Acquisition Announcement - Carlisle Companies Incorporated (CSL) has signed a definitive deal to acquire certain assets of Bonded Logic, Inc. and Phoenix Fibers, LLC, indicating CSL's intention to become a pure-play building products company [1] - The financial terms of the acquisition have not been disclosed [1] Acquisition Rationale - The acquisition aligns with Carlisle's Vision 2030 strategy, aimed at strengthening its business and product portfolio [2] - Bonded Logic's advanced natural fiber insulation products will enhance CSL's building envelope product offerings [2] Timeline - The acquisition is expected to be completed in the second quarter of 2025, subject to customary closing conditions [3] Market Position and Performance - Carlisle has a market capitalization of $17.3 billion and currently holds a Zacks Rank 3 (Hold) [4] - The company is benefiting from strength in the non-residential market, particularly from increased re-roofing activities [4] - Revenues are anticipated to grow in the mid-single digits in 2025 due to strong momentum in the Construction Materials unit [4] Challenges - The Weatherproofing Technologies unit is facing challenges due to lower volumes from a slowdown in the residential construction market [5] - High debt levels are also a concern for the company [5] Stock Performance - Over the past three months, CSL's shares have increased by 12%, outperforming the industry's growth of 1.3% [6] - The Zacks Consensus Estimate for CSL's 2025 earnings has decreased by 0.1% in the last 60 days [6] - CSL has a trailing four-quarter average earnings surprise of 2.3% [6]

Core Viewpoint - Griffon Corporation (GFF) and Carlisle Companies Incorporated (CSL) are both key players in the Zacks Diversified Operations industry, focusing on innovative home and building envelope products and solutions. The article evaluates their growth prospects and challenges to determine which company presents a better investment opportunity today [1][2]. Griffon Corporation (GFF) - GFF is experiencing strong fundamentals in the Home and Building Products segment, with stable demand driven by repair and remodeling activities. The U.S. residential construction market is expected to recover, supported by builder incentives and anticipated interest rate cuts [3]. - The Consumer and Professional Products (CPP) segment faces challenges due to reduced consumer demand in North America and the UK, particularly for outdoor tools and decor [4]. - GFF has expanded its business through acquisitions, notably acquiring Pope, an Australia-based company, which is expected to generate annual revenues of approximately $25 million and positively impact earnings in its first full year [5]. - GFF is committed to shareholder returns, paying dividends of $23.4 million and repurchasing shares worth $72.9 million in the fiscal second quarter. The company also approved a new $400 million share repurchase authorization and increased its quarterly dividend by 20% [6]. Carlisle Companies Incorporated (CSL) - CSL is experiencing strong momentum in the Construction Materials segment, driven by high demand for reroofing products and increased sales in the non-residential construction market due to the acquisition of MTL [7]. - The Weatherproofing Technologies segment is negatively impacted by lower volumes in the residential construction market and project delays, attributed to high interest rates and unfavorable weather conditions [8]. - CSL rewarded shareholders with a dividend payment of $45.2 million and share buybacks worth $400 million in the first three months of 2025, along with an 18% dividend hike in August 2024 [9]. - The company is facing rising raw material and labor costs, which are increasing direct expenses and selling, general, and administrative expenses. In the first quarter, the cost of sales rose by 1.8% year over year, while selling and administrative expenses increased by 16.3% [10][11]. Financial Performance and Valuation - The Zacks Consensus Estimate for GFF's fiscal 2025 sales indicates a year-over-year decline of 1.2%, while EPS is expected to grow by 11.5%. GFF's EPS estimates have been trending upward over the past 60 days [12]. - In contrast, CSL's 2025 sales and EPS estimates imply year-over-year growth of 4.9% and 10.3%, respectively, but its EPS estimates have declined over the past 60 days [12]. - Over the past year, CSL's shares have decreased by 4.9%, while GFF's stock has increased by 5.4% [15]. - CSL is trading at a forward price-to-earnings ratio of 17.15X, above its three-year median of 14.84X, while GFF's forward earnings multiple is at 11.41X, close to its median of 10.66X [17]. Conclusion - Both companies hold a Zacks Rank 3 (Hold), making investment decisions challenging. CSL's strength in Construction Materials is offset by weaknesses in its Weatherproofing Technologies unit and rising costs, suggesting caution for investors [18]. - Conversely, GFF's strengths in the Home and Building Products segment, growth investments, and shareholder-friendly policies indicate a more favorable outlook, making it a more attractive investment option compared to CSL [19].

