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

Zacks Equity Research

Carlisle Companies Incorporated CSL reported better-than-expected second-quarter 2019 results, delivering a positive earnings surprise of 11%.

The company’s adjusted earnings were $2.62 per share, surpassing the Zacks Consensus Estimate of $2.36. Also, the bottom line increased 33% from the year-ago quarter figure of $1.97.

Inside the Headlines

In the reported quarter, Carlisle’s net sales were $1,314.8 million, up 6.4% year over year. The improvement was driven by 2.3% contribution from organic sales growth and 4.7% benefit from acquired assets, partially offset by 0.6% adverse impact of foreign currency translation.

The top line surpassed the Zacks Consensus Estimate of $1,312 million.

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

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 $915 million, increasing 10.4% year over year. It represented 69.6% of net sales. Organic sales and acquired assets had a positive impact of 4.7% and 6.1%, respectively. These were partially offset by 0.4% adverse impact of forex woes.

CIT revenues, representing 18.7% of net sales, were $245.4 million, up 3.2% year over year. The improvement was driven by 2.2% growth in organic sales and 1.6% benefit from acquired assets, partially offset by 0.6% adverse impact of unfavorable movements in foreign currencies.

CFT revenues, representing 5.1% of net sales, were $67.3 million, down 8.2% year over year. In the reported quarter, organic sales declined 11.7% while forex woes had an adverse 2.4% impact. However, acquired assets had a positive impact of 5.9% on sales.

CBF revenues were $87.1 million, decreasing 9.7% year over year. It represented 6.6% of net sales. Organic sales declined 7% while unfavorable movements in foreign currencies had a 2.7% adverse impact.

Operating Margin Improves Y/Y

In the reported quarter, Carlisle’s cost of sales jumped 1.8% year over year to $920.6 million. It represented 70% of net sales compared with 73.1% a year ago.

Selling and administrative expenses increased 7.8% to $172.3 million. It represented 13.1% of net sales compared with 12.9% in the year-ago quarter. R&D expenses totaled $15.4 million, up from $14.2 million.

Operating profit was $207.2 million, up 29.7% year over year, while margin expanded 290 basis points to 15.8%. Margin benefited from improved sales volume, Carlisle Operating System and price realizations. These were partially offset by wage inflation and acquisition- related charges.

Balance Sheet and Cash Flow

Exiting the second quarter, Carlisle had cash and cash equivalents of $422 million compared with $803.6 million recorded on Dec 31, 2018. Long-term debt was $1,589.4 million compared with $1,587.8 million at the end of 2018.

Outlook

For 2019, strength in aerospace and defense markets as well as solid med-tech platform have set the tone for robust growth. Also, the company is likely to benefit from acquired assets and healthy demand for both new construction and replacement products. Its solid product portfolio and geographical diversity are expected to boost growth.

On a segmental basis, sales are anticipated to grow in a low-double digit range for CCM, in a mid-to-high single digit range for CIT, mid-single digit range for CFT. However, for CBF, the company expects sales to be down in a mid-single digit range.

Zacks Rank & Key Picks

Carlisle currently carries a Zacks Rank #3 (Hold).

Some top-ranked stocks in the same space are General Electric Company GE, Crane Co. CR and Danaher Corporation DHR. While General Electric sports a Zacks Rank #1 (Strong Buy), Crane and Danaher carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

General Electric delivered average earnings surprise of 5.56% in the trailing four quarters.

Crane pulled off average positive earnings surprise of 6.12% in the trailing four quarters.

Danaher delivered average earnings surprise of 3.25% in the trailing four quarters.

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