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

Carlisle Companies (NYSE:CSL) Incorporated CSL (OTC:CSLLY) 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.

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 (NYSE:GFF) Corporation GFF, ITT (NYSE:ITT) Inc. ITT and 3M Company (NYSE:MMM) 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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