CARLISLE COMPANIES INCORPORATED 3rd Quarter
2020 Earnings Conference Call
October 20, 2020
Forward-looking statements | Non-GAAP financial measures |
During this presentation, we make certain forward-looking statements concerning plans and expectations for Carlisle Companies Incorporated. We caution you that actual events or results may differ materially from our plans and expectations based on various factors and uncertainties, including risks from the global coronavirus (COVID-19) pandemic. The risk factors are contained in Carlisle's Securities and Exchange Commission filings. Carlisle undertakes no duty to update forward-looking statements.
Certain ratios related to Earnings before Interest, Income
Taxes, Depreciation and Amortization ("EBITDA"), Free Cash
Flow, Net Debt, Debt to EBITDA ratio, and Net Debt to Capital Ratio are not measures of liquidity or financial condition under US GAAP. See slide 15 in this presentation for a reconciliation of these measures to the most directly comparable GAAP measures. Throughout this presentation each non-GAAP measure is denoted with an *.
2
Vision 2025 Remains Our Focus
- Drive organic growth in excess of 5%.
- Utilize the Carlisle Operating System (COS) consistently to reduce costs 1-2% of sales, driving operating leverage.
- Build scale with synergistic acquisitions.
- Continue to invest in and develop exceptional talent.
- Deploy over $3 billion into capital expenditures, share repurchases and dividends.
Drive to $15 Earnings per Share
3
2020 Q3 Results
Q3 revenue declined 12% y/y
- Organic revenue down 14.3%
- 1.9% acquisition growth
- FX was a favorable 0.4% impact
Operating income declined 18.5% driven by:
- COVID-19related volume declines and subsequent unfavorable absorption
- Wage inflation
- Accelerated restructuring
- Partially offset by raw material savings, reduced SG&A and COS
Financial Summary
(in millions, except per share amounts) | Q3 '20 | Q3 '19 | ||||
Revenues | $1,126.7 | $1,280.6 | -12.0% | |||
Operating income | $155.7 | $191.0 | -18.5% | |||
Income from continuing operations, | $102.3 | $139.3 | -26.6% | |||
net of tax | ||||||
Diluted EPS from continuing | $1.87 | $2.42 | -22.7% | |||
operations | ||||||
Positioned to accelerate through the
recovery
4
2020 Q3 Revenue Bridge
$1.28B | -14.3% | +1.9% | ||
+0.4% | $1.13B | |||
Organic Revenue by Segment
Construction Materials | -8.1% |
Interconnect Technologies | -39.1% |
Fluid Technologies | -10.8% |
Brake & Friction | -10.8% |
5
2020 Q3 Operating Margin Bridge
14.9% -3.6%
+2.3% | +1.0% | -0.2% | 13.8% |
-0.6%
6
2020 Q3 EPS Bridge
$2.42
-$1.04
-$0.13
+$0.18
+$0.29 +$0.09
$1.87
+$0.10
-$0.04
7
Carlisle Construction Materials
Three Months Ended September 30, | Acquisition | Price / | Exchange | ||||||||||||||||
Volume | |||||||||||||||||||
2020 | 2019 | Change $ | Change % | Effect | Rate Effect | ||||||||||||||
(in millions) | Effect | ||||||||||||||||||
Revenues | $ | 823.5 | $ | 893.5 | $ | (70.0) | (7.8) % | - % | (8.1) % | 0.3 % | |||||||||
Operating income | $ | 181.3 | $ | 173.0 | $ | 8.3 | 4.8 % | ||||||||||||
Operating margin percentage | 22.0 | % | 19.4 | % | +260 bps | ||||||||||||||
Items affecting comparability | $ | 1.3 | $ | 0.8 |
- Q3 Notable Commercial Items:
- September sales slightly positive year-over-year for the first time since the pandemic began
- Recently announced price increases and improving demand trends in the industry are positive signs
- CCM team continues to deliver the premium Carlisle Experience
- Operating Income Increase:
- 5% year-over-year increase
- Margin driven by favorable raw materials, COS savings and lower SG&A
- Partially offset volume declines and wage inflation
8
Carlisle Interconnect Technologies
Three Months Ended September 30, | Acquisition | Price / | Exchange | ||||||||||||||||
Volume | |||||||||||||||||||
2020 | 2019 | Change $ | Change % | Effect | Rate Effect | ||||||||||||||
(in millions) | Effect | ||||||||||||||||||
Revenues | $ | 168.5 | $ | 241.9 | $ | (73.4) | (30.3) | % | 8.8 % | (39.1) % | - % | ||||||||
Operating income | $ | (3.7) | $ | 36.0 | $ | (39.7) | (110.3) | % | |||||||||||
Operating margin percentage | (2.2) % | 14.9 | % | NM | |||||||||||||||
Items affecting comparability | $ | 4.5 | $ | 2.5 | |||||||||||||||
- Q3 Notable Commercial Items:
- Record decline in Commercial Aerospace market negatively impacting CIT
- Some positive signs:
- The European regulatory body has approved the 737Max-8 aircraft for a return to flying
