Carlisle Companies Reports First Quarter Results
Carlisle Companies Incorporated (NYSE:CSL) today announced its first quarter 2023 financial results.
- First quarter revenues of $1.2 billion, declined 21.2% year-over-year
- Reported first quarter GAAP Diluted EPS of $1.92 and Adjusted EPS of $2.57, down 39.7%
- Channel inventory destock and inclement weather continued to be headwinds
- Contractor end market demand remains robust
- Pricing remained strong with year-over-year improvements in all segments
- Repurchased 200 thousand shares for $50 million in the quarter
Comments from Chris Koch, Chair, President and Chief Executive Officer
“As expected and previously communicated, the first quarter of 2023 continued to reflect the destocking efforts by distributors and contractors in the building products industry. Additionally, inclement weather during the first quarter disrupted contractors’ ability to complete jobs and better address pent-up demand.
Underlying demand in the non-residential construction markets remains strong, with secular positives such as growing demand for energy-efficient solutions for buildings and a multi-year backlog of re-roofing projects. We remain mindful of growing concerns over continued Fed interest rate hikes and the possibility of a recession in the back half of 2023. For CCM however, where approximately two-thirds of revenue is tied to non-discretionary re-roofing demand, we continue to expect healthy activity both for the remainder of this year and for the foreseeable future.
Notably, the anticipated seasonal ramp in construction activity for 2023 is underway, with sequentially improved orders and shipments in April. Given strong contractor backlogs, the visible pipeline is robust. The latest non-residential construction indicators such as the ABI, Dodge Momentum Index, and ABC Contractor Backlog continued to support our confidence in a solid demand backdrop this year. Additionally, constrained labor markets continue to limit contractors’ ability to service and complete the backlog and growing demand for the market’s energy-efficient building envelope solutions. As a result, backlogs continue to be strong, new products that remove labor from the job site are desired, and the value brought to the contractor through the Carlisle Experience continues to be in high demand.
I am pleased our teams remain committed to delivering on Vision 2025, which includes meeting the needs of our end users, distributors and contractors by providing industry-leading, energy-efficient solutions with the highest quality standards. We also remain committed to and are increasing investment in innovation that addresses contractor labor constraints that pressure their ability to service current demand effectively and cost efficiently. Recent product launches that reduce installation times for our customers include our 16-foot TPO product (fewer seams), our ReadyFlash technology (improves flash-off time), and our Self-Adhering technology on 12′ and 16′ TPO. We aim to be our customers’ manufacturer of choice, competing on and earning a fair price for the value we create. We are excited about our product launches this year that demonstrate both our commitment to helping facilitate ease of installation as well as to meeting the growing demand for “circular” products. As a reminder, circular products reduce waste to a minimum by being productively used and reused, as opposed to a single use product ultimately destined for the landfill.
Several months after announcing our commitment to achieve Net-Zero greenhouse gas (GHG) emissions across our entire value chain by 2050, we continue to take important steps towards achieving this ambitious goal. For example, we have committed to purchasing several million pounds of bio-MDI and bio-polyol, to test and develop bio-based raw materials into our production. We’ve also replaced approximately 25% of our sourced prime carbon black in certain products with recycled material. We are piloting end-of-life management of tear-off EPDM where we collect and process it into consumer rubber products. These steps all further our progress towards our Sustainability mission that is built on 1) improving the energy efficiency of buildings, 2) reducing emissions in our value stream, and 3) reducing the volume of construction materials in landfills.
Finally, I want to thank all our employees for their unrelenting focus on delivering value to all our customers and channel partners. We rely on our accomplished teams to provide Carlisle with the competitive advantages necessary to navigate this increasingly complex operating environment.
We remain confident in our ability to execute throughout all segments, with improving momentum in CCM’s orders entering the spring/summer construction season, and with CWT, CIT and CFT all tracking on plan for 2023 with upside potential.”
First Quarter 2023
Revenue for the first quarter of $1.2 billion decreased 21.2% year-over-year. Organic revenue decreased 20.6% (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). Changes in foreign exchange rates had a negative 0.6% impact on revenues.
Operating income for the first quarter of $141.0 million decreased 49.2% from $277.3 million in the first quarter of 2022. Income from continuing operations for the first quarter of $99.6 million decreased 48.7% from $194.3 million in the first quarter of 2022. Adjusted EBITDA for the first quarter of $213.8 million decreased 38.0% from $344.8 million in the first quarter of 2022.
