2024, we are excited to continue to share the Vision 2030 story and discuss the value creation opportunity unlocked by our transition to a pure play building products portfolio. As mentioned earlier, our first quarter performance demonstrated many of the themes we discussed in our Vision 2030 presentation, including being well positioned to leverage mega-trends in energy efficiency, labor savings, and growing re-roof demand within the building envelope marketplace.
Previous report
Other Operating (Income) Expense, net
Previous report
(1)Includes other non-operating expense (income), net, which may be presented in separate line items on the Condensed Consolidated Statements of Income and Comprehensive Income.
Previous report
(1)Includes other non-operating expense (income), net, which may be presented in separate line items on the Condensed Consolidated Statements of Income and Comprehensive Income.
Reworded paragraphs (24)
Previous wording
In the first three months of 2024, we used cash generated from operations to return $41.5 million to stockholders in the form of cash dividends and repurchased $150.0 million of shares, adding to our cumulative share repurchases since 2017 of nearly $3.3 billion. As of March 31, 2024, we had 6.9 million shares available for repurchase under our share repurchase program. We also invested $32.5 million into our businesses in the form of capital expenditures to drive innovation and the Carlisle Experience.
Current wording
In the first six months of 2024, we used cash generated from operations and proceeds from the sale of CIT to return $81.7 million to stockholders in the form of cash dividends and repurchased $700.0 million of shares, adding to our cumulative share repurchases since 2017 of $3.8 billion. As of June 30, 2024, we had 5.6 million shares available for repurchase under our share repurchase program.
Previous wording
Revenues increased in the first quarter of 2024 primarily reflecting higher sales in our non-residential construction end market of $203.1 million, as continued inventory normalization and growing re-roof activity led to healthy construction activity.
Current wording
Revenues increased in the second quarter and the first six months of 2024 primarily reflecting higher sales in our non-residential construction end market of $147.3 million and $350.4 million, respectively, as continued inventory normalization and growing re-roof activity led to healthy construction activity in the quarter and the year to date.
Previous wording
Gross margin percentage (gross margin expressed as a percentage of revenues) increased in the first quarter of 2024, driven primarily by higher sales volume at our CCM segment.
Current wording
Gross margin percentage (gross margin expressed as a percentage of revenues) increased in the second quarter and the first six months of quarter of 2024, driven primarily by higher sales volumes in our CCM segment.
Previous wording
Selling and administrative expenses increased in the first quarter of 2024 primarily driven by higher wage and benefit costs of $12.6 million and increased sales and marketing expenses of $8.2 million due to increased commissions expense as a result of higher sales volumes.
Current wording
Selling and administrative expenses increased in the first six months of 2024 primarily driven by higher wage and benefit expenses of $22.7 million, increased sales and marketing expenses of $12.6 million due to increased commissions expense as a result of higher sales volumes and increased amortization expense of $4.4 million primarily from the acquisition of MTL.
Previous wording
Research and development expenses were higher in the first quarter of 2024, primarily reflecting higher new product development expenses of $2.1 million at our CCM segment and $0.2 million at our CWT segment. The increase in research and development is consistent with a key pillar of Vision 2030 to drive innovation with a commitment to investing in the creation of new products and solutions that add value through advancements in sustainability, and energy and labor efficiencies.
Current wording
Research and development expenses were higher in the second quarter and the first six months of 2024, primarily reflecting higher new product development expenses at our CCM segment ($2.2 million in the second quarter and $4.4 million in the first six months of 2024) and CWT segment ($0.4 million in the second quarter and $0.6 million in the first six months of 2024). The increase in research and development expenses is consistent with a key pillar of Vision 2030 to drive innovation with a commitment to investing in the creation of new products and solutions that add value through advancements in sustainability, and energy and labor efficiencies. Additionally, in the second quarter of 2024, we announced plans to invest $45 million to expand our Research & Innovation Center located in Carlisle, PA.
Previous wording
The change in other operating (income) expense, net, primarily reflected a $0.1 million gain on sale of fixed assets in the first quarter of 2024 compared to a $3.9 million loss on sale of fixed assets in the first quarter of 2023.
Current wording
The change in other operating income, net, for the first six months of 2024 compared to the first six months of 2023 primarily reflected a $5.0 million gain from an insurance settlement received in the second quarter of 2024 compared to losses on the sale of fixed assets of $2.5 million and impairment on fixed assets of $1.3 million recorded in the first six months of 2023.
