Carlisle Prices Notes Offering, To Repay Debts With Proceeds

Carlisle Companies Incorporated (NYSE:CSL) , on Feb 13, announced the pricing of $750 million worth of senior notes. Subject to the fulfilment of customary conditions, the public offering of notes is expected to close on Feb 28, 2020.

It is worth mentioning here that the company’s shares gained 1% last Friday, ending the trading session at $163.31.

Inside the Headlines

As mentioned, the notes — due to expire on Mar 1, 2030, and carrying a coupon rate of 2.750% — have been offered at 98.756% of the principal amount. Interest on notes will be paid semi-annually, each on Mar 1 and Sep 1. The first interest payment will be made on Sep 1, 2020.

Notably, the issuer has the option to redeem wholly or in parts the senior notes, prior to Dec 1, 2029.

Carlisle will use funds raised from the notes offering to redeem 5.125% senior notes that are due to expire in 2020. Also, the company may use the funds for general corporate purposes (that includes payment of buyout-related expenses).

We believe that offerings of senior notes will increase the company’s debts and in turn, might inflate its financial obligations and hurt profitability. However, measures relating to redeeming notes will be a relief.

Carlisle’s Debt Profile

The company has a highly leveraged balance sheet. At the end of 2019, the company’s long-term debts were at $1,341.4 million. Its interest expenses totaled $66.1 million in the year, reflecting 2.2% increase from the previous year.

In February 2020, the company amended and extended credit facility worth $1 billion. The facility will mature in 2025. The proceeds from this facility will be used for acquisitions, repaying existing debts, capital spending, general corporate purposes and others.

Zacks Rank, Estimate Trend and Price Performance

With a market capitalization of $9.1 billion, Carlisle currently carries a Zacks Rank #4 (Sell). In the past 30 days, the Zacks Consensus Estimate for its earnings has been lowered by 1% to $8.96 for 2020 and raised by 2.2% to $10.07 for 2021.

Carlisle Companies Incorporated Price and Consensus