Group 1: Company Performance - Carlisle Companies Incorporated (CSL) is experiencing strong momentum in the Construction Materials segment, with a 2% year-over-year revenue increase in Q1 2025, driven by higher sales in the non-residential construction market and acquisitions [1] - The company anticipates mid-single-digit revenue growth for the Construction Materials segment in 2025, supported by strong contractor backlogs and customer demand [2] - CSL's acquisitions, including ThermaFoam, Plasti-Fab, and MTL Holdings, have positively impacted net sales growth by 4.6% in Q1 2025, expanding its product offerings and market presence [3][4] Group 2: Shareholder Returns - In Q1 2025, CSL rewarded shareholders with a dividend payment of $45.2 million, an increase of 8.9% year-over-year, and repurchased shares worth $400 million, up 166.5% year-over-year [5] Group 3: Challenges - The Weatherproofing Technologies segment is facing challenges, with organic revenues declining by 11.7% year-over-year due to lower volumes from a slowdown in the residential construction market and project delays [9] - The company is also dealing with rising raw material and labor costs, which have increased selling and administrative expenses by 16.3% and cost of sales by 1.8% year-over-year in Q1 2025 [10]

Financial Performance - Carlisle reported revenue of $1.1 billion for the first quarter of 2025, essentially flat year-over-year, with diluted EPS of $3.13[57] - Operating income for the company decreased to $183.6 million, with an operating margin of 16.8%, down from 20.5% in the previous year[63] - Gross profit decreased by 3.3% to $385.7 million, with a gross margin of 35.2%[65] - Net income for Q1 2025 was $143.3 million, down from $192.3 million in Q1 2024, with income from continuing operations at $140.1 million compared to $170.9 million[82] - Adjusted EBITDA for Q1 2025 was $238.4 million, a decrease from $265.5 million in Q1 2024, resulting in an adjusted EBITDA margin of 21.8% compared to 24.2%[82] - EBIT for Q1 2025 was $183.4 million, down from $225.5 million in Q1 2024, with adjusted EBIT at $190.6 million compared to $226.6 million[82] Revenue Segments - Revenues for Carlisle Construction Materials segment increased by 1.9% to $798.5 million, primarily due to higher sales in the non-residential construction end-market[72] - The Carlisle Weatherproofing Technologies segment saw a revenue decrease of 5.0% to $297.3 million, attributed to lower sales in the residential construction end-market[74] - Recent acquisitions contributed $50 million in revenue during the first quarter, with expectations that these acquisitions will exceed original synergy projections[60] Cash Flow and Investments - Operating cash flow for Q1 2025 was $1.8 million, a decrease of $161.7 million compared to Q1 2024, primarily due to lower income from continuing operations and higher working capital uses[78] - Cash used in investing activities was $78.9 million in Q1 2025, mainly for the purchase of ThermaFoam ($52.9 million) and capital expenditures ($29.0 million)[79] - Cash used in financing activities totaled $456.4 million in Q1 2025, primarily for share repurchases ($400.0 million) and cash dividends ($45.2 million)[80] Strategic Focus - Carlisle raised its 2025 share repurchase target from $800 million to $1 billion, having repurchased 1.2 million shares for $400 million in the first quarter[61] - Research and development expenses increased by 16.3% to $10.7 million, reflecting a commitment to innovation and new product development[67] - The company plans to continue focusing on strategic acquisitions and product development to enhance competitive positioning in the market[84] Market Conditions - The company expects a low-single-digit increase in commercial roofing volumes driven by re-roofing demand, while residential volumes are anticipated to decrease low-single-digits due to buyer uncertainty and affordability challenges[59] - There were no material changes in the company's market risk for the three months ended March 31, 2025[85] - The company anticipates potential impacts on future performance due to various external factors, including competition, economic conditions, and geopolitical events[84] Working Capital - The company reported a significant increase in working capital uses, with accounts receivable up by $29.1 million and accounts payable by $28.1 million compared to the previous year[78] - The provision for income taxes decreased by 20.5% to $34.9 million, reflecting lower pre-tax income[70]

Core Viewpoint - Carlisle Companies Incorporated (CSL) reported first-quarter 2025 adjusted earnings of $3.61 per share, exceeding the Zacks Consensus Estimate of $3.53, but reflecting a 3% year-over-year decline [1] - Total revenues for CSL were $1,096 million, slightly below the consensus estimate of $1,101 million, marking a 0.1% decrease year over year [1] Segmental Discussion - Revenues from the Carlisle Construction Materials segment increased by 2% year over year to $799 million, driven by contributions from the MTL acquisition and strong end-market demand, despite a 1% decrease in organic revenues [2] - Revenues from the Carlisle Weatherproofing Technologies segment decreased by 5% year over year to $297 million, primarily due to lower construction activities, with organic revenues slipping 12% [3] Margin Profile - Cost of sales rose by 1.8% year over year to $710.1 million, while selling and administrative expenses increased by 16.3% to $194 million [4] - Operating income fell by 18.4% year over year to $183.6 million, resulting in an operating margin decrease of 370 basis points to 16.8% [4] Balance Sheet and Cash Flow - At the end of Q1 2025, CSL had cash and cash equivalents of $220.2 million, down from $753.5 million at the end of 2024, while long-term debt remained stable at $1.89 billion [5] - Net cash generated from operating activities in the first three months of 2025 was $1.8 million, a significant decrease from $163.5 million in the same period last year [5] Shareholder Returns - CSL rewarded shareholders with a dividend payment of $45.2 million, an increase of 8.9% year over year, and repurchased shares worth $400 million, up 166.5% year over year [6] Outlook - The company reaffirmed its financial guidance for 2025, expecting mid-single-digit revenue growth and earnings growth of over 10% year over year, with an anticipated adjusted EBITDA margin expansion of approximately 50 basis points [7]