Previous wording
Interest expense, net of capitalized interest, decreased in the first quarter of 2024 primarily reflecting lower long-term debt balances associated with the redemption of $300.0 million of our 0.55% unsecured senior notes in September 2023. Refer to Note 12 for further information on our long-term debt.
Current wording
Interest expense, net of capitalized interest, stayed flat in the second quarter and relatively flat in the first six months of 2024 primarily reflecting lower long-term debt balances associated with the redemption of $300.0 million of our 0.55% unsecured senior notes in September 2023, offset by a reduction in capitalized interest. Refer to Note 12 for further information on our long-term debt.
Previous wording
Interest income increased during the first quarter of 2024 primarily reflecting higher yields and a higher invested cash balance.
Current wording
Interest income increased during the second quarter and the first six months of 2024 primarily reflecting higher yields and a higher invested cash balance.
Previous wording
Other non-operating income, net, decreased in the first quarter of 2024 primarily reflecting unfavorable changes in foreign currencies against the U.S. Dollar of $0.8 million and pension assets of $0.3 million, partially offset by favorable changes to Rabbi Trust investments of $0.5 million.
Current wording
Other non-operating income, net, decreased in the second quarter of 2024 primarily reflecting unfavorable changes to Rabbi Trust investments of $0.6 million and pension assets of $0.3 million, partially offset by favorable changes in foreign currencies against the U.S. Dollar of $0.1 million.
Previous wording
The increase in provision for income taxes on continuing operations for the first three months of 2024 primarily reflects higher pre-tax income. The effective tax rate on continuing operations the first three months of 2024 was 20.4%. The year-to-date provision for income taxes included taxes on earnings at an anticipated rate of 23.7% and a tax benefit of $7.1 million of discrete activity primarily related to excess tax benefits from employee stock compensation.
Current wording
The increase in provision for income taxes on continuing operations for the first six months of 2024 primarily reflects higher pre-tax income. The effective tax rate on continuing operations the first six months of 2024 was 22.4%. The year-to-date provision for income taxes included taxes on earnings at an anticipated rate of 23.8% and a tax benefit of $8.6 million of discrete activity primarily related to excess tax benefits from employee stock compensation.
Previous wording
The effective income tax rate on continuing operations for the first three months of 2023 was 22.2%.
Current wording
The effective income tax rate on continuing operations for the first six months of 2023 was 22.9%.
Previous wording
Income from discontinued operations for the first quarter of 2024 primarily reflects operating results from the CIT business compared to operating results from the CIT and CFT businesses in the first quarter of 2023. Refer to Note 5 for further information on our discontinued operations.
Current wording
Income from discontinued operations for the first six months of 2024 primarily reflects the pre-tax gain on sale of the CIT business of $454.7 million and operating results of $56.8 million compared to the pre-tax loss on sale of the CFT business of $50.8 million, partially offset by operating results of $28.4 million from CIT in the first six months of 2023. Refer to Note 5 for further information on our discontinued operations.
Previous wording
This segment produces a complete line of premium energy-efficient single-ply roofing products and warranted roof systems and accessories for the commercial building industry, including ethylene propylene diene monomer ("EPDM"), thermoplastic polyolefin ("TPO") and polyvinyl chloride ("PVC") membrane, polyisocyanurate ("polyiso") insulation, and engineered metal roofing and wall panel systems for commercial and residential buildings.
Current wording
This segment produces a complete line of premium energy-efficient single-ply roofing products and warranted roof systems and accessories for the commercial building industry, including ethylene propylene diene monomer
Previous wording
CCM’s revenue increase in the first quarter of 2024 primarily reflected higher sales in the non-residential end market of $195.4 million driven by inventory normalization and growing re-roof activity benefiting from pent-up demand. CCM’s operating margin and adjusted EBITDA margin increase in the first quarter of 2024 primarily reflected higher sales volume.
Current wording
CCM’s revenue increase in the second quarter and the first six months of 2024 primarily reflected higher sales in the non-residential end market of $134.3 million and $329.7 million, respectively, driven by inventory normalization and growing re-roof activity benefiting from pent-up demand. CCM’s operating margin and adjusted EBITDA margin increase in the second quarter and the first six months of 2024 primarily reflected higher sales volume.
Previous wording
CWT’s revenue was relatively flat in the first quarter of 2024. CWT’s operating margin and adjusted EBITDA margin increases in the first quarter of 2024 primarily reflected efficiencies gained through continued realized synergies from the Henry acquisition, targeted restructuring efforts and continued implementation of COS.