- Airbus delivered 57 aircraft in September, up from an April low of 14
- Boeing has had very few cancellations in recent weeks
- Medical sales a continued positive driver
- Operating Income Decline:
- Lower volumes, higher restructuring costs, and wage and raw material inflation
- Partially offset by savings from COS and lower SG&A
9
Carlisle Fluid Technologies
Three Months Ended September 30, | Acquisition | Price / | Exchange | ||||||||||||||||
Volume | |||||||||||||||||||
2020 | 2019 | Change $ | Change % | Effect | Rate Effect | ||||||||||||||
(in millions) | Effect | ||||||||||||||||||
Revenues | $ | 65.0 | $ | 68.5 | $ | (3.5) | (5.1) % | 4.4 % | (10.8) % | 1.3 % | |||||||||
Operating income | $ | 4.4 | $ | 4.2 | $ | 0.2 | 4.8 % | ||||||||||||
Operating margin percentage | 6.8 | % | 6.1 | % | +70 bps | ||||||||||||||
Items affecting comparability | $ | 0.1 | $ | 1.0 | |||||||||||||||
- Q3 Notable Commercial Items:
- Delivered positive sequential results
- Positive price realization, improved operational execution and new product introductions
- Significant quality and delivery improvements to enhance our customers' experience
- Operating Income Increase:
- Driven by pricing, savings from COS and lower SG&A
- Partially offset by lower volumes and wage and raw material inflation
10
Carlisle Brake & Friction
Three Months Ended September 30, | Acquisition | Price / | Exchange | |||||||||||||||||
Volume | ||||||||||||||||||||
2020 | 2019 | Change $ | Change % | Effect | Rate Effect | |||||||||||||||
(in millions) | Effect | |||||||||||||||||||
Revenues | $ | 69.7 | $ | 76.7 | $ | (7.0) | (9.1) | % | - % | (10.8) % | 1.7 % | |||||||||
Operating income | $ | 0.9 | $ | 5.7 | $ | (4.8) | (84.2) | % | ||||||||||||
Operating margin percentage | 1.3 | % | 7.4 | % | -610 bps | |||||||||||||||
Items affecting comparability | $ | 0.4 | $ | 0.5 | ||||||||||||||||
- Q3 Notable Commercial Items:
- Pandemic exacerbates multi-year Mining, Ag, and Construction declines
- Focused on new products
- Operating Income Decline:
- Driven by lower volumes and wage inflation
- Partially offset by savings from COS
11
Focused on Capital Structure Optimization
Senior
Note
$750M
Senior2.75%
SeniorNote $600M
Note
Senior$400M3.75%
Note3.5% $350M
3.75%
- Cash on hand of $719M as of 9/30/20
- $1B available under revolver
- $84.5M capital returned to shareholders in dividends YTD
- Utilized $341.7M of cash YTD to repurchase shares
- 2.3M shares remaining under authorization as of 9/30/20
- Net debt to cap ratio of 36%*
- Net Debt to EBITDA of 1.8x*
- EBITDA to interest of 10.2x*
*Represents non-GAAP measure
12
Cash Flow
Q3 '19 | Q4 '19 | Q1 '20 | Q2 '20 | Q3 '20 | ||||
Operating Cash | $292.4 | $213.6 | $53.2 | $173.1 | $213.9 | |||
Flow | ||||||||
Capital | ||||||||
$(15.6) | $(32.3) | $(22.8) | $(25.7) | $(24.2) | ||||
Expenditures | ||||||||
Free Cash Flow * | $276.8 | $181.3 | $30.4 | $147.4 | $189.7 |
*Represents non-GAAP measure
13
2020 Outlook
CCM
CIT
CFT
CBF
Corporate
Total CSL
4Q20F
Revenue Outlook
+LSD
Down Mid-
30%
Down Mid-
Teens
-LSD
-HSD
Items Affecting Comparability* ($M)
3Q20 4Q20F FY20F
$1.3 ~$0-1~$2-3
$4.5 ~$3-5~$21-23
$0.1 ~$2-3~$4-5
$0.4 ~$2-4~$8-10
~$0-1~$6-7
$6.3 ~$8-10~$40-45
FY 2020 | |
Corporate Expense | ~$95M |
D&A | ~$230M |
CapEx | $100-110M |
FCF Conversion | ~150% |
Interest Expense, Net | ~$75M |
Tax Rate | ~23% |
- Includes restructuring, facility rationalization costs, acquisition and divestiture related items, and COVID-19 related plant closures and absences
14
Reconciliation of GAAP to Non-GAAP Measures
Unaudited Leverage Ratios
(in millions except for ratios) | LTM 9/30/2020 | |
Income from Continuing Operations | $ | 344 |
Income tax expense | 90 | |
Interest expense | 74 | |
Depreciation and amortization | 223 | |
Non-cash stock based compensation expense | 28 | |
EBITDA | $ | 758 |
Short-term debt including current maturities | $ | 1 |
Long-term debt | 2,100 | |
Total debt | $ | 2,100 |
Less: Cash | 704 | |
Net Debt | $ | 1,396 |
Net Debt to EBITDA1 | 1.8x | |
EBITDA to interest | 10.2x |
Net Debt to Capital Ratio
(in millions except for ratios) | Capital | |||||
Total debt | $ | 2,100 | Net debt | $ | 1,381 | |
Less: cash | $ | 719 | Total shareholders' | $ | 2,475 | |
equity | ||||||
Net debt | $ | 1,381 | Total capital (net of cash) | $ | 3,856 | |
Net debt to capital | 36 | % |
15
Attachments
- Original document
- Permalink
Disclaimer
Carlisle Companies Inc. published this content on 20 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 October 2020 21:09:07 UTC
