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Carlisle (CSL) Q2 Earnings and Revenues Top Estimates, Up Y/Y

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Carlisle Companies Incorporated CSL reported decent second-quarter 2021 results wherein both the bottom line and the top line surpassed the Zacks Consensus Estimate.

The company’s adjusted earnings were $2.16 per share, beating the consensus estimate of $2.09 by 3.4%. The bottom line increased 34.2% on a year-over-year basis supported by higher sales and share repurchases, partially offset by higher corporate expense.

Carlisle Companies Incorporated Price, Consensus and EPS Surprise

Carlisle Companies Incorporated Price, Consensus and EPS Surprise
Carlisle Companies Incorporated Price, Consensus and EPS Surprise

Carlisle Companies Incorporated price-consensus-eps-surprise-chart | Carlisle Companies Incorporated Quote

Inside the Headlines

In the reported quarter, Carlisle’s revenues came in at $1,177.8 million, up 22% year over year. This increase was attributable to 20.7% rise in organic revenues, 0.4% benefit from acquired assets and a positive impact of 0.9% from changes in foreign exchange rates.

The top line surpassed the Zacks Consensus Estimate of $1,157 million by 1.8%.

The company reports results under three segments — Carlisle Construction Materials (“CCM”), Carlisle Interconnect Technologies (“CIT”) and Carlisle Fluid Technologies (“CFT”). In May 2021, it agreed to divest its Carlisle Brake & Friction (“CBF”) segment as part of its portfolio enhancement strategy. Effective second-quarter 2021, the CBF segment is included in the company’s discontinued operations. The quarterly segmental results are briefly discussed below.

Revenues from CCM totaled $937.3 million, increasing 27.5% year over year. It represented 79.6% of the company’s revenues. Organic revenues grew 26.8% on the back of strong demand for U.S. commercial roofing and strength across Architectural Metals and Polyurethane platform. Solid momentum in Europe was a vital factor as well.

CIT revenues, representing 14.3% of total revenues, were $168.9 million, down 8.2% year over year. The decline was primarily attributable to a 9.7% fall in organic revenues on account of decrease in orders from Aerospace customers, partially offset by benefits from acquisitions and price realization.

CFT revenues, representing 6.1% of total revenues, were $71.6 million, up 54% year over year. Organic revenues increased 44.3% on account of strength across Automotive Refinish and Transportation markets, and benefits from acquisitions.

Operating Margin Details

In the reported quarter, Carlisle’s cost of sales increased 25.1% to $870.1 million. It represented 73.9% of net sales compared with 72% a year ago.

Selling and administrative expenses increased 11.5% to $161.3 million. It represented 13.7% of net sales compared with 15% in the year-ago quarter. Research and development expenses totaled $13.8 million, up 17.9%.

Operating income was $133.8 million, up 16.9% year over year, while margin contracted 50 basis points to 11.4%. In June, it announced the commencement of construction on CCM's sixth TPO manufacturing line. The manufacturing line will be engaged in producing commercial roofing industry’s first 16-foot-wide TPO membranes. In July, it entered into an agreement to acquire California-based Henry Company for $1.575 billion in cash.

Balance Sheet and Cash Flow

Exiting the second quarter, Carlisle had cash and cash equivalents of $713.3 million compared with $767.2 million at the end of previous quarter. Long-term debt (including current portion) was $2,081.6 million, down from $2,082.2 million sequentially.

In the first six months of 2021, the company generated net cash of $171.5 million from operating activities compared with $226.3 million a year ago.

In the first half of 2021, the company rewarded shareholders with a dividend payout of $56 million. Amount spent on buying back shares totaled $265.6 million, up 38.5%.

Outlook

In 2021, Carlisle expects revenue growth in high-teens for the CCM segment, driven by strength across Architectural Metals, European and Polyurethanes markets. The CIT segment is expected to decline in the mid to high single-digit range while the CFT segment is likely to witness revenue growth in mid-teens on the back of strength in markets.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks are Griffon Corporation GFF, ITT Inc. ITT and 3M Company MMM, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Griffon delivered an earnings surprise of 122.71%, on average, in the trailing four quarters.

ITT delivered an earnings surprise of 26.36%, on average, in the trailing four quarters.

3M delivered an earnings surprise of 9.85%, on average, in the trailing four quarters.


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