Carlisle(CSL) - 2025 Q2 - Quarterly Report

PART I—Financial Information This section presents unaudited condensed consolidated financial statements, including income, balance, cash flow, and equity, with detailed explanatory notes Item 1. Financial Statements This section provides the unaudited condensed consolidated financial statements and comprehensive notes covering presentation, segment data, acquisitions, and other key financial details Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) This section presents the unaudited condensed consolidated statements of income and comprehensive income for the three and six months ended June 30, 2025 and 2024 Three Months Ended June 30, 2025 vs 2024 | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :--------------------------------- | :----------------- | :----------------- | :----------- | | Revenues | $1,449.5 | $1,450.6 | $(1.1) (-0.1%) | | Operating income | $335.0 | $377.5 | $(42.5) (-11.3%) | | Net income | $255.8 | $712.4 | $(456.6) (-64.1%) | | Diluted EPS | $5.88 | $14.84 | $(8.96) (-60.4%) | | Income from discontinued operations | $0.01 | $8.90 | $(8.89) (-99.9%) | Six Months Ended June 30, 2025 vs 2024 | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :--------------------------------- | :----------------- | :----------------- | :----------- | | Revenues | $2,545.3 | $2,547.1 | $(1.8) (-0.1%) | | Operating income | $518.6 | $602.7 | $(84.1) (-13.9%) | | Net income | $399.1 | $904.7 | $(505.6) (-55.9%) | | Diluted EPS | $9.05 | $18.75 | $(9.70) (-51.7%) | | Income from discontinued operations | $0.08 | $9.30 | $(9.22) (-99.1%) | Condensed Consolidated Balance Sheets (Unaudited) This section presents the unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024 As of June 30, 2025 vs December 31, 2024 | Metric | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | Change | | :--------------------------------- | :-------------------------- | :-------------------------- | :------- | | Total current assets | $1,526.9 | $1,926.3 | $(399.4) | | Total assets | $5,519.4 | $5,816.6 | $(297.2) | | Total current liabilities | $697.1 | $665.8 | $31.3 | | Long-term debt | $1,891.5 | $1,887.4 | $4.1 | | Total liabilities and equity | $5,519.4 | $5,816.6 | $(297.2) | | Cash and cash equivalents | $68.4 | $753.5 | $(685.1) | Condensed Consolidated Statements of Cash Flows (Unaudited) This section presents the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 Six Months Ended June 30, 2025 vs 2024 | Metric | 2025 (in millions) | 2024 (in millions) | Change | | :--------------------------------- | :----------------- | :----------------- | :------- | | Net cash provided by operating activities | $288.9 | $346.9 | $(58.0) | | Net cash (used in) provided by investing activities | $(165.9) | $1,526.6 | $(1,692.5) | | Net cash used in financing activities | $(808.9) | $(741.9) | $(67.0) | | Change in cash and cash equivalents | $(685.1) | $1,130.8 | $(1,815.9) | Condensed Consolidated Statements of Stockholders' Equity (Unaudited) This section presents the unaudited condensed consolidated statements of stockholders' equity for the six months ended June 30, 2025 and 2024 Stockholders' Equity as of June 30, 2025 vs June 30, 2024 | Metric | June 30, 2025 (in millions) | June 30, 2024 (in millions) | Change | | :--------------------------------- | :-------------------------- | :-------------------------- | :------- | | Total Stockholders' Equity | $2,120.6 | $3,004.3 | $(883.7) | | Retained Earnings | $7,083.8 | $6,456.9 | $626.9 | | Treasury Stock (Cost) | $(5,555.3) | $(3,988.6) | $(1,566.7) | - Share Repurchases (Six Months Ended June 30): - 2025: $706.3 million (2.0 million shares) - 2024: $705.5 million (1.8 million shares)[17] - Dividends Paid (Six Months Ended June 30): - 2025: $88.4 million ($2.00 per share) - 2024: $81.8 million ($1.70 per share)[17] Notes to Condensed Consolidated Financial Statements (Unaudited) This section provides detailed notes explaining the basis of presentation, segment information, recent acquisitions, discontinued operations, and other financial statement items Note 1—Basis of Presentation This note outlines the accounting principles and assumptions used in preparing the unaudited