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, 2021

Commission file number 1-9278

www.carlisle.com

CARLISLE COMPANIES INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware	31-1168055
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

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

(Address of principal executive offices, including zip code)

(480) 781-5000

(Registrant's telephone number, including area 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 21, 2021, there were 52,125,596 shares of the registrant's common stock, par value $1.00 per share, outstanding.

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	22
Item 3. Quantitative and Qualitative Disclosure about Market Risk	35
Item 4. Controls and Procedures	35
PART II
Item 1. Legal Proceedings	35
Item 1A. Risk Factors	35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3. Defaults Upon Senior Securities	35
Item 4. Mine Safety Disclosures	35
Item 5. Other Information	35
Item 6. Exhibits	36
Signature	37

2

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)	2021		2020		2021		2020
Revenues	$	1,177.8	$	965.4	$	2,118.7	$	1,924.6
Cost of goods sold	870.1		695.3		1,566.1		1,385.1
Selling and administrative expenses	161.3		144.6		312.1		295.5
Research and development expenses	13.8		11.7		24.2		23.6
Other operating income, net	(1.2)		(0.7)		(2.2)		(1.3)
Operating income	133.8		114.5		218.5		221.7
Interest expense, net	19.2		19.7		38.4		38.7
Loss on extinguishment of debt	—		—		—		8.8
Interest income	(0.4)		(2.6)		(0.9)		(3.3)
Other non-operating expense (income), net	1.1		(0.7)		4.7		(0.9)
Income from continuing operations before income taxes	113.9		98.1		176.3		178.4
Provision for income taxes	19.8		22.1		33.1		37.6
Income from continuing operations	94.1		76.0		143.2		140.8
Discontinued operations:
Income (loss) before income taxes	6.3		(1.1)		10.8		(5.2)
Provision for (benefit from) income taxes	1.1		(0.5)		2.5		(1.6)
Income (loss) from discontinued operations	5.2		(0.6)		8.3		(3.6)
Net income	$	99.3	$	75.4	$	151.5	$	137.2
Basic earnings per share attributable to common shares:
Income from continuing operations	$	1.79	$	1.38	$	2.71	$	2.54
Income (loss) from discontinued operations	0.10		(0.01)		0.16		(0.07)
Basic earnings per share	$	1.89	$	1.37	$	2.87	$	2.47
Diluted earnings per share attributable to common shares:
Income from continuing operations	$	1.77	$	1.37	$	2.68	$	2.52
Income (loss) from discontinued operations	0.10		(0.01)		0.16		(0.07)
Diluted earnings per share	$	1.87	$	1.36	$	2.84	$	2.45
Average shares outstanding:
Basic	52.3		54.8		52.7		55.3
Diluted	53.0		55.2		53.3		55.8
Comprehensive income:
Net income	$	99.3	$	75.4	$	151.5	$	137.2
Other comprehensive income (loss):
Foreign currency gains (losses)	6.8		7.8		(6.5)		(20.5)
Amortization of unrecognized net periodic benefit costs, net of tax	1.2		1.0		2.4		2.0
Other, net of tax	0.3		0.7		(1.7)		(17.5)
Other comprehensive income (loss)	8.3		9.5		(5.8)		(36.0)
Comprehensive income	$	107.6	$	84.9	$	145.7	$	101.2

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

3

Carlisle Companies Incorporated

Condensed Consolidated Balance Sheets (Unaudited)

