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Carlisle (CSL) Q2 Earnings & Revenues Surpass Estimates

Zacks Equity Research

Carlisle Companies Incorporated CSL reported better-than-expected results in second-quarter 2020, wherein both earnings and revenues beat the Zacks Consensus Estimate.

The company’s adjusted earnings were $1.61 per share, beating the consensus estimate of $1.06. However, the bottom line declined 38.5% on a year-over-year basis on account of lower revenues.

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 were $1,024.2 million, down 22.1% year over year. The decline was attributable to a 23.8% fall in organic revenues and 0.2% adverse impact of foreign currency translation, partially offset by 1.9% benefit from acquired assets.

The top line surpassed the Zacks Consensus Estimate of $998 million.

The company reports results under four segments — Carlisle Construction Materials (“CCM”), Carlisle Interconnect Technologies (“CIT”), Carlisle Fluid Technologies (“CFT”), and Carlisle Brake & Friction (“CBF”). The quarterly segmental results are briefly discussed below.

Revenues from CCM totaled $734.9 million, decreasing 19.7% year over year. It represented 71.8% of the company’s revenues. Organic revenues declined 19.7% due to a decline in sales volume across most product categories.

CIT revenues, representing 18% of total revenues, were $184 million, down 25% year over year. The decline was primarily attributable to a 33.5% decline in organic revenues on account of the significant order decline from Aerospace customers amid the coronavirus outbreak, partially offset by acquisitions and strength in the medical markets.

CFT revenues, representing 4.5% of total revenues, were $46.5 million, down 30.9% year over year, reflecting negative impacts of the coronavirus outbreak. In the second quarter, organic revenues declined 34.2% on account of lower sales volume, particularly in the transportation and automotive refinish markets.

CBF revenues were $58.8 million, decreasing 32.5% year over year. It represented 5.7% of revenues. Organic revenues in the quarter declined 31.1%. Softness in vehicle end markets and unfavorable movements in foreign currencies had an adverse impact.

Operating Margin Details

In the reported quarter, Carlisle’s cost of sales declined 19.3% to $743 million. It represented 72.5% of net sales compared with 70% a year ago.

Selling and administrative expenses decreased 11.1% to $153.1 million. It represented 14.9% of net sales compared with 13.1% in the year-ago quarter. R&D expenses totaled $14.1 million, down 8.4% year over year.

Operating profit was $113.4 million, down 45.3% year over year, while margin contracted 470 basis points to 11.1%. Margin was adversely impacted by lower sales volumes, wage inflation, higher raw material costs and higher restructuring costs. These were partially offset by benefits from Carlisle Operating System and lower expenses.

Balance Sheet and Cash Flow

Exiting the second quarter, Carlisle had cash and cash equivalents of $737.7 million compared with $351.2 million recorded as of Dec 31, 2019. Long-term debt (including current portion) was $2,078.0 million compared with $1,591.6 million at the end of 2019.

In the first six months of 2020, the company generated net cash of $226.3 million from operating activities compared with $197.1 million in the year-ago comparable period.

Outlook

On uncertainties, regarding the impacts of the coronavirus outbreak on financial and operating results, Carlisle has not provided its earnings and revenue guidance for 2020.

However, given its solid balance sheet and cash flow generating capabilities, the company anticipates generating free cash flow conversion of more than 125% in 2020. For the year, Carlisle anticipates incurring capital expenditure of $100-110 million. Its net interest expenses are expected to be $75 million.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks are Macquarie Infrastructure Company MIC, Danaher Corporation DHR and Cintas Corporation CTAS. While Macquarie currently sports a Zacks Rank #1 (Strong Buy), Danaher and Cintas carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Macquarie delivered an earnings surprise of 3.13%, on average, in the trailing four quarters.

Danaher delivered an earnings surprise of 2.74%, on average, in the trailing four quarters.

Cintas delivered an earnings surprise of 8.33%, on average, in the trailing four quarters.

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