Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


			☒			QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2019

Commission file number 1-9278

www.carlisle.com

CARLISLE COMPANIES INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware

31-1168055

(State of incorporation)

(I.R.S. Employer Identification No.)

(480) 781-5000

(Telephone)

16430 North Scottsdale Road, Suite 400, Scottsdale, Arizona 85254

(Address of principal executive office, including zip code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock

CSL

New York Stock Exchange

Preferred stock purchase rights

n/a

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes			☒			No			☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Yes			☒			No			☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


Yes			☐			No			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes			☐			No			☒

On October 16, 2019, there were 56,673,326 shares of the registrant's common stock outstanding, par value $1.00 per share.

Carlisle Companies Incorporated

Table of Contents


			Page
PART I

Item 1. Financial Statements			3

Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)			3

Condensed Consolidated Balance Sheets (Unaudited)			4

Condensed Consolidated Statement of Cash Flows (Unaudited)			5

Condensed Statement of Shareholders' Equity (Unaudited)			7

Notes to Condensed Consolidated Financial Statements (Unaudited)			8

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			24

Item 3. Quantitative and Qualitative Disclosure about Market Risk			35

Item 4. Controls and Procedures			36

PART II

Item 1. Legal Proceedings			36

Item 1A. Risk Factors			36

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			36

Item 3. Defaults Upon Senior Securities			36

Item 4. Mine Safety Disclosures			36

Item 5. Other Information			36

Item 6. Exhibits			37

Signature			38

PART I

Item 1. Financial Statements

Carlisle Companies Incorporated

Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except per share amounts)	2019		2018		2019		2018
Revenues	$	1,280.6	$	1,181.4	$	3,667.3	$	3,402.2

Cost of goods sold	900.4		867.1		2,604.3		2,506.3
Selling and administrative expenses	175.0		164.8		511.5		473.3
Research and development expenses	15.2		12.3		45.0		40.4

Other operating (income) expense, net	(1.0)		(2.8)		(6.4)		(12.2)
Operating income	191.0		140.0		512.9		394.4
Interest expense, net	16.7		16.3		49.6		49.2
Interest income	(1.7)		(3.3)		(6.2)		(7.5)
Other non-operating (income) expense, net	(1.2)		5.1		(2.2)		6.3
Income from continuing operations before income taxes	177.2		121.9		471.7		346.4
Provision for income taxes	37.9		25.0		102.0		76.9
Income from continuing operations	139.3		96.9		369.7		269.5

Discontinued operations:
(Loss) income before income taxes	(1.8)		2.6		(1.8)		300.3
(Benefit from) provision for income taxes	(0.4)		(0.2)		(2.3)		46.8
(Loss) income from discontinued operations	(1.4)		2.8		0.5		253.5
Net income	$	137.9	$	99.7	$	370.2	$	523.0

Basic earnings per share attributable to common shares:
Income from continuing operations	$	2.45	$	1.61	$	6.46	$	4.40
(Loss) income from discontinued operations	(0.02)		0.05		0.01		4.15
Basic earnings per share	$	2.43	$	1.66	$	6.47	$	8.55

Diluted earnings per share attributable to common shares:
Income from continuing operations	$	2.42	$	1.59	$	6.40	$	4.37
(Loss) income from discontinued operations	(0.02)		0.05		0.01		4.12
Diluted earnings per share	$	2.40	$	1.64	$	6.41	$	8.49

Average shares outstanding (in thousands):
Basic	56,657		59,826		57,073		60,712
Diluted	57,335		60,329		57,621		61,176

Comprehensive income:
Net income	$	137.9	$	99.7	$	370.2	$	523.0
Other comprehensive income:
Foreign currency losses	(23.6)		(8.4)		(23.3)		(21.6)
Amortization of unrecognized net periodic benefit costs, net of tax	0.7		0.6		2.0		2.6
Other, net of tax	(1.2)		—		(1.2)		0.5
Other comprehensive loss	(24.1)		(7.8)		(22.5)		(18.5)
Comprehensive income	$	113.8	$	91.9	$	347.7	$	504.5

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

Carlisle Companies Incorporated

Condensed Consolidated Balance Sheets (Unaudited)


(in millions, except share and per share amounts)	September 30, 2019		December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	658.1	$	803.6
Receivables, net of allowance of $5.6 million and $5.1 million, respectively	862.0		698.3
Inventories, net	508.4		457.5
Prepaid expenses	25.4		22.0
Other current assets	53.5		75.3
Total current assets	2,107.4		2,056.7

Property, plant, and equipment, net	757.1		760.1
Goodwill, net	1,534.6		1,441.8
Other intangible assets, net	1,031.6		967.7
Other long-term assets	110.4		22.9
Total assets	$	5,541.1	$	5,249.2

LIABILITIES AND EQUITY
Current liabilities:

Accounts payable	$	371.8	$	312.1
Accrued liabilities and other	293.6		258.0
Deferred revenue	26.8		25.5

Total current liabilities	692.2		595.6

Long-term liabilities:
Long-term debt	1,590.2		1,587.8
Deferred revenue	214.6		201.9
Other long-term liabilities	363.1		266.5
Total long-term liabilities	2,167.9		2,056.2