interim financial statements - The unaudited Condensed Consolidated Financial Statements are prepared in accordance with GAAP but do not include all information required for complete financial statements, and should be read with the 2024 Annual Report on Form 10-K[20] - Management believes the statements contain all necessary normal and recurring adjustments for fair presentation of interim financial results[21] - No recently issued accounting pronouncements are expected to materially affect financial position or results[22] Note 2—Segment Information This note provides financial data and descriptions for the company's reportable operating segments, Carlisle Construction Materials and Carlisle Weatherproofing Technologies - Reportable Segments: - Carlisle Construction Materials (CCM): Produces premium single-ply roofing products, warranted roof systems, and accessories for commercial buildings, including EPDM, TPO, PVC membrane, polyiso insulation, and engineered metal roofing/wall panel systems - Carlisle Weatherproofing Technologies (CWT): Provides building envelope solutions for energy efficiency and sustainability in commercial and residential applications, including waterproofing, moisture protection, roofing underlayments, air/vapor barriers, sealants, roof coatings, spray polyurethane foam, expanded polystyrene insulation, and HVAC products[23][24] Segment Operating Income (Three Months Ended June 30, 2025 vs 2024) | Segment | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :--------------------------------- | :----------------- | :----------------- | :----------- | | CCM Operating Income | $323.8 | $346.8 | $(23.0) (-6.6%) | | CWT Operating Income | $42.5 | $59.2 | $(16.7) (-28.2%) | Segment Operating Income (Six Months Ended June 30, 2025 vs 2024) | Segment | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :--------------------------------- | :----------------- | :----------------- | :----------- | | CCM Operating Income | $518.6 | $558.0 | $(39.4) (-7.1%) | | CWT Operating Income | $58.7 | $101.4 | $(42.7) (-42.1%) | Note 3—Acquisitions This note details recent acquisitions, including Bonded Logic, ThermaFoam, PFB, and MTL, and their strategic alignment with the company's building products focus - 2025 Acquisitions: - Bonded Logic (June 30, 2025): Acquired for $60.7 million cash, a manufacturer of sustainable thermal and acoustical insulation products, aligning with Vision 2030 and strategic pivot to building products - ThermaFoam (February 3, 2025): Acquired for $52.9 million cash, provides expanded polystyrene insulation products, supporting Vision 2030 and expanding geographic coverage[29][32] - 2024 Acquisitions: - PFB (December 18, 2024): Acquired 100% equity for $266.5 million cash, a leading vertically integrated provider of expanded polystyrene insulation products in Canada and the Midwestern U.S - MTL (May 1, 2024): Acquired 100% equity for $424.6 million cash, a leading provider of prefabricated perimeter edge metal systems and non-insulated architectural metal wall systems[36][40] Note 4—Discontinued Operations This note provides information on the sale of Carlisle Interconnect Technologies and the resulting income from discontinued operations - Sale of Carlisle Interconnect Technologies (CIT): Completed on May 21, 2024, for $2.025 billion cash proceeds[44] - Income from Discontinued Operations (Three Months Ended June 30): - 2025: $0.3 million - 2024: $427.2 million (primarily due to $462.2 million gain on sale of discontinued operations)[44][45] - Income from Discontinued Operations (Six Months Ended June 30): - 2025: $3.5 million - 2024: $448.6 million (primarily due to $454.4 million gain on sale of discontinued operations)[45] Note 5—Earnings Per Share This note details the calculation of basic and diluted earnings per share from continuing operations, including the treatment of participating securities - Diluted EPS from Continuing Operations (Three Months Ended June 30): - 2025: $5.87 - 2024: $5.94[48] - Diluted EPS from Continuing Operations (Six Months Ended June 30): - 2025: $8.97 - 2024: $9.45[48] - Restricted shares are considered participating securities for EPS calculation using the two-class method, while diluted