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Carlisle Companies Reports Record Income from Continuing Operations of $103.6 million and Record EBIT Margin of 16.6% in the Third Quarter 2015P

CHARLOTTE, N.C.--(BUSINESS WIRE)--Carlisle Companies Incorporated (NYSE:CSL) reported net sales from continuing operations of $973.1 million for the quarter ended September 30, 2015, a 7.6% increase from $904.1 million in the third quarter 2014. Net sales from the acquisition of the Finishing Brands business, which now constitutes the Carlisle Fluid Technologies (CFT) segment, contributed 7.5% to net sales in the third quarter. Net sales from the acquisition of LHi Technology (LHi), reported in the Carlisle Interconnect Technologies (CIT) segment, contributed 2.9% to net sales. Organic net sales (defined as net sales excluding sales from acquisitions within the last twelve months, as well as the impact of changes in foreign exchange rates versus the U.S. Dollar) declined by 1.0%. Fluctuations from foreign exchange had a negative impact to net sales of 1.8%.

“We generated $189 million in free cash flow in the third quarter and ended the quarter with $354 million cash on hand. Year-to-date we’ve returned $111 million in capital to shareholders through dividends and share repurchases.”

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Income from continuing operations in the third quarter 2015 increased 20% to a record $103.6 million, compared with $86.3 million in the third quarter 2014, reflecting lower raw material costs, savings from the Carlisle Operating System and contribution from acquisitions. These positive impacts were partially offset by lower selling price and foreign exchange fluctuations. On a per share basis, income from continuing operations in the third quarter 2015 increased 19% to $1.56 per diluted share, from $1.31 per diluted share in the prior year.

All financial and percentage comparisons in our third quarter reporting are made to the same quarter of the previous year, unless otherwise stated. On April 1, 2015, the Company completed the acquisition of the Finishing Brands business. Beginning in the second quarter 2015, the Company added a reportable segment, Carlisle Fluid Technologies, to reflect the acquisition of Finishing Brands. This press release also includes a comparison of three and nine months ended September 30, 2015 to 2014 selected financial results on a pro forma basis for Carlisle and the CFT segment, which assumes the acquisition of Finishing Brands had occurred on January 1, 2014. For selected pro forma information and reconciliation to the reported GAAP amounts, refer to the financial exhibits.

Comment

David A. Roberts, Chairman and Chief Executive Officer, said, “We achieved record performance in the third quarter for EBIT (earnings before interest and income taxes), EBIT margin and net earnings. In addition, performance improved significantly from the second quarter at our two most recent acquisitions, Carlisle Fluid Technologies and LHi. Our organic net sales decreased 1.0% for the quarter. Despite slightly lower organic net sales, we achieved 21% growth in EBIT and our EBIT margin increased 180 basis points to a record high of 16.6%.

“At Carlisle Construction Materials (CCM), we remained resolute in maintaining selling price in the commercial roofing market. Partly as a result, CCM net sales in the third quarter were lower organically by 1.2%. Despite the lower sales, CCM’s EBIT performance was excellent in the third quarter. EBIT grew 19% and EBIT margin expanded 380 basis points to a record high 20.3%, reflecting lower raw material costs, savings from the Carlisle Operating System and the non-recurrence of plant startup costs. While our net sales results were lower in the third quarter than previously expected, we remain positive about the strength and outlook for the commercial roofing market. For the full year, we expect low-to-mid single digit net sales growth and record EBIT and EBIT margin at CCM.

“Carlisle Interconnect Technologies’ (CIT) net sales grew 23% during the quarter, reflecting 16% growth from the acquisition of LHi and organic net sales growth of 7.4%. CIT continued its excellent track record in the aerospace market as net sales grew 8% despite contractual selling price reductions. CIT’s EBIT margin of 20.4% was outstanding. Also impressive was the EBIT margin contribution from the LHi medical acquisition of 13.1%, a 480 basis point increase from its margin contribution in the second quarter. We continue to expect record performance from CIT for the full year.

“Net sales at Carlisle Fluid Technologies (CFT) were $67.9 million in the third quarter. Sequentially, CFT’s sales reflect a 10% increase over net sales in the second quarter of 2015. CFT achieved an impressive EBIT margin of 14.9% in the third quarter which includes approximately 630 basis points of acquisition related amortization expense. The quarter’s strong performance is evidence of the significant potential of this segment. As previously announced, Barry Holt was appointed President of CFT. Barry brings with him the leadership and industry experience to solidify CFT as another strong growth platform for Carlisle.

