CARLISLE COMPANIES INC
For the period ended Sep 30, 2024. Filed Oct 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.
Sep 30, 2024 · Filed Oct 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 2024-06-30; filed 2024-07-25.
0000790051-24-000166
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-25.
0000790051-24-000198
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 77 previous paragraphs and 79 current paragraphs.
46 unchanged; 19 reworded; 13 added; 12 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 24 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 (13)
Current report
Carlisle delivered another quarter of strong performance, despite a continued decline in residential markets along with the impact of weather-related and port strike events, which negatively impacted shipping days, contractor days on the roof and manufacturing output. We continued to execute on our Vision 2030 strategies, and we are pleased with our third quarter performance against our 2030 goals.
Current report
CCM continued its strong momentum with its 2024 accomplishments into the third quarter, driven by healthy contractor backlogs, robust re-roofing activity, and excellent margin performance. CCM sales were up 9% year-over-year assisted by the inventory normalization in the channel and the acquisition of MTL Holdings LLC ("MTL"). CCM's 30.4% operating margin and 32.8% adjusted EBITDA margin in the third quarter reflected strong volume leverage, a positive raw material environment, and excellent operating execution through the Carlisle Operating System (COS).
Current report
As we look at CWT’s performance, while we were pleased with progress on share gain initiatives within CWT, a higher interest rate environment, low housing turnover, and affordability challenges resulted in a further slowing of housing activity in the quarter. For the quarter, these challenges impacted sales and drove a decline of 3% year-over-year. Despite the near-term challenges facing CWT, we remain pleased and optimistic about the prospects for this segment.
Current report
We continue to be encouraged by the positive long-term outlook in the North American building products markets and the strength of the Carlisle business model. Our pivot to a “pure play” building products company is delivering the expected outcomes and demonstrating our commitment to being superior capital allocators. Additionally, we believe that leveraging the megatrends around energy efficiency and labor savings, along with growing re-roof demand, and our introduction of innovative new products, are creating additional catalysts for growth. Similar to Vision 2025, we believe Vision 2030 positions us well to drive above-market growth and earn a premium in the marketplace.
Current report
Carlisle remains committed to generating superior shareholder returns through our balanced capital deployment approach. This quarter, we repurchased 1.1 million shares of our common stock for $466.1 million and increased our dividend 18%, marking the 48th consecutive annual dividend increase.
Current report
We are excited about our recent agreement to acquire PFB Holdco, Inc. ("Plasti-Fab"), which aligns with our Vision 2030 strategy to enhance our “best-in-class” building envelope product portfolio following the completion of our pivot to a “pure play” building products company earlier this year. The acquisition of Plasti-Fab establishes Carlisle as a leading manufacturer in the $1.5 billion North American expanded polystyrene insulation market and provides vertically integrated polystyrene capabilities to our Insulfoam business while adding scale, supporting retail channel growth, and filling key geographic gaps in the U.S. and Canada.
Current report
Other operating income, net, decreased in the third quarter of 2024, primarily driven by a $1.5 million loss from litigation settlements in the third quarter of 2024.
Current report
Other Non-operating (Income) Expense, net
Current report
Other non-operating (income) expense, net, increased in the first nine months of 2024, primarily reflecting favorable changes to Rabbi Trust investments of $1.2 million, partially offset by unfavorable changes to pension assets of $0.8 million.
Current report
(Loss) Income from Discontinued Operations
Current report
(Loss) income from discontinued operations for the third quarter of 2024 primarily reflected legal matters related to Carlisle Interconnect Technologies ("CIT") and Carlisle Fluid Technologies ("CFT"), which were sold in May 2024 and October 2023, respectively, compared to full operating results from CIT and CFT product lines in 2023.
Current report
CWT’s revenue decrease in the third quarter and the first nine months of 2024 primarily reflected lower sales in the residential end market of $31.9 million and $59.9 million, respectively, partially offset by higher sales in the non-residential end market of $19.8 million and $40.5 million, respectively.
Current report
CWT’s operating margin and adjusted EBITDA margin decrease in the third quarter of 2024 primarily reflected higher operating costs to support longer term growth initiatives. CWT's operating margin and adjusted EBITDA margin stayed relatively flat in the first nine months of 2024.
Removed paragraphs (12)
Previous 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.
Previous 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").
Previous 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.
Previous 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.
Previous report
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 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.
Previous report
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 report
Other Non-operating Income, net
Previous report
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.
Previous report
The effective income tax rate on continuing operations for the first six months of 2023 was 22.9%.
Previous report
Income from Discontinued Operations
Previous report
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.
Reworded paragraphs (19)
Previous 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.
Current wording
Revenues increased in the third quarter and the first nine months of 2024, primarily reflecting higher sales in our non-residential construction end market of $102.2 million and $452.6 million, respectively, as continued inventory normalization and growing re-roof activity led to increased construction activity in the quarter and the year to date period.
Previous 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.
Current wording
Gross margin as a percentage of revenues increased in the third quarter and the first nine months of 2024, driven primarily by volume leverage on strong sales growth in our CCM segment.