First Quarter 2025 Earnings Call April 23, 2025 Forward Looking Statements & Non-GAAP Financial Measures This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally use words such as "expect," "foresee," "anticipate," "believe," "project," "should," "estimate," "will," "plans," "intends," "forecast," and similar expressions, and reflect our expectations concerning the future. Such statements are made b ...

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $1.1 billion, essentially flat year-over-year, with diluted EPS at $3.13 and adjusted EPS at $3.61, reflecting a 3% decrease from the prior year [6][36] - Adjusted EBITDA margin for the quarter was 21.8%, down 240 basis points from Q1 2024 [36] - The company repurchased 1.2 million shares for $400 million, bringing total repurchases since 2017 to $5 billion [16] Business Line Data and Key Metrics Changes - In the CCM segment, Q1 revenues were $799 million, up 2% year-over-year, supported by recurring reroofing activity and accelerated orders due to anticipated tariff-related price increases [38] - CWT segment revenues were $297 million, down 5% year-over-year, with organic revenue declining by 12% due to challenges in residential end markets [41] - Adjusted EBITDA for CCM was $217 million, down 5% year-over-year, while CWT's adjusted EBITDA was $46 million, down 28% year-over-year [39][42] Market Data and Key Metrics Changes - The ongoing strength in reroofing demand, which represents 70% of CCM's commercial business, continues to be a key driver of performance [8] - Residential volumes are expected to decline low single digits for 2025 due to buyer uncertainty and affordability challenges [16] - Inventory levels in the channel remain low compared to historical comparisons, which may benefit pricing [16][115] Company Strategy and Development Direction - The company is committed to its Vision 2030 strategy, focusing on innovation and capital allocation to enhance its leadership position within the building envelope [18][34] - The acquisition of MTL is expected to exceed initial synergy estimates, contributing significantly to the company's growth [20] - The company plans to deploy approximately $1 billion into share repurchases in 2025, an increase from the original projection of $800 million [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the roofing season, with expectations for low single-digit increases in commercial roofing volumes [15] - The company anticipates mid-single-digit revenue growth for the full year 2025, with adjusted EBITDA margin expansion of approximately 50 basis points [49] - Concerns remain regarding the indirect impacts of tariffs and potential economic uncertainty affecting contractors and suppliers [13][14] Other Important Information - The company is investing significantly in R&D to accelerate innovation efforts, with a focus on energy-efficient and labor-saving solutions [31][34] - The company expects to generate full-year free cash flow of approximately $1 billion for 2025, providing financial flexibility for capital deployment [48] - The company has maintained a strong liquidity position with a net debt to EBITDA ratio of 1.2 times [44] Q&A Session Summary Question: Volume cadence within CCM and contractor sentiment - Management noted optimism among contractors regarding the construction season, with volumes building after a slow start due to weather challenges [62][64] Question: Changes in cost composition and pricing outlook - Management indicated minimal impact from tariffs and slight upward pricing pressure on MDI, with expectations for neutral raw material costs for the year [69][73] Question: Customer perception of new products and cash generation - Management stated that customers are not delaying necessary replacements and emphasized the importance of labor efficiency in driving demand for innovative products [80][82] - The company remains confident in generating strong cash flow, even in a potential revenue dip, due to effective working capital management [87][89] Question: Guidance for CWT and residential market recovery - Management expects residential markets to show moderate recovery in the second half of the year, with overall guidance for CWT remaining unchanged [135][136]