Shareholders' equity:
Preferred stock, $1 par value per share (5,000,000 shares authorized and unissued)	—		—
Common stock, $1 par value per share (200,000,000 shares; 56,494,919 and 57,957,912 shares outstanding, respectively)	78.7		78.7
Additional paid-in capital	405.0		383.8
Deferred compensation equity	2.9		8.0
Treasury shares, at cost (21,986,358 and 20,534,652 shares, respectively)	(1,308.1)		(1,102.4)
Accumulated other comprehensive loss	(144.6)		(122.1)
Retained earnings	3,647.1		3,351.4
Total shareholders' equity	2,681.0		2,597.4
Total liabilities and equity	$	5,541.1	$	5,249.2

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

Carlisle Companies Incorporated

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended September 30,
(in millions)	2019		2018
Operating activities:
Net income	$	370.2	$	523.0
Reconciliation of net income to net cash provided by operating activities:
Depreciation	65.6		64.6
Amortization	85.9		78.6
Lease expense	20.3		—

Stock-based compensation, net of tax benefit	19.2		17.8
Deferred taxes	(3.3)		(9.0)
Gain on sale of assets	0.3		(6.4)
Gain on sale of discontinued operation, net of tax	—		(251.0)
Other operating activities, net	5.3		0.4
Changes in assets and liabilities, excluding effects of acquisitions:
Receivables	(145.6)		(207.2)
Inventories	(9.1)		(61.9)
Prepaid expenses and other assets	8.2		(0.9)
Accounts payable	71.0		12.6
Accrued liabilities and other	12.6		(66.2)
Deferred revenues	13.1		11.8
Other long-term liabilities	(24.2)		(3.6)
Net cash provided by operating activities	489.5		102.6

Investing activities:
Acquisitions, net of cash acquired	(287.7)		(19.5)
Capital expenditures	(56.6)		(96.1)
Proceeds from sale of discontinued operation	—		758.0
Other investing activities, net	2.2		11.4
Net cash (used in) provided by investing activities	(342.1)		653.8

Financing activities:


Repurchases of common stock	(232.1)		(295.4)
Dividends paid	(74.5)		(69.7)
Proceeds from exercise of stock options	27.3		22.3
Withholding tax paid related to stock-based compensation	(9.7)		(9.7)
Other financing activities, net	(2.7)		—
Net cash used in financing activities	(291.7)		(352.5)

Effect of foreign currency exchange rate changes on cash and cash equivalents	(1.2)		(0.4)
Change in cash and cash equivalents	(145.5)		403.5
Less: change in cash and cash equivalents of discontinued operations	—		1.3
Cash and cash equivalents at beginning of period	803.6		378.3
Cash and cash equivalents at end of period	$	658.1	$	780.5

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

Carlisle Companies Incorporated

Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)


	Common Stock					Additional Paid-In Capital		Deferred Compensation Equity		Accumulated Other Comprehensive Income (Loss)		Retained Earnings	Shares in Treasury					Total Shareholders' Equity
(in millions, except per share amounts)	Shares	Amount													Shares		Cost
Balance as of June 30, 2018	59.8	$	78.7	$	365.8	$	7.8	$	(102.9)	$	3,211.5	18.6	$	(888.6)	$	2,672.3

Net income	—	—		—		—		—		99.7		—	—		99.7
Other comprehensive loss, net of tax	—	—		—		—		(7.8)		—		—	—		(7.8)
Cash dividends - $0.40 per share	—	—		—		—		—		(24.1)		—	—		(24.1)
Repurchases of common stock	(0.5)	—		—		—		—		—		0.5	(59.3)		(59.3)
Issuances and deferrals, net for stock based compensation⁽¹⁾	0.3	—		12.0		0.5		—		—		(0.3)	12.4		24.9
Balance as of September 30, 2018	59.6	$	78.7	$	377.8	$	8.3	$	(110.7)	$	3,287.1	18.8	$	(935.5)	$	2,705.7

Balance as of June 30, 2019	56.4	$	78.7	$	397.3	$	3.0	$	(120.5)	$	3,537.5	22.0	$	(1,312.8)	$	2,583.2

Net income	—	—		—		—		—		137.9		—	—		137.9
Other comprehensive loss, net of tax	—	—		—		—		(24.1)		—		—	—		(24.1)
Cash dividends - $0.50 per share	—	—		—		—		—		(28.3)		—	—		(28.3)
Repurchases of common stock	—	—		—		—		—		—		—	—		—
Issuances and deferrals, net for stock based compensation⁽¹⁾	0.1	—		7.7		(0.1)		—		—		(0.1)	4.7		12.3
Balance as of September 30, 2019	56.5	$	78.7	$	405.0	$	2.9	$	(144.6)	$	3,647.1	21.9	$	(1,308.1)	$	2,681.0

⁽¹⁾Issuances and deferrals, net for stock based compensation reflects share activity related to option exercises, restricted and performance shares vested and net issuances and deferrals associated with deferred compensation equity.

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

Carlisle Companies Incorporated

Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)


	Common Stock					Additional Paid-In Capital		Deferred Compensation Equity		Accumulated Other Comprehensive Income (Loss)		Retained Earnings	Shares in Treasury					Total Shareholders' Equity
(in millions, except per share amounts)	Shares	Amount													Shares		Cost
Balance as of December 31, 2017	61.8	$	78.7	$	353.7	$	10.4	$	(85.7)	$	2,820.8	16.6	$	(649.6)	$	2,528.3
Adoption of accounting standards	—	—		—		—		(6.5)		13.0		—	—		6.5
Net income	—	—		—		—		—		523.0		—	—