EPS uses the treasury stock method, including stock options and performance share awards[47][48] Note 6—Revenues This note provides a breakdown of revenues by end-market and geographic area, along with information on contract liabilities Revenues by End-Market (Three Months Ended June 30, 2025 vs 2024) | End-Market | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :-------------------------- | :----------------- | :----------------- | :----------- | | Non-residential construction | $1,176.5 | $1,169.8 | $6.7 (0.6%) | | Residential construction | $242.4 | $246.6 | $(4.2) (-1.7%) | | Other | $30.6 | $34.2 | $(3.6) (-10.5%) | | Total Revenues | $1,449.5 | $1,450.6 | $(1.1) (-0.1%) | Revenues by Geographic Area (Three Months Ended June 30, 2025 vs 2024) | Region | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :-------------------------- | :----------------- | :----------------- | :----------- | | United States | $1,312.6 | $1,322.0 | $(9.4) (-0.7%) | | International | $136.9 | $128.6 | $8.3 (6.5%) | | Total Revenues | $1,449.5 | $1,450.6 | $(1.1) (-0.1%) | - Contract liabilities balance as of June 30, 2025, was $359.0 million, up from $335.2 million in 2024[53] Note 7—Income Taxes This note discusses the effective income tax rate on continuing operations and the impact of recent tax legislation - Effective income tax rate on continuing operations for the six months ended June 30, 2025, was 20.7%, down from 22.4% in 2024, including a $12.6 million tax benefit from discrete activity[54] - The 'One Big Beautiful Bill Act' enacted on July 4, 2025, is not expected to materially affect the Company's financial position or results[55] Note 8—Inventories This note provides a detailed breakdown of inventory categories, including raw materials, work-in-process, finished goods, and reserves Inventories as of June 30, 2025 vs December 31, 2024 | Category | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | Change | | :----------------- | :-------------------------- | :-------------------------- | :------- | | Raw materials | $169.2 | $157.0 | $12.2 | | Work-in-process | $30.1 | $26.1 | $4.0 | | Finished goods | $314.3 | $299.8 | $14.5 | | Reserves | $(12.7) | $(10.2) | $(2.5) | | Total Inventories | $500.9 | $472.7 | $28.2 | Note 9—Other Intangible Assets This note presents the net book value of other intangible assets, categorized by customer relationships, trade names, and technology Net Book Value of Other Intangible Assets as of June 30, 2025 vs December 31, 2024 | Category | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | Change | | :-------------------------- | :-------------------------- | :-------------------------- | :------- | | Customer relationships | $1,045.3 | $1,075.5 | $(30.2) | | Indefinite lived trade names | $254.4 | $252.0 | $2.4 | | Technology | $92.1 | $82.2 | $9.9 | | Definite-lived trade names | $77.5 | $80.0 | $(2.5) | | Other | $14.8 | $15.2 | $(0.4) | | Total Net Book Value | $1,484.1 | $1,504.9 | $(20.8) | Note 10—Long-term Debt This note details the company's long-term debt obligations, including notes due, unamortized discounts, and compliance with debt covenants Long-term Debt as of June 30, 2025 vs December 31, 2024 | Debt Type | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | | :----------------- | :-------------------------- | :-------------------------- | | 2.20% Notes due 2032 | $550.0 | $550.0 | | 2.75% Notes due 2030 | $750.0 | $750.0 | | 3.75% Notes due 2027 | $600.0 | $600.0 | | Unamortized discount, etc. | $(4.2) | $(9.4) | | Total Debt | $1,895.8 | $1,890.6 | | Less: current portion | $4.3 | $3.2 | | Long-term Debt | $1,891.5 | $1,887.4 | - No borrowings or repayments under the revolving credit facility during the six months ended June 30, 2025; $1.0 billion available[59] - The Company was in compliance with all debt covenants as of June 30, 2025, and December 31, 2024[60] Note 11—Commitments and Contingencies This note addresses legal proceedings and other commitments, confirming no material developments during the reporting period - No material developments in legal proceedings or new material legal proceedings during the six months ended June 30, 2025[62] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance, highlighting