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Carlisle (CSL) Q3 Earnings Surpass Estimates, Revenues Miss

Zacks Equity Research

Carlisle Companies Incorporated CSL reported mixed third-quarter 2019 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same.

The company’s adjusted earnings came in at $2.42 per share, surpassing the Zacks Consensus Estimate of $2.29. Also, the bottom line increased 44% from the year-ago quarter figure of $1.68.

Inside the Headlines

In the reported quarter, Carlisle’s net sales were $1,280.6 million, up 8.4% year over year. The improvement was driven by 3.4% contribution from organic sales growth and 5.4% benefit from acquired assets, partially offset by 0.4% adverse impact of foreign currency translation.

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 top line missed the Zacks Consensus Estimate of $1,295 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 $893.5 million, increasing 15% year over year. It represented 69.8% of net sales. Organic sales and acquired assets had a positive impact of 8.8% and 6.5%, respectively. These were partially offset by 0.3% adverse impact of forex woes.

CIT revenues, representing 18.9% of net sales, were $241.9 million, up 0.7% year over year. The improvement was driven 1.5% benefit from acquired assets, partially offset by 0.7% decline in organic sales and 0.1% adverse impact of unfavorable movements in foreign currencies.

CFT revenues, representing 5.3% of net sales, were $68.5 million, down 5.4% year over year. In the third quarter, organic sales declined 17.1% while forex woes had an adverse 1.1% impact. However, acquired assets had a positive impact of 12.8% on sales.

CBF revenues were $76.7 million, decreasing 16.6% year over year. It represented 6% of net sales. Organic sales declined 15% while unfavorable movements in foreign currencies had a 1.6% adverse impact.

Operating Margin Improves Y/Y

In the reported quarter, Carlisle’s cost of sales jumped 3.8% year over year to $900.4 million. It represented 70.3% of net sales compared with 73.4% a year ago.

Selling and administrative expenses increased 6.2% to $175 million. It represented 13.7% of net sales compared with 13.9% in the year-ago quarter. R&D expenses totaled $15.2 million, up from $12.3 million.

Operating profit was $191 million, up 36.4% year over year, while margin expanded 300 basis points to 14.9%. Margin benefited from improved sales volume, Carlisle Operating System and price realizations. These were partially offset by wage inflation and higher raw material costs.

Balance Sheet and Cash Flow

Exiting the third quarter, Carlisle had cash and cash equivalents of $658.1 million compared with $803.6 million recorded on Dec 31, 2018. Long-term debt was $1,590.2 million compared with $1,587.8 million at the end of 2018.

Outlook

For 2019, strength in aerospace, space, medical and defense markets as well as solid medical technologies platform have set the tone for robust growth. Also, the company is likely to benefit from acquired assets and strength across non-residential construction markets.

For 2019, on a segmental basis, sales are anticipated to grow in low-double digit range for CCM, in a mid-single digit range for CIT. However, for CFT, the company expects sales to be down in low-to-mid single digit range. For CBF, the company expects sales to be down in low double digits range.

Zacks Rank & Key Picks

Carlisle currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the same space are HC2 Holdings, Inc. HCHC, Macquarie Infrastructure Company MIC and KushCo Holdings Inc. KSHB. All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

HC2 Holdings delivered average positive earnings surprise of 48.55% in the trailing four quarters.

Macquarie’s earnings surprise in the last reported quarter was 26.04%.

KushCo’s earnings surprise in the last reported quarter was 14.29%.

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