csl-20200630

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 June 30, 2020

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 July 16, 2020, there were 54,579,811 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			37

Item 4. Controls and Procedures			37

PART II

Item 1. Legal Proceedings			37

Item 1A. Risk Factors			37

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			38

Item 3. Defaults Upon Senior Securities			38

Item 4. Mine Safety Disclosures			38

Item 5. Other Information			38

Item 6. Exhibits			39

Signature			40

PART I

Item 1. Financial Statements

Carlisle Companies Incorporated

Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except per share amounts)	2020		2019		2020		2019
Revenues	$	1,024.2	$	1,314.8	$	2,054.4	$	2,386.7

Cost of goods sold	743.0		920.6		1,494.8		1,703.9
Selling and administrative expenses	153.1		172.3		315.0		336.5
Research and development expenses	14.1		15.4		28.5		29.8

Other operating expense (income), net	0.6		(0.7)		—		(5.4)
Operating income	113.4		207.2		216.1		321.9
Interest expense, net	19.8		16.6		38.7		32.9
Loss on extinguishment of debt	—		—		8.8		—
Interest income	(2.7)		(1.9)		(3.4)		(4.5)
Other non-operating income, net	(0.7)		(0.6)		(1.2)		(1.0)
Income from continuing operations before income taxes	97.0		193.1		173.2		294.5
Provision for income taxes	21.6		40.1		36.0		64.1
Income from continuing operations	75.4		153.0		137.2		230.4

Discontinued operations:

Provision for (benefit from) income taxes	—		0.1		—		(1.9)
(Loss) income from discontinued operations	—		(0.1)		—		1.9
Net income	$	75.4	$	152.9	$	137.2	$	232.3

Basic earnings per share attributable to common shares:
Income from continuing operations	$	1.37	$	2.68	$	2.47	$	4.01
Income from discontinued operations	—		—		—		0.03
Basic earnings per share	$	1.37	$	2.68	$	2.47	$	4.04

Diluted earnings per share attributable to common shares:
Income from continuing operations	$	1.36	$	2.65	$	2.45	$	3.98
Income from discontinued operations	—		—		—		0.03
Diluted earnings per share	$	1.36	$	2.65	$	2.45	$	4.01

Average shares outstanding:
Basic	54.8		57.0		55.3		57.2
Diluted	55.2		57.6		55.8		57.7

Comprehensive income:
Net income	$	75.4	$	152.9	$	137.2	$	232.3
Other comprehensive income (loss):
Foreign currency gains (losses)	7.8		(3.6)		(20.5)		0.3
Amortization of unrecognized net periodic benefit costs, net of tax	1.0		0.6		2.0		1.3
Other, net of tax	0.7		(1.6)		(17.5)		—
Other comprehensive income (loss)	9.5		(4.6)		(36.0)		1.6
Comprehensive income	$	84.9	$	148.3	$	101.2	$	233.9

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

Carlisle Companies Incorporated

Condensed Consolidated Balance Sheets (Unaudited)


(in millions, except per share amounts)	June 30, 2020		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	737.7	$	351.2
Receivables, net of allowance for credit losses of $7.6 million and $6.6 million, respectively	692.5		682.5
Inventories, net	547.8		510.6
Contract assets	101.9		100.5
Prepaid expenses	25.2		30.5
Other current assets	47.8		76.7
Total current assets	2,152.9		1,752.0

Property, plant, and equipment, net	764.3		783.5
Goodwill, net	1,708.3		1,716.3
Other intangible assets, net	1,083.9		1,140.6
Other long-term assets	98.9		103.6
Total assets	$	5,808.3	$	5,496.0

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	321.3	$	327.3
Accrued and other current liabilities	259.9		294.5
Contract liabilities	31.9		27.0
Current portion of debt	0.8		250.2

Total current liabilities	613.9		899.0

Long-term liabilities:
Long-term debt, less current portion	2,077.2		1,341.4
Contract liabilities	226.9		220.4
Other long-term liabilities	374.1		392.4
Total long-term liabilities	2,678.2		1,954.2

Shareholders' equity:
Preferred stock, $1 par value per share (5.0 shares authorized and unissued)	—		—
Common stock, $1 par value per share (200.0 shares authorized; 54.4 and 55.7 shares outstanding, respectively)	78.7		78.7
Additional paid-in capital	424.5		413.7
Deferred compensation equity	3.3		2.9
Treasury shares, at cost (24.0 and 22.7 shares, respectively)	(1,632.7)		(1,449.7)
Accumulated other comprehensive loss	(160.1)		(124.1)
Retained earnings	3,802.5		3,721.3
Total shareholders' equity	2,516.2		2,642.8
Total liabilities and equity	$	5,808.3	$	5,496.0