flat revenues, resilient margins in re-roofing markets, and challenges in residential construction. It details strategic initiatives, recent acquisitions, and innovation efforts, along with a summary of consolidated and segment-specific results, liquidity, and capital resources Executive Overview This overview highlights Q2 2025 diluted EPS, flat revenues, resilient margins, market sentiment, strategic pillars, and recent acquisitions and innovation efforts - Diluted EPS from continuing operations was $5.87 for Q2 2025, with revenues flat at $1.4 billion and margins above Vision 2030 targets despite new construction market deterioration[65] - Commercial re-roofing market showed mid-single-digit growth, contributing approximately 70% of CCM's commercial roofing business, offsetting lower-than-expected results at CWT due to continued declines in residential end-markets[66][67] - Carlisle Market Survey in July confirmed a negative shift in contractor and distributor sentiment, with expectations of continued pressures through 2025, leading to project delays and slower new construction bidding[68] - The company remains committed to Vision 2030 strategic pillars, including operational excellence (Carlisle Operating System, automation), enhancing the Carlisle Experience, and disciplined capital allocation ($343.1 million returned to shareholders in Q2)[69] - Recent acquisitions (Bonded Logic, ThermaFoam, PFB, MTL) align with the 'pure play building products company' strategy, with expected annual synergies exceeding $34 million, and innovation agenda advanced with new product launches[70][71] Summary of Financial Results This section provides a concise summary of key financial metrics, including revenues, operating income, and diluted EPS from continuing operations for the reported periods Three Months Ended June 30, 2025 vs 2024 | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :--------------------------------- | :----------------- | :----------------- | :----------- | | Revenues | $1,449.5 | $1,450.6 | $(1.1) (-0.1%) | | Operating income | $335.0 | $377.5 | $(42.5) (-11.3%) | | Operating margin | 23.1% | 26.0% | -2.9 pp | | Diluted EPS from continuing operations | $5.87 | $5.94 | $(0.07) (-1.2%) | | Adjusted EBITDA | $389.3 | $417.6 | $(28.3) (-6.8%) | | Adjusted EBITDA margin | 26.9% | 28.8% | -1.9 pp | Six Months Ended June 30, 2025 vs 2024 | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :--------------------------------- | :----------------- | :----------------- | :----------- | | Revenues | $2,545.3 | $2,547.1 | $(1.8) (-0.1%) | | Operating income | $518.6 | $602.7 | $(84.1) (-13.9%) | | Operating margin | 20.4% | 23.7% | -3.3 pp | | Diluted EPS from continuing operations | $8.97 | $9.45 | $(0.48) (-5.1%) | | Adjusted EBITDA | $627.7 | $683.1 | $(55.4) (-8.1%) | | Adjusted EBITDA margin | 24.7% | 26.8% | -2.1 pp | Consolidated Results of Operations This section analyzes consolidated revenues, gross margin, selling and administrative expenses, R&D, interest, and income taxes for the reported periods - Revenues were flat in Q2 and the first six months of 2025, reflecting higher non-residential construction sales (due to acquisitions) offset by lower residential construction sales (due to lower new construction activity)[74] - Gross margin decreased to 37.3% in Q2 2025 (from 39.2% in Q2 2024) and to 36.4% in the first six months of 2025 (from 38.0% in 2024), primarily due to increased unit costs from higher absorption of fixed costs on lower volumes[75] - Selling and administrative expenses increased by $7.6 million (4.0%) in Q2 and $34.8 million (9.8%) in the first six months of 2025, mainly due to higher wage/benefit expenses, amortization, and acquisition-related costs from recent acquisitions[76] - Research and development expenses increased by $1.8 million (19.4%) in Q2 and $3.3 million (17.8%) in the first six months of 2025, consistent with Vision 2030's focus on innovation and new product development[77] - Interest expense decreased by $4.1 million (21.8%) in Q2 and $7.9 million (21.1%) in the first six months of 2025, primarily due to lower long-term debt balances from the redemption of $400.0 million of notes in December 