Current wording
CWT’s revenue was relatively flat in the second quarter and the first six months of 2024. CWT’s operating margin and adjusted EBITDA margin also stayed relatively flat in the second quarter of 2024. CWT's operating margin and adjusted EBITDA margin increase in the first six months of 2024 primarily reflected efficiencies gained through continued realized synergies from the acquisition of Henry Company LLC, targeted restructuring efforts and continued implementation of the Carlisle Operating System.
Previous wording
We maintain liquidity sources primarily consisting of cash and cash equivalents as well as availability under our credit facilities. In the near term, cash on hand is our primary source of liquidity. The decrease in cash and cash equivalents compared to December 31, 2023, is primarily related to cash used on share repurchases, payment of dividends to stockholders and capital expenditures, partially offset by cash generated from operations.
Current wording
We maintain liquidity sources primarily consisting of cash and cash equivalents as well as availability under our credit facilities. In the near term, cash on hand is our primary source of liquidity. The increase in cash and cash equivalents compared to December 31, 2023, is primarily related to proceeds from our sale of CIT and cash generated from operations, partially offset by cash used on share repurchases, the purchase of MTL, payment of dividends to stockholders and capital expenditures.
Previous wording
In certain countries our cash is subject to local laws and regulations that require government approval for conversion of such cash to U.S. Dollars, as well as for transfer of such cash, both temporarily and permanently outside of that jurisdiction. In addition, upon permanent transfer of cash outside of certain jurisdictions, primarily in Canada, we may be subject to withholding taxes, and as such we have accrued $6.0 million in anticipation of those taxes as of March 31, 2024.
Current wording
In certain countries our cash is subject to local laws and regulations that require government approval for conversion of such cash to U.S. Dollars, as well as for transfer of such cash, both temporarily and permanently outside of that jurisdiction. In addition, upon permanent transfer of cash outside of certain jurisdictions, primarily in Canada, we may be subject to withholding taxes, and as such we have accrued $6.2 million in anticipation of those taxes as of June 30, 2024.
Previous wording
We believe we have sufficient cash on hand, availability under our credit facilities and operating cash flows to meet our anticipated business requirements for at least the next 12 months. At the discretion of management, the Company may use available cash on capital expenditures, dividends, common stock repurchases, acquisitions and strategic investments.
Current wording
We believe we have sufficient cash on hand, availability under our credit facilities and operating cash flows to meet our anticipated business requirements for at least the next 12 months. At the discretion of management, the Company may use available cash on capital expenditures, dividends, acquisitions, strategic investments or repurchases, redemptions or retirements of securities, including our common stock.
Previous wording
We also anticipate we will have sufficient cash on hand, availability under our credit facilities and operating cash flows to meet our anticipated long-term business requirements and to pay outstanding principal balances of our existing notes by the respective maturity dates. Another potential source of liquidity is access to public capital markets, subject to market conditions. We may access the capital markets for a variety of reasons, including to repay the outstanding balances of our outstanding debt and fund acquisitions. Refer to Note 12.
Current wording
We also anticipate we will have sufficient cash on hand, availability under our credit facilities and operating cash flows to meet our anticipated long-term business requirements and to pay outstanding principal balances of our existing notes by the respective maturity dates. Another potential source of liquidity is access to public capital markets, subject to market conditions. We may access the capital markets for a variety of reasons, including to repay the outstanding balances of our outstanding debt and fund acquisitions. Refer to Note 12 for information on our long-term debt.
Previous wording
We generated operating cash flows of $163.5 million for the first three months of 2024 (including working capital uses of $91.4 million), compared with $149.6 million for the first three months of 2023 (including working capital uses of $33.7 million). Higher operating cash flows of $13.9 million for the first three months of 2024 primarily reflected higher income from continuing operations of $87.3 million, offset by higher working capital uses of $57.7 million. Working capital uses related to a decrease in cash from accounts receivable of $187.4 million, reflecting higher sales volumes, and inventory investments of $23.9 million, partially offset by an increase in cash from accounts payable of $78.7 million, reflecting a larger inventory build heading into the construction season, and accrued expenses of $85.4 million, reflecting lower payments in the quarter for customer incentives and rebates and cash bonuses related to 2023 performance.