Core Insights - Carlisle (CSL) reported revenue of $1.1 billion for the quarter ended March 2025, reflecting a slight decline of 0.1% year-over-year and a negative surprise of -0.46% compared to the Zacks Consensus Estimate [1] - The company's EPS was $3.61, down from $3.72 in the same quarter last year, but exceeded the consensus estimate of $3.53 by +2.27% [1] Revenue Performance - Carlisle Weatherproofing Technologies (CWT) generated revenues of $297.30 million, which was below the average estimate of $317.84 million, marking a year-over-year decline of -5% [4] - Carlisle Construction Materials (CCM) reported revenues of $798.50 million, surpassing the average estimate of $783.03 million, with a year-over-year increase of +1.9% [4] Adjusted EBIT Analysis - Adjusted EBIT for Carlisle Construction Materials (CCM) was $194.90 million, exceeding the average estimate of $186.16 million [4] - Adjusted EBIT for Corporate and unallocated was -$25.30 million, slightly better than the average estimate of -$25.99 million [4] - Adjusted EBIT for Carlisle Weatherproofing Technologies (CWT) was $21 million, which fell short of the average estimate of $30.25 million [4] Stock Performance - Over the past month, shares of Carlisle have returned +1.9%, contrasting with a -6.6% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Viewpoint - Carlisle (CSL) reported quarterly earnings of $3.61 per share, exceeding the Zacks Consensus Estimate of $3.53 per share, but down from $3.72 per share a year ago, indicating a 2.27% earnings surprise [1][2] Financial Performance - The company posted revenues of $1.1 billion for the quarter ended March 2025, which was a miss by 0.46% compared to the Zacks Consensus Estimate, and remained unchanged from the previous year's revenues [2] - Over the last four quarters, Carlisle has surpassed consensus EPS estimates three times and topped consensus revenue estimates only once [2] Stock Performance - Carlisle shares have declined approximately 3.6% since the beginning of the year, while the S&P 500 has seen a decline of 10.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $6.96 on revenues of $1.52 billion, and for the current fiscal year, it is $22.31 on revenues of $5.26 billion [7] - The trend of estimate revisions for Carlisle is mixed, which could change following the recent earnings report [6] Industry Context - The Diversified Operations industry, to which Carlisle belongs, is currently ranked in the top 27% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Another company in the same industry, Markel Group (MKL), is expected to report quarterly earnings of $18.89 per share, reflecting a year-over-year increase of 4% [9]

Revenue and Earnings - Revenue for Q1 2025 was $1.1 billion, essentially flat year-over-year, with diluted EPS of $3.13 and adjusted EPS of $3.61[2] - Revenue for Carlisle Construction Materials (CCM) was $799 million, a 2% increase year-over-year, while Carlisle Weatherproofing Technologies (CWT) revenue declined by 5%[12] - Total revenues for the three months ended March 31, 2025, were $1,095.8 million, slightly down from $1,096.5 million in the same period of 2024[28] - Adjusted net income for the three months ended March 31, 2025, was $161.5 million, with an adjusted EPS of $3.61, compared to $180.5 million and $3.72 for the same period in 2024[38] - Income from continuing operations (GAAP) for Q1 2025 was $140.1 million, resulting in a diluted EPS of $3.13, down from $170.9 million and $3.52 in Q1 2024[38] - The company reported a decrease in net income (GAAP) to $143.3 million in Q1 2025 from $192.3 million in Q1 2024[38] Operating Performance - Operating income decreased by 18.5% year-over-year to $183.6 million, with an operating margin of 16.8%[9] - Adjusted EBITDA for the three months ended March 31, 2025, was $238.4 million, compared to $265.5 million in 2024, reflecting a decrease in adjusted EBITDA margin from 24.2% to 21.8%[34] - The company’s income from continuing operations for the three months ended March 31, 2025, was $140.1 million, down from $170.9 million in 2024[34] Cash Flow and Investments - Free cash flow is expected to generate approximately $1 billion in 2025, with share repurchase target raised from $800 million to $1 billion[6] - Operating cash flow used by continuing operations was $1.4 million, with free cash flow used by continuing operations decreasing by $162 million year-over-year[11] - Free cash flow from continuing operations was negative $30.4 million for the three months ended March 31, 2025, down from $132.0 million in 2024[31] - The company reported a net cash used in investing activities of $78.9 million, compared to $32.0 million in the prior year, primarily due to acquisitions totaling $49.9 million[23] Acquisitions and Synergies - Recent acquisitions contributed $50 million in revenue during Q1 2025, with expectations to exceed original synergy projections[5] - The company incurred $6.8 million in costs related to acquisitions, which contributed $5.2 million and $0.12 to adjusted net income[38] - Acquisition-related amortization for Q1 2025 was $28.4 million, impacting adjusted net income by $21.6 million and $0.48 per share[38] Market Trends and Outlook - The company anticipates mid-single-digit revenue growth for FY 2025, with adjusted EBITDA margins expected to expand by approximately 50 basis points[15] - The Carlisle Market Survey indicates a low-single-digit increase in commercial roofing volumes, primarily driven by re-roofing demand[4] Financial Position - The company’s cash and cash equivalents decreased to $220.2 million as of March 31, 2025, from $753.5 million at the beginning of the period[25] - Long-term debt increased slightly to $1,894.4 million as of March 31, 2025, compared to $1,890.6 million at the end of 2024[25] Shareholder Returns - The company repurchased $400.0 million of common stock during the three months ended March 31, 2025, compared to $150.0 million in the same period of 2024[23]