2024[78] - Interest income decreased by $12.4 million (89.9%) in Q2 and $13.9 million (64.1%) in the first six months of 2025, due to a lower invested cash balance and lower yields[79] - Provision for income taxes decreased by $19.3 million (22.1%) in Q2 and $28.3 million (21.6%) in the first six months of 2025, primarily due to lower pre-tax income. The effective tax rate for the six months ended June 30, 2025, was 20.7% (vs 22.4% in 2024), benefiting from $12.6 million in discrete activity[80] Segment Results of Operations This section analyzes the financial performance of Carlisle Construction Materials (CCM) and Carlisle Weatherproofing Technologies (CWT), focusing on revenue and operating margin changes - Carlisle Construction Materials (CCM) revenue increased by $6.7 million (0.6%) in Q2 and $21.6 million (1.2%) in the first six months of 2025, driven by higher non-residential construction sales from the MTL acquisition[82] - CCM's operating margin decreased to 29.6% in Q2 2025 (from 31.8% in Q2 2024) and to 27.4% in the first six months of 2025 (from 29.8% in 2024), due to higher operating costs and investments in innovation and Carlisle Experience[82] - Carlisle Weatherproofing Technologies (CWT) revenue decreased by $7.8 million (2.2%) in Q2 and $23.4 million (3.5%) in the first six months of 2025, primarily due to lower residential construction sales, partially offset by PFB and ThermaFoam acquisitions[84][85] - CWT's operating margin decreased to 12.0% in Q2 2025 (from 16.4% in Q2 2024) and to 9.0% in the first six months of 2025 (from 15.0% in 2024), mainly due to increased unit costs from higher absorption of fixed costs on lower volumes[84][85] Liquidity and Capital Resources This section discusses the company's cash position, credit facilities, and cash flow activities, including operating, investing, and financing for the reported periods - Management believes current cash, credit facilities, and anticipated operating cash flows are adequate for short-term and long-term financial requirements, including debt repayment and acquisitions[86] Cash Flow Summary (Six Months Ended June 30, 2025 vs 2024) | Activity | 2025 (in millions) | 2024 (in millions) | Change | | :--------------------------------- | :----------------- | :----------------- | :------- | | Net cash provided by operating activities | $288.9 | $346.9 | $(58.0) | | Net cash (used in) provided by investing activities | $(165.9) | $1,526.6 | $(1,692.5) | | Net cash used in financing activities | $(808.9) | $741.9 | $(67.0) | - Cash provided by operating activities decreased by $58.0 million in the first six months of 2025, due to lower income from continuing operations and higher working capital uses (receivables, accounts payable), partially offset by lower inventory investments[89] - Cash used in investing activities was $165.9 million in the first six months of 2025 (ThermaFoam, Bonded Logic acquisitions, capital expenditures), compared to $1,526.6 million provided in 2024 (proceeds from CIT sale, partially offset by MTL acquisition and capital expenditures)[90] - Cash used in financing activities was $808.9 million in the first six months of 2025 (share repurchases of $700.0 million, dividends of $88.3 million), compared to $741.9 million in 2024 (share repurchases of $700.0 million, dividends of $81.7 million, partially offset by stock option exercises)[91] Non-GAAP Financial Measures This section defines and reconciles non-GAAP financial measures such as EBIT, Adjusted EBIT, Adjusted EBITDA, and Adjusted EBITDA Margin, used to assess core operating performance - EBIT, Adjusted EBIT, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP measures used to provide insights into core operating results by excluding items with potential variability across periods[92] Adjusted EBITDA (Three Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | | :----------------- | :----------------- | :----------------- | | Adjusted EBITDA | $389.3 | $417.6 | | Adjusted EBITDA margin | 26.9% | 28.8% | Adjusted EBITDA (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | | :----------------- | :----------------- | :----------------- | | Adjusted EBITDA | $627.7 | $683.1 | | Adjusted EBITDA margin | 24.7% | 