CARLISLE COMPANIES INC

Previous wording

The most significant, and well-understood, external challenge in the quarter was the rapid rise in petroleum-derived raw material and freight costs driven by the conflict in the Middle East. We acted decisively to recover our costs through freight surcharges and broad-based price increases across CCM and CWT, implemented in April and July, with a third increase taking effect in August. As we have experienced in prior raw material inflationary cycles, pricing realization typically lags cost inflation, and we expect the benefit of our pricing actions to build through the second half of 2026 and into 2027.

Current wording

Price realization continued to build through the quarter, supported by the freight surcharges and broad-based price increases implemented across CCM and CWT. Customers have continued to choose Carlisle as these actions have taken hold, and we have not seen a material change in demand. Renewed escalation of the conflict in the Middle East drove petroleum-derived raw material, diesel, and freight costs higher, well above what we anticipated in our July outlook. As in prior inflationary cycles, pricing typically lags cost inflation, which drove the year-over-year decline in margins. We view this as a timing issue, not a structural one. We expect the benefit of our pricing actions to keep building through the fourth quarter and into 2027, and margin expansion to resume as raw material costs normalize.

Previous wording

Our strong balance sheet continues to support our balanced and disciplined approach to capital allocation. During the quarter, we repurchased $250 million of shares, and we have increased our full-year target for repurchases to $1.2 billion. Our M&A framework remains unchanged: disciplined, synergistic building envelope acquisitions that enhance our systems offering, increase content per square foot, and meet our strict returns criteria.

Current wording

Our strong cash generation continues to support our balanced and disciplined approach to capital allocation. During the quarter, we repurchased $350 million of shares. We also increased our quarterly dividend by 14%, marking our 50th consecutive annual dividend increase and earning Carlisle the distinction of a "Dividend King." This milestone reflects the durability of our business model and our long-standing commitment to returning capital to shareholders. Our balance sheet remains strong, and we remain on track with our $1.2 billion share repurchase target for 2026. Our M&A framework remains unchanged, focused on disciplined, synergistic building envelope acquisitions that enhance our systems offering, increase content per square foot, and meet our strict returns criteria.

Previous wording

Based on our first-half performance, continued momentum in our strategic growth initiatives, and the pricing actions we have taken to date, we are raising our full-year 2026 revenue outlook to mid-single-digit growth with operating and adjusted EBITDA margins approximately flat. This outlook reflects disciplined execution, partial recovery of higher raw material and freight costs, and easier comparisons. It does not assume a near-term recovery in new construction markets. With the strength of our imperative business model, resilient re-roofing demand, and our leadership position in North America, we remain confident in our path to our Vision 2030 financial objectives.

Current wording

For the fourth quarter, we expect high-single-digit revenue growth with flat margins, as the benefits of our pricing actions continue to build. Our outlook does not assume a near-term recovery in new construction markets. With the strength of our business model, resilient re-roofing demand, and our leadership position in North America, we remain committed to advancing Vision 2030 through organic growth, acquisitions, margin expansion, and increased cash flow, and we remain confident in our path to our Vision 2030 financial objectives.

Previous wording

Gross margin decreased in the second quarter and the first six months of 2026, primarily driven by inflation of our petrochemical-based raw material inputs and freight costs due to the rapid increase in oil prices caused by the conflict in the Middle East, which outpaced the impact of price increases put in place during the second quarter.

Current wording

Gross margin decreased in the third quarter and the first nine months of 2026, primarily driven by inflation of our petrochemical-based raw material inputs, diesel, and freight costs. The rapid increase in oil prices caused by the conflict in the Middle East outpaced the impact of price increases put in place during the second and third quarters.

Previous wording

Selling and administrative expenses increased in the second quarter, primarily due to higher wage and benefit expenses of $6.0 million driven by increased incentive compensation and higher commissions expense of $4.6 million, partially offset by a $5.5 million decrease in acquisition-related costs and professional fees.

Current wording

Selling and administrative expenses increased in the third quarter, primarily due to higher wage and benefit expenses of $7.1 million, driven by increased incentive compensation, and higher commissions expense of $2.8 million, partially offset by lower advertising expenses of $1.3 million.

Previous wording

Selling and administrative expenses decreased in the first six months of 2026, primarily due to a $6.1 million decrease in wage and benefit expenses driven by lower headcount and an $11.5 million decrease in acquisition-related costs and professional fees.

Current wording

Selling and administrative expenses decreased in the first nine months of 2026, primarily due to an $11.9 million decrease in acquisition-related costs and professional fees.

Previous wording

Research and development expenses increased in the second quarter and the first six months of 2026, primarily due to higher new product development expenses. 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.

Current wording

Research and development expenses were relatively flat in the third quarter and the first nine months of 2026. Consistent with a key pillar of Vision 2030, the Company remains committed to investing in innovation through the development of new products and solutions that create value by advancing sustainability and energy and labor efficiency.

Previous wording

Interest expense increased in the second quarter and the first six months of 2026, primarily due to higher long-term debt balances associated with the notes issued on August 20, 2025. Refer to Note 9 for further information on our long-term debt.

Current wording

Interest expense increased in the third quarter and the first nine months of 2026, primarily due to higher long-term debt balances associated with the notes issued on August 20, 2025. Refer to Note 9 for further information on our long-term debt.

Previous wording

The provision for income taxes on continuing operations increased during the second quarter and the first six months of 2026, primarily due to lower excess tax benefits from employee stock compensation.

Current wording

The provision for income taxes on continuing operations decreased during the third quarter of 2026, primarily due to lower pre-tax income. The provision for income taxes on continuing operations increased during the first nine months of 2026, primarily due to lower excess tax benefits from employee stock compensation.