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

Carlisle Companies Incorporated

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Six Months Ended June 30,
(in millions)	2020		2019
Operating activities:
Net income	$	137.2	$	232.3
Reconciliation of net income to net cash provided by operating activities:
Depreciation	49.1		43.8
Amortization	63.7		56.2
Lease expense	14.1		13.2

Stock-based compensation	14.9		11.3
Loss on extinguishment of debt	8.8		—
Deferred taxes	(1.1)		(1.9)


Other operating activities, net	11.5		7.9
Changes in assets and liabilities, excluding effects of acquisitions:
Receivables	(11.8)		(184.6)
Inventories	(48.4)		(6.4)
Contract assets	(1.4)		(13.4)
Prepaid expenses and other assets	29.4		26.9
Accounts payable	(5.0)		71.0
Accrued and other current liabilities	(31.8)		(47.3)
Contract liabilities	11.5		7.2
Other long-term liabilities	(14.4)		(19.1)
Net cash provided by operating activities	226.3		197.1

Investing activities:
Capital expenditures	(48.5)		(41.0)
Acquisitions, net of cash acquired	(2.4)		(272.0)

Other investing activities, net	0.9		1.1
Net cash used in investing activities	(50.0)		(311.9)

Financing activities:
Proceeds from notes	740.7		—
Repayment of notes	(258.5)		—
Borrowings from revolving credit facility	500.0		—
Repayments of revolving credit facility	(500.0)		—
Financing costs	(24.2)		—
Repurchases of common stock	(191.8)		(232.1)
Dividends paid	(56.0)		(46.2)
Proceeds from exercise of stock options	11.4		20.5
Withholding tax paid related to stock-based compensation	(6.4)		(9.3)
Other financing activities, net	(0.5)		(0.1)
Net cash provided by (used in) financing activities	214.7		(267.2)

Effect of foreign currency exchange rate changes on cash and cash equivalents	(4.5)		0.4
Change in cash and cash equivalents	386.5		(381.6)

Cash and cash equivalents at beginning of period	351.2		803.6
Cash and cash equivalents at end of period	$	737.7	$	422.0

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 March 31, 2019	56.8	$	78.7	$	390.1	$	7.8	$	(115.9)	$	3,407.5	21.6	$	(1,243.5)	$	2,524.7

Net income	—	—		—		—		—		152.9		—	—		152.9
Other comprehensive loss, net of tax	—	—		—		—		(4.6)		—		—	—		(4.6)
Cash dividends - $0.40 per share	—	—		—		—		—		(22.9)		—	—		(22.9)
Repurchases of common stock	(0.6)	—		—		—		—		—		0.6	(75.0)		(75.0)
Issuances and deferrals, net for stock based compensation⁽¹⁾	0.2	—		7.2		(4.8)		—		—		(0.2)	5.7		8.1
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

Balance as of March 31, 2020	54.9	$	78.7	$	418.7	$	3.4	$	(169.6)	$	3,754.8	23.5	$	(1,567.5)	$	2,518.5

Net income	—	—		—		—		—		75.4		—	—		75.4
Other comprehensive income, net of tax	—	—		—		—		9.5		—		—	—		9.5
Cash dividends - $0.50 per share	—	—		—		—		—		(27.7)		—	—		(27.7)
Repurchases of common stock	(0.5)	—		—		—		—		—		0.5	(66.5)		(66.5)
Issuances and deferrals, net for stock based compensation⁽¹⁾	—	—		5.8		(0.1)		—		—		—	1.3		7.0
Balance as of June 30, 2020	54.4	$	78.7	$	424.5	$	3.3	$	(160.1)	$	3,802.5	24.0	$	(1,632.7)	$	2,516.2

⁽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, 2018	57.9	$	78.7	$	383.8	$	8.0	$	(122.1)	$	3,351.4	20.5	$	(1,102.4)	$	2,597.4

Net income	—	—		—		—		—		232.3		—	—		232.3
Other comprehensive income, net of tax	—	—		—		—		1.6		—		—	—		1.6
Cash dividends - $0.80 per share	—	—		—		—		—		(46.2)		—	—		(46.2)
Repurchases of common stock	(1.9)	—		—		—		—		—		1.9	(224.9)		(224.9)
Issuances and deferrals, net for stock based compensation⁽¹⁾	0.4	—		13.5		(5.0)		—		—		(0.4)	14.5		23.0
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

Balance as of December 31, 2019	55.7	$	78.7	$	413.7	$