26.8% | Forward-Looking Statements This section highlights the inherent risks and uncertainties associated with forward-looking statements, including market conditions, competition, and macroeconomic factors - The report contains forward-looking statements subject to unforeseen risks and uncertainties, including competition, technological changes, raw material costs, governmental policies, M&A integration, business cyclicality, cybersecurity, litigation, and macroeconomic conditions (inflation, interest rates, currency exchange rates, geopolitical conflicts)[95] - The company undertakes no duty to update forward-looking statements unless required by law[95] Item 3. Quantitative and Qualitative Disclosure about Market Risk This section states that there have been no material changes in the company's market risk for the six months ended June 30, 2025, referring to the previous Annual Report on Form 10-K for detailed information - No material changes in the Company's market risk for the six months ended June 30, 2025[96] - Refer to the 2024 Annual Report on Form 10-K for additional information[96] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, and reports no material changes in internal control over financial reporting during the second quarter of 2025 - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[97] - No material changes in internal control over financial reporting occurred during the second quarter of 2025[97] PART II—Other Information This section includes disclosures on legal proceedings, risk factors, equity transactions, and other miscellaneous information and exhibits Item 1. Legal Proceedings This section indicates that information about legal proceedings is included in Note 11 of the financial statements, and there have been no new material developments or proceedings during the reporting period - Information about legal proceedings is included in Note 11[99] - No material developments in legal proceedings or new material legal proceedings during the six months ended June 30, 2025[62][99] Item 1A. Risk Factors This section states that there have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes in the Company's risk factors disclosed in the 2024 Annual Report on Form 10-K[100] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the common stock repurchases made during the three months ended June 30, 2025, under the company's share repurchase program, and notes the remaining authorized shares for repurchase Common Stock Repurchases (Three Months Ended June 30, 2025) | Month | Shares Purchased (millions) | Average Price Paid Per Share | | :---- | :-------------------------- | :--------------------------- | | April | 0.3 | $349.43 | | May | 0.3 | $392.94 | | June | 0.2 | $369.36 | | Total | 0.8 | | - As of June 30, 2025, 1.5 million shares remained available for repurchase under the Company's share repurchase program, which has no expiration date[101] Item 3. Defaults Upon Senior Securities This item is marked as "Not applicable," indicating no defaults upon senior securities during the reporting period - Not applicable[102] Item 4. Mine Safety Disclosures This item is marked as "Not applicable," indicating no mine safety disclosures are required for the company - Not applicable[103] Item 5. Other Information This section states that none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[104] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications, XBRL taxonomies, and the interactive data file - Includes certifications from Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2)[105] - Includes Section 1350 Certifications (Exhibit 32.1)[105] - Includes Inline XBRL Instance and Taxonomy Extension files (Exhibits 101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE, 101.DEF) and Cover Page Interactive Data File (Exhibit 104)[105] Signature This section contains the signature of the registrant, Carlisle Companies Incorporated, by its Vice President and Chief Financial Officer, Kevin P. Zdimal, dated July 31, 2025, confirming the due authorization of the report - Report signed by Kevin P. Zdimal, Vice President and Chief Financial Officer, on behalf of Carlisle Companies Incorporated[109] - Date of signature: July 31, 2025[109]