Previous wording

The year-to-date provision reflects an anticipated tax rate of 23.2% and a $3.8 million discrete tax benefit, primarily from excess tax benefits from employee stock compensation, compared to a $12.6 million discrete tax benefit in the first six months of 2025.

Current wording

The year-to-date provision reflects an anticipated tax rate of 23.2% and a $3.9 million discrete tax benefit, primarily from excess tax benefits from employee stock compensation, compared to a $12.1 million discrete tax benefit in the first nine months of 2025.

Previous wording

CCM's operating margin and adjusted EBITDA margin slightly decreased in the second quarter and the first six months of 2026, primarily due to raw materials and freight inflation driven by the conflict in the Middle East.

Current wording

CCM's operating margin and adjusted EBITDA margin decreased in the third quarter and the first nine months of 2026, primarily due to raw material, diesel, and freight inflation driven by the conflict in the Middle East, which outpaced pricing realization.

Previous wording

CWT’s revenue increased in the second quarter and the first six months of 2026, primarily driven by increased volumes from share gains and the 2025 acquisition of Bonded Logic.

Current wording

CWT’s revenue increased 6% in the first nine months of 2026. Higher volumes from share gains contributed approximately 5%, realization of price increases implemented in the second and third quarters to offset input cost inflation contributed less than 1%, and the 2025 acquisition of Bonded Logic contributed less than 1%.

Previous wording

Net cash provided by operating activities for the first six months of 2026 was $197.1 million, compared to $288.9 million for the first six months of 2025. The $91.8 million decrease was primarily driven by lower income from continuing operations, excluding non-cash reconciling items, of $11.0 million, and a $125 million post-year-end settlement of an accrued liability related to a transferable energy tax credit acquired in 2025. These decreases were partially offset by larger increases in accrued incentive compensation of $9.5 million, accrued rebates and commissions of $11.2 million driven by higher sales, and accrued taxes of $22.2 million related to the timing of other transferable energy tax credit acquisitions and related payments.

Current wording

Net cash provided by operating activities for the first nine months of 2026 was $511.2 million, compared to $715.8 million for the first nine months of 2025. The $204.6 million decrease was primarily driven by lower income from continuing operations, excluding non-cash reconciling items, of $42.0 million, higher working capital uses of $74.3 million, and a $125 million post-year-end settlement of an accrued liability related to a transferable energy tax credit acquired in 2025. These decreases were partially offset by larger increases in accrued incentive compensation of $14.9 million and accrued rebates and commissions of $19.2 million driven by higher sales.

Previous wording

Net working capital requirements for the first six months of 2026 were generally consistent with the prior year. Higher investments in accounts receivable of $72.4 million driven by increased sales volume and inventory of $28.9 million driven by higher raw material costs were offset by a $106.1 million larger increase in accounts payable resulting from the timing and cost of raw material and freight purchases.

Current wording

Net working capital requirements for the first nine months of 2026 increased by $74.3 million compared to the prior year. Larger increases in accounts receivable of $107.5 million driven by increased sales and inventory of $84.8 million driven by higher raw material costs were partially offset by a $118.0 million larger increase in accounts payable resulting from increased raw material and freight costs.

Previous wording

Net cash used in investing activities of $69.7 million for the first six months of 2026 primarily reflected capital expenditures of $70.0 million. Cash used in investing activities of $165.9 million for the first six months of 2025 primarily reflected the purchases of ThermaFoam for $52.9 million and Bonded Logic for $57.7 million, and capital expenditures of $57.8 million.

Current wording

Net cash used in investing activities of $106.2 million for the first nine months of 2026 primarily reflected capital expenditures of $106.8 million. Cash used in investing activities of $199.4 million for the first nine months of 2025 primarily reflected the purchases of ThermaFoam for $52.9 million and Bonded Logic for $57.7 million, and capital expenditures of $91.3 million.

Previous wording

Net cash used in financing activities of $573.8 million in the first six months of 2026 primarily reflected share repurchases of $500.0 million and cash dividend payments of $90.1 million. Cash used in financing activities of $808.9 million in the first six months of 2025 primarily reflected share repurchases of $700.0 million and cash dividend payments of $88.3 million.

Current wording

Net cash used in financing activities of $970.1 million in the first nine months of 2026 primarily reflected share repurchases of $850.0 million and cash dividend payments of $139.6 million. Cash used in financing activities of $165.4 million in the first nine months of 2025 primarily reflected share repurchases of $1.0 billion and cash dividend payments of $135.3 million, partially offset by net proceeds of $987.8 million from the issuance of the notes on August 20, 2025.

Previous wording

Earnings before interest and taxes ("EBIT"), adjusted EBIT, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") and adjusted EBITDA margin are intended to provide investors and others with information about our performance and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items. As a result, management believes that these measures enhance the ability of investors to analyze trends in our business and evaluate our performance relative to similarly-situated companies. This information differs from net income, operating income, and operating margin determined in accordance with GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with GAAP. Our and our segments' EBIT, adjusted EBIT, adjusted EBITDA and adjusted EBITDA margin follows. These non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies.

Current wording

Earnings before interest and taxes ("EBIT"), adjusted EBIT, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") and adjusted EBITDA margin are intended to provide investors and others with information about our performance and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items. As a result, management believes that these measures enhance the ability of investors to analyze trends in our business and evaluate our performance relative to similarly-situated companies. This information differs from net income, operating income, and operating margin determined in accordance with GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with GAAP. Our and our segments' EBIT, adjusted EBIT, adjusted EBITDA and adjusted EBITDA margin follow. These non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies.

Previous wording

•increases in raw material costs that cannot be recovered in product pricing;

Current wording

•increases in raw material, energy, and freight costs that cannot be recovered in product pricing;