“At Carlisle Brake & Friction (CBF), we continue to experience new lows in our key markets due to the continued global economic slowdown. Net sales at CBF declined 21% in the third quarter, consisting of a 16% decline in volume and a 4.8% decline due to foreign exchange. CBF’s EBIT was only marginally positive in the third quarter due to the significant sales decline as well as $1.1 million in severance charges. We believe we have seen the bottom of this cycle but do not see signs of recovery in the near term. As recently announced, Ted Messmer was appointed President of CBF, bringing with him extensive leadership experience.

“Carlisle FoodService Products’ (CFS) results were slightly higher in the third quarter in both net sales and EBIT reflecting growth in our foodservice and janitorial/sanitation markets. EBIT margin for the quarter was 12.4%, a 30 basis point improvement over the prior year.

“We generated $189 million in free cash flow in the third quarter and ended the quarter with $354 million cash on hand. Year-to-date we’ve returned $111 million in capital to shareholders through dividends and share repurchases.”

Roberts concluded by stating, “We continue to expect 2015 to be an outstanding year for Carlisle with the establishment of the CFT segment and record results at CCM and CIT. We now expect organic net sales growth to be in the low-to-mid single digit percent range. We expect EBIT and EBIT margin improvement primarily from continued favorable raw material conditions, savings from the Carlisle Operating System, and sales growth leverage. Capital expenditures are expected to be between $70 million and $80 million in 2015. We remain favorably positioned with our liquidity and strong balance sheet to continue to pursue growth opportunities both organically and through acquisitions, while returning value to shareholders.”

Segment Results for Third Quarter 2015

Carlisle Construction Materials (CCM): Net sales in the third quarter 2015 declined 3.2% to $570.1 million, reflecting a 2.0% negative impact due to foreign exchange fluctuations and a decline in organic net sales of 1.2%. CCM’s organic net sales decline reflected slightly lower selling price and flat volume. CCM’s EBIT margin rose 380 basis points to 20.3%, primarily reflecting lower raw material costs, savings from the Carlisle Operating System and the non-recurrence of plant startup expenses of $2.0 million in the prior year. These positive impacts were partially offset by lower selling price, unfavorable changes in mix and the negative impact from foreign exchange fluctuations.

Carlisle Interconnect Technologies (CIT): Net sales in the third quarter 2015 grew 23% to $202.3 million, reflecting acquisition growth of 16% and organic growth of 7.4%. Net sales in CIT’s aerospace market were up 8%. Net sales to the military market were up 10%. Net sales into the test and measurement market were flat reflecting timing of orders from larger customers. Net sales to the industrial market were down 20%. The acquisition of LHi in the medical market contributed $25.9 million in net sales and $3.4 million in EBIT. CIT’s EBIT margin of 20.4% remained relatively level with the prior year, despite the impact of lower selling price from contractual reductions and the dilutive impact of LHi on EBIT margin. These negative impacts were offset by higher organic net sales volume, savings from the Carlisle Operating System and favorable changes in mix.

Carlisle Fluid Technologies (CFT): Net sales in the third quarter 2015 were $67.9 million. On a pro forma basis, net sales in the third quarter grew 2.6% versus pro forma net sales in the prior year, primarily reflecting 9.7% organic net sales growth partially offset by a 7.1% negative impact due to foreign currency fluctuations. On a pro forma basis, CFT’s EBIT margin for the third quarter of 2015 increased 250 basis points to 14.9% from the prior period due primarily to higher selling price, net sales volume growth and favorable changes in mix. Included in CFT’s EBIT for the third quarter 2015 was $0.4 million in severance expense.

Carlisle Brake & Friction (CBF): Net sales in the third quarter of 2015 declined 21% to $70.7 million, comprised of 16% lower organic net sales and a 4.8% negative impact on net sales from foreign exchange rate fluctuations. Net sales in the construction market declined by 29%. Net sales in the agriculture and mining markets declined by 16% and 24%, respectively. CBF’s EBIT margin during the third quarter decreased 610 basis points to 0.7%, primarily due to lower sales volume and the negative impact of foreign exchange. Included in CBF’s EBIT in the third quarter was $1.1 million in severance related expense.

Carlisle FoodService Products (CFS): Net sales in the third quarter 2015 grew 1.3% to $62.1 million. Net sales in the foodservice and janitorial/sanitation markets grew by 2% and 5%, respectively. Net sales in the healthcare market declined by 2%. CFS’ EBIT margin during the quarter grew 30 basis points to 12.4% on lower raw material costs and operating efficiencies, partially offset by lower selling price related to...


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