Current wording
The increase in working capital uses related to a decrease in cash from accounts receivable of $66.6 million, reflecting higher sales volumes, and higher inventory investments in the first half of 2024 of $128.8 million, reflecting the end of destocking of inventory experienced in 2023 and a productive start in 2024 to the commercial construction season. The increase in working capital uses was partially offset by an increase in cash from accounts payable of $57.9 million, related to higher inventory investments, and in accrued expenses of $76.1 million, reflecting lower payments in the year for customer incentives, rebates and cash bonuses related to 2023 performance.
Previous wording
Cash used in investing activities of $32.0 million for the first three months of 2024 primarily reflected capital expenditures of $32.5 million. Cash used in investing activities of $31.7 million for the first three months of 2023 primarily reflected capital expenditures of $40.2 million, partially offset by the sale of equipment of $8.0 million.
Current wording
Cash provided by investing activities of $1,526.6 million for the first six months of 2024 primarily reflected proceeds from the sale of CIT, net of cash disposed, of $1,995.3 million, offset by the purchase of MTL for $412.8 million, net of cash acquired, and capital expenditures of $57.4 million. Cash used in investing activities of $55.9 million for the first six months of 2023 primarily reflected capital expenditures of $70.1 million, partially offset by the sale of equipment of $14.0 million.
Previous wording
Cash used in financing activities of $166.1 million in the first three months of 2024 primarily reflected share repurchases of $150.0 million and cash dividend payments of $41.5 million, reflecting the increased quarterly dividend of $0.85 per share, partially offset by net proceeds of $26.3 million from the exercising of stock options. Cash used in financing activities of $94.8 million during the first three months of 2023 primarily reflected share repurchases of $50.0 million and cash dividend payments of $38.9 million.
Current wording
Cash used in financing activities of $741.9 million in the first six months of 2024 primarily reflected share repurchases of $700.0 million and cash dividend payments of $81.7 million, reflecting the increased quarterly dividend of $0.85 per share, partially offset by net proceeds of $43.7 million from the exercising of stock options. Cash used in financing activities of $327.1 million during the first six months of 2023 primarily reflected share repurchases of $250.0 million and cash dividend payments of $77.2 million.
Previous wording
On April 3, 2024, the Company and Carlisle, LLC, as co-borrowers, entered into a Fifth Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A. as administrative agent, and the lenders party thereto. The Revolving Credit Agreement provides for a $1.0 billion unsecured revolving line of credit with a maturity date of April 3, 2029 and amends and restates the Company's Fourth Amended and Restated Credit Agreement, which was scheduled to expire on February 5, 2025. Refer to Note 16 for further information on the Revolving Credit Agreement.
Current wording
On April 3, 2024, the Company and Carlisle, LLC, as co-borrowers, entered into a Fifth Amended and Restated Credit Agreement (the "Credit Agreement") with JPMorgan Chase Bank, N.A. as administrative agent, and the lenders party thereto. The Revolving Credit Agreement provides for a $1.0 billion unsecured revolving line of credit with a maturity date of April 3, 2029 and amends and restates the Company's Fourth Amended and Restated Credit Agreement, which was scheduled to expire on February 5, 2025 (the "Prior Credit Agreement"). Refer to Note 12 for further information on the Credit Agreement.
Previous wording
During the three months ended March 31, 2024, we had no borrowings or repayments under our Fourth Amended and Restated Credit Agreement. As of March 31, 2024 and December 31, 2023, the Company had no outstanding balance and $1.0 billion available for use under our Company's Fourth Amended and Restated Credit Agreement.
Current wording
During the six months ended June 30, 2024, borrowing and repayments under the Credit Agreement totaled $22.0 million with a weighted average interest rate of 8.50%. As of June 30, 2024 and December 31, 2023, the Company had no outstanding balance and $1.0 billion available for use under the Credit Agreement and Prior Credit Agreement, respectively.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Selling and administrative expenses increased in the second quarter of 2024 primarily driven by higher wage and benefit expenses of $10.1 million, increased sales and marketing expenses of $4.3 million due to increased commissions expense as a result of higher sales volumes and increased amortization expense of $3.8 million primarily from the acquisition of MTL Holdings LLC ("MTL").
Current report — wording carried from elsewhere
Other non-operating income, net, decreased in the first six months of 2024 primarily reflecting unfavorable changes in foreign currencies against the U.S. Dollar of $0.7 million and pension assets of $0.6 million.
Current report — wording carried from elsewhere
("EPDM"), thermoplastic polyolefin ("TPO") and polyvinyl chloride ("PVC") membrane, polyisocyanurate ("polyiso") insulation, and engineered metal roofing and wall panel systems for commercial and residential buildings.