Diluted earnings per share (EPS) for the first quarter of $1.92 decreased 47.7% from $3.67 in the first quarter of 2022. Adjusted diluted EPS for the first quarter of $2.57 decreased 39.7% from $4.26 in the first quarter of 2022. The decrease in EPS reflects impact from lower volumes in our building products businesses, partially offset by positive pricing across all segments, positive leverage at CIT and CFT, and share repurchases.
First Quarter 2023 Segment Highlights
Carlisle Construction Materials (CCM)
- Revenue of $576.0 million, down 34.6% (-34.2% organic) year-over-year, was due to lower volumes as distributors and contractors continue to normalize inventory levels prolonged by weather conditions, partially offset by price realization.
- Operating income was $122.4 million, down 53.1% year-over-year. Adjusted EBITDA was $136.8 million, down 50.3% year-over-year, reflecting an adjusted EBITDA margin of 23.8%, which was impacted by lower volumes and unfavorable product mix, partially offset by positive pricing and savings from the Carlisle Operating System (COS).
- We now expect full year 2023 sales to decrease high-single-digits year-over-year.
Carlisle Weatherproofing Technologies (CWT)
- Revenue of $316.6 million, down 11.8% (-11.3% organic) year-over-year, was due to residential demand weakness and unfavorable impact of foreign exchange rates, partially offset by retail strength and price realization.
- Operating income was $24.1 million, down 35.7% year-over-year. Adjusted EBITDA was $53.9 million, down 14.6% year-over-year reflecting an adjusted EBITDA margin of 17.0%, which was negatively impacted by volumes in residential-related businesses, unfavorable mix and raw material and wage inflation, partially offset by positive pricing and savings from COS.
- We continue to expect full year 2023 sales to decrease low-double-digits year-over-year.
Carlisle Interconnect Technologies (CIT)
- Revenue of $213.5 million, up 15.4% (+15.7% organic) year-over-year, was driven by continued strengthening in the aerospace end market.
- Operating income was $10.9 million and adjusted EBITDA was $30.5 million, up 65.8% year-over-year reflecting an adjusted EBITDA margin of 14.3%, which was favorably impacted by higher volumes, positive pricing, and savings from COS, partially offset by wage inflation.
- We continue to expect full year 2023 sales to increase high-single-digits year-over-year.
Carlisle Fluid Technologies (CFT)
- Revenue of $72.7 million, up 2.3% (+6.5% organic) year-over-year, reflected higher volumes and positive pricing, partially offset by unfavorable impact from changes in foreign exchange rates.
- Operating income was $10.7 million up 123% year-over-year. Adjusted EBITDA was $15.9 million, up 51.4% year-over-year reflecting an adjusted EBITDA margin of 21.9%, which was positively impacted by price realization and savings from COS, partially offset by wage inflation.
- We continue to expect full year 2023 sales to increase high-single-digits year-over-year.
Operating cash flow from continuing operations for three months ended March 31, 2023, was $147.5 million, an increase of $102.5 million versus the prior year. Free cash flow from continuing operations was $107.3 million, an increase of $93.4 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 accounts receivable and inventory due to lower sales volume, partially offset by lower income from continuing operations year-over-year and reductions in accrued expenses.
During three months ended March 31, 2023, we deployed $50.0 million toward share repurchases and paid $38.9 million in cash dividends. As of March 31, 2023, we had 3.2 million shares available for repurchase under our share repurchase program. Additionally, as of March 31, 2023, we had $423.9 million of cash and cash equivalents and $1.0 billion of availability under our revolving credit facility.
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About Carlisle Companies Incorporated
Carlisle Companies Incorporated is a leading supplier of innovative Building Envelope products and energy-efficient solutions for customers creating sustainable buildings of the future. Through its building products businesses (CCM and CWT) and family of leading brands, Carlisle delivers innovative, labor-reducing and environmentally responsible products and solutions to customers through the Carlisle Experience. Over the life of a building, Carlisle’s products help drive lower greenhouse gas emissions, improve energy savings for building owners and operators, and increase a building’s resiliency to the elements. Driven by its strategic plan, Vision 2025, 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 also is a leading provider of products to the Aerospace, Medical Technologies and General Industrial markets through its Interconnect Technologies (CIT) and Fluid Technologies (CFT) business segments.
Jim Giannakouros, CFA – Vice President of Investor Relations – firstname.lastname@example.org – (480) 781-5135
Source: Carlisle Companies Incorporated