Previous wording
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 wording
Selling and administrative expenses increased in the third quarter of 2024, primarily driven by higher wage and benefit expenses of $11.6 million, increased sales and marketing expenses of $7.0 million due to increased commissions expense as a result of higher sales volumes and increased amortization expense of $4.6 million primarily from the acquisition of MTL.
Previous 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.
Current wording
Selling and administrative expenses increased in the first nine months of 2024, primarily driven by higher wage and benefit expenses of $34.2 million, increased sales and marketing expenses of $19.6 million due to increased commissions expense as a result of higher sales volumes and increased amortization expense of $8.9 million primarily from the acquisition of MTL.
Previous 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.
Current wording
Research and development expenses were higher in the third quarter and the first nine months of 2024, primarily reflecting higher new product development expenses at our CCM segment ($0.6 million in the third quarter and $5.0 million in the first nine months of 2024) and CWT segment ($0.3 million in the third quarter and $0.9 million in the first nine 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.
Previous wording
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 wording
Other operating income, net, increased in the first nine months of 2024, primarily driven by a $5.0 million gain from an insurance settlement received in the second quarter of 2024.
Previous 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.
Current wording
Interest expense, net of capitalized interest, decreased in the third quarter and the first nine 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. Refer to Note 12 for further information on our long-term debt.
Previous 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.
Current wording
Interest income increased during the third quarter and the first nine months of 2024, primarily reflecting higher yields and a higher invested cash balance due to proceeds from the sale of Carlisle Interconnect Technologies ("CIT") in the second quarter of 2024.
Previous 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.
Current wording
Other non-operating (income) expense, net, increased in the third quarter of 2024, primarily reflecting favorable changes to Rabbi Trust investments of $1.2 million and to foreign currencies against the U.S. Dollar of $0.7 million, partially offset by unfavorable changes to pension assets of $0.3 million.
Previous 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.
Current wording
The increase in provision for income taxes on continuing operations for the first nine months of 2024, primarily reflected higher pre-tax income. The year-to-date provision for income taxes included taxes on earnings at an anticipated rate of 23.7% and a tax benefit of $9.2 million of discrete activity primarily related to excess tax benefits from employee stock compensation.
Previous 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.
Current wording
(Loss) income from discontinued operations for the first nine months of 2024 primarily reflected the pre-tax gain on sale of the CIT business of $457.3 million and operating results of $56.2 million compared to the pre-tax loss on sale of the CFT business of $47.2 million, partially offset by operating results of $53.9 million from CIT and $17.5 million from CFT in the first nine months of 2023.
Previous 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.
Current wording
CCM’s revenue increase in the third quarter and the first nine months of 2024 primarily reflected higher sales in the non-residential end market of $82.4 million and $412.1 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 third quarter and the first nine months of 2024 primarily reflected volume leverage on higher sales.
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 $6.2 million in anticipation of those taxes as of June 30, 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 $6.3 million in anticipation of those taxes as of September 30, 2024.
Previous wording
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.
Current wording
We generated operating cash flows of $659.7 million for the first nine months of 2024 (including working capital uses of $200.6 million), compared to $812.4 million for the first nine months of 2023 (including working capital uses of $4.3 million). Lower operating cash flows of $152.7 million for the first nine months of 2024 primarily reflected lower operating cash provided by discontinued operations of $152.3 million and higher working capital uses of $196.3 million, partially offset by higher income from continuing operations of $175.5 million.
Previous 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.
Current wording
The increase in working capital uses related to a decrease in cash from higher inventory investments in 2024 of $220.9 million, reflecting the end of destocking of inventory experienced in 2023 and increased construction activity, and accounts receivable of $11.8 million, reflecting higher sales volumes. The increase in working capital uses was partially offset by an increase in cash from accounts payable of $17.1 million, related to higher inventory investments, and in accrued expenses of $30.4 million, reflecting lower payments in the year for customer incentives, rebates and cash bonuses related to 2023 performance.
Previous 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.
Current wording
Cash provided by investing activities of $1,508.9 million for the first nine months of 2024 primarily reflected proceeds from the sale of CIT, net of cash disposed, of $1,998.0 million, offset by the purchase of MTL for $414.3 million, net of cash acquired, and capital expenditures of $76.7 million. Cash used in investing activities of $86.7 million for the first nine months of 2023 primarily reflected capital expenditures of $106.3 million, partially offset by the sale of equipment of $18.7 million.
Previous 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.
Current wording
Cash used in financing activities of $1,242.9 million in the first nine months of 2024 primarily reflected share repurchases of $1,166.1 million and cash dividend payments of $127.4 million, reflecting the increased quarterly dividend of $1.00 per share, partially offset by net proceeds of $55.4 million from the exercising of stock options. Cash used in financing activities of $994.5 million during the first nine months of 2023 primarily reflected share repurchases of $580.0 million, the repayment of senior notes of $300.0 million and cash dividend payments of $119.3 million.
Previous 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.
Current wording
During the nine months ended September 30, 2024, borrowing and repayments under the Credit Agreement totaled $22.0 million with a weighted average interest rate of 8.50%. As of September 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.
Previous wording
Our expectations for segment and total revenues for 2024, compared to 2023 follows:
Current wording
Our expectations for segment and total revenues for the fourth quarter of 2024 follows:
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Refer to Note 5 for further information on our discontinued operations.