(in millions, except par values)	June 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	713.3	$	897.1
Receivables, net of allowance for credit losses of $4.7 million and $5.0 million, respectively	722.4		554.4
Inventories, net	462.6		432.7
Contract assets	71.5		84.5
Prepaid expenses	23.4		35.8
Other current assets	69.4		60.2
Assets held for sale	449.9		144.6
Total current assets	2,512.5		2,209.3
Property, plant, and equipment, net	674.2		672.1
Goodwill, net	1,640.2		1,641.7
Other intangible assets, net	903.9		960.9
Other long-term assets	108.5		107.4
Assets held for sale	—		275.0
Total assets	$	5,839.3	$	5,866.4
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	387.1	$	284.5
Accrued and other current liabilities	246.1		274.6
Contract liabilities	34.5		32.5
Current portion of debt	1.2		1.1
Liabilities held for sale	92.8		53.5
Total current liabilities	761.7		646.2
Long-term liabilities:
Long-term debt, less current portion	2,080.4		2,080.2
Contract liabilities	240.5		235.8
Other long-term liabilities	338.8		344.6
Liabilities held for sale	—		21.9
Total long-term liabilities	2,659.7		2,682.5
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; 51.9 and 52.9 shares outstanding, respectively)	78.7		78.7
Additional paid-in capital	460.1		441.7
Treasury shares, at cost (26.5 and 25.5 shares, respectively)	(2,042.3)		(1,814.4)
Accumulated other comprehensive loss	(102.8)		(97.0)
Retained earnings	4,024.2		3,928.7
Total shareholders' equity	2,417.9		2,537.7
Total liabilities and equity	$	5,839.3	$	5,866.4

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

4

Carlisle Companies Incorporated

Condensed Consolidated Statements of Cash Flows (Unaudited)

	Six Months Ended June 30,
(in millions)	2021		2020
Operating activities:
Net income	$	151.5	$	137.2
Reconciliation of net income to net cash provided by operating activities:
Depreciation	46.3		49.1
Amortization	60.8		63.7
Lease expense	13.5		14.1
Stock-based compensation	8.7		14.9
Loss on extinguishment of debt	—		8.8
Deferred taxes	0.7		(1.1)
Other operating activities, net	9.5		11.5
Changes in assets and liabilities, excluding effects of acquisitions:
Receivables	(190.7)		(11.8)
Inventories	(40.6)		(48.4)
Contract assets	13.7		(1.4)
Prepaid expenses and other assets	16.3		29.4
Accounts payable	118.3		(5.0)
Accrued and other current liabilities	(20.9)		(31.8)
Contract liabilities	6.8		11.5
Other long-term liabilities	(22.4)		(14.4)
Net cash provided by operating activities	171.5		226.3
Investing activities:
Capital expenditures	(55.1)		(48.5)
Investment in securities	(10.2)		—
Acquisitions, net of cash acquired	—		(2.4)
Other investing activities, net	1.8		0.9
Net cash used in investing activities	(63.5)		(50.0)
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	(265.6)		(191.8)
Dividends paid	(56.0)		(56.0)
Proceeds from exercise of stock options	45.6		11.4
Withholding tax paid related to stock-based compensation	(7.7)		(6.4)
Other financing activities, net	(0.8)		(0.5)
Net cash (used in) provided by financing activities	(284.5)		214.7
Effect of foreign currency exchange rate changes on cash and cash equivalents	(0.3)		(4.5)
Change in cash and cash equivalents	(176.8)		386.5
Less: change in cash and cash equivalents of discontinued operations	7.0		0.9
Cash and cash equivalents at beginning of period	897.1		342.5
Cash and cash equivalents at end of period	$	713.3	$	728.1

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

5

Carlisle Companies Incorporated

Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)

	Common Stock			Additional Paid-In Capital		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, 2020	54.9	$	78.7	$	422.1	$	(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
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)	—	—		5.7		—		—		—	1.3		7.0
Balance as of June 30, 2020	54.4	$	78.7	$	427.8	$	(160.1)	$	3,802.5	24.0	$	(1,632.7)	$	2,516.2
Balance as of March 31, 2021	52.1	$	78.7	$	443.4	$	(111.1)	$	3,952.4	26.3	$	(1,951.6)	$	2,411.8
Net income	—	—		—		—		99.3		—	—		99.3
Other comprehensive income, net of tax	—	—		—		8.3		—		—	—		8.3
Dividends - $0.525 per share	—	—		—		—		(27.5)		—	—		(27.5)
Repurchases of common stock	(0.6)	—		—		—		—		0.6	(115.6)		(115.6)
Issuances and deferrals, net for stock based compensation(1)	0.4	—		16.7		—		—		(0.4)	24.9		41.6
Balance as of June 30, 2021	51.9	$	78.7	$	460.1	$	(102.8)	$	4,024.2	26.5	$	(2,042.3)	$	2,417.9

(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)

6

Carlisle Companies Incorporated

Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)

	Common Stock			Additional Paid-In Capital		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, 2019	55.7	$	78.7	$	416.6	$	(124.1)	$	3,721.3	22.7	$	(1,449.7)	$	2,642.8
Net income	—	—		—		—		137.2		—	—		137.2
Other comprehensive loss, net of tax	—	—		—		(36.0)		—		—	—		(36.0)
Dividends - $1.00 per share	—	—		—		—		(56.0)		—	—		(56.0)
Repurchases of common stock	(1.5)	—		—		—		—		1.5	(191.8)		(191.8)
Issuances and deferrals, net for stock based compensation(1)	0.2	—		11.2		—		—		(0.2)	8.8		20.0
Balance as of June 30, 2020	54.4	$	78.7	$	427.8	$	(160.1)	$	3,802.5	24.0	$	(1,632.7)	$	2,516.2
Balance as of December 31, 2020	52.9	$	78.7	$	441.7	$	(97.0)	$	3,928.7	25.5	$	(1,814.4)	$	2,537.7
Net income	—	—		—		—		151.5		—	—		151.5
Other comprehensive loss, net of tax	—	—		—		(5.8)		—		—	—		(5.8)
Dividends - $1.05 per share	—	—		—		—		(56.0)		—	—		(56.0)
Repurchases of common stock	(1.6)	—		—		—		—		1.6	(265.6)		(265.6)
Issuances and deferrals, net for stock based compensation(1)	0.6	—		18.4		—		—		(0.6)	37.7		56.1
Balance as of June 30, 2021	51.9	$	78.7	$	460.1	$	(102.8)	$	4,024.2	26.5	$	(2,042.3)	$	2,417.9

(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)

7

Carlisle Companies Incorporated

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1—Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by Carlisle Companies Incorporated (the "Company" or "Carlisle"). The accompanying unaudited Condensed Consolidated Financial Statements do not include all disclosures as required by accounting principles generally accepted in the United States of America ("United States" or "U.S."), and should be read in conjunction with the Company’s audited Consolidated Financial Statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 (the "2020 Annual Report on Form 10-K").

The accompanying unaudited Condensed Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the U.S. and, of necessity, include some amounts that are based upon management estimates and judgments. The accompanying unaudited Condensed Consolidated Financial Statements include assets, liabilities, revenues and expenses of all majority-owned subsidiaries. Intercompany transactions and balances are eliminated in consolidation.

In the Company's opinion, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting solely of adjustments of a normal, recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented.

Discontinued Operations

The results of operations for the Company's Carlisle Brake & Friction ("CBF") segment have been classified as discontinued operations for all periods presented in the Condensed Consolidated Statements of Income. Assets and liabilities subject to the sale agreement for CBF have been classified as held for sale for all periods presented in the Condensed Consolidated Balance Sheets. Refer to Note 4 for additional information.

Note 2—Segment Information

The Company reports its results of operations through the following three segments, each of which represents a reportable segment as follows:

Carlisle Construction Materials ("CCM")—this segment produces a complete range of building envelope products for commercial, industrial and residential buildings, including single-ply roofing, rigid foam insulations, spray polyurethane foam technologies, architectural metal, heating, ventilation and air conditioning ("HVAC") hardware and sealants, below-grade waterproofing, and air and vapor barrier systems focused on the weatherproofing and thermal performance of the building envelope.

Carlisle Interconnect Technologies ("CIT")—this segment produces high-performance wire and cable, including optical fiber, for the commercial aerospace, military and defense electronics, medical device, industrial, and test and measurement markets. CIT's product portfolio also includes sensors, connectors, contacts, cable assemblies, complex harnesses, racks, trays, and installation kits, in addition to engineering and certification services.

Carlisle Fluid Technologies ("CFT")—this segment produces highly engineered liquid, powder, sealants and adhesives finishing equipment and integrated system solutions for spraying, pumping, mixing, metering and curing of a variety of coatings used in the automotive manufacture, general industrial, protective coating, wood, specialty and automotive refinishing markets.

8

A summary of segment information follows:

	Three Months Ended June 30,
	2021				2020
(in millions)	Revenues		Operating Income (Loss)		Revenues		Operating Income (Loss)
Carlisle Construction Materials	$	937.3	$	177.4	$	734.9	$	137.6
Carlisle Interconnect Technologies	168.9		(12.9)		184.0		(1.5)
Carlisle Fluid Technologies	71.6		6.6		46.5		(5.2)
Segment total	1,177.8		171.1		965.4		130.9
Corporate and unallocated(1)	—		(37.3)		—		(16.4)
Total	$	1,177.8	$	133.8	$	965.4	$	114.5
	Six Months Ended June 30,
	2021				2020
(in millions)	Revenues		Operating Income (Loss)		Revenues		Operating Income (Loss)
Carlisle Construction Materials	$	1,656.6	$	298.7	$	1,411.3	$	245.3
Carlisle Interconnect Technologies	324.7		(23.6)		408.5		14.9
Carlisle Fluid Technologies	137.4		10.9		104.8		(2.4)
Segment total	2,118.7		286.0		1,924.6		257.8
Corporate and unallocated(1)	—		(67.5)		—		(36.1)
Total	$	2,118.7	$	218.5	$	1,924.6	$	221.7

(1)Corporate operating loss includes other unallocated costs, primarily general corporate expenses.

Note 3—Acquisitions

Motion Tech Automation, LLC

On July 22, 2020, the Company acquired 100% of the equity of Motion Tech Automation, LLC ("MTA") for consideration of $33.3 million, including $0.3 million of cash acquired and post-closing adjustments, which were finalized in the third quarter of 2020. The acquired products and services include sensors, manufacturing services, distribution services and engineering services to packaging and label, life sciences, semiconductor, fluid handling, and test and measurement customers.

Consideration of $16.4 million has been preliminarily allocated to goodwill, $4.3 million to definite-lived intangible assets, $4.9 million to inventory, $2.7 million to accounts receivable and $1.3 million to accounts payable. In accordance with the purchase agreement, Carlisle is indemnified for up to $1.6 million, and recorded an indemnification asset of $1.5 million in other long-term assets relating to the indemnification for pre-acquisition debt and tax withholding liabilities. During the second quarter of 2021, the pre-acquisition debt of $1.4 million was relieved along with the corresponding indemnification asset.

The preliminary fair value and weighted average useful lives of the acquired definite-lived intangible assets are as follows:

(in millions)	Fair Value		Weighted Average Useful Life (in years)
Technologies	$	2.3	9
Customer relationships	1.0		9
Trade names	1.0		5
Total	$	4.3

All of the $16.4 million preliminary value allocated to goodwill is deductible for tax purposes. Goodwill of $11.0 million, $2.8 million and $2.6 million has been preliminarily assigned to the CCM, CIT and CFT reporting units, respectively, which aligns with the reportable segments.

9

Note 4—Discontinued Operations

On May 25, 2021, the Company signed a definitive agreement to sell CBF to certain direct and indirect wholly-owned subsidiaries of BRWS Parent LLC, a portfolio company of One Rock Capital Partners (“CentroMotion”), for gross proceeds of (i) $250 million cash at closing, subject to certain adjustments, and (ii) the right to receive up to an additional $125 million based on CBF's achievement of certain performance targets. The transaction is subject to customary closing conditions and is expected to close in the third quarter of 2021. The sale of CBF is consistent with the Company's optimization strategy, as laid out in Vision 2025.

A summary of the results from discontinued operations included in the Condensed Consolidated Statements of Income and Comprehensive Income follows:

(in millions)	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues	$	98.8	$	58.8	$	186.9	$	129.8
Cost of goods sold	76.1		47.8		147.4		109.8
Other operating expenses, net	11.8		12.1		23.8		25.6
Operating income (loss)	10.9		(1.1)		15.7		(5.6)
Other non-operating (income) expense, net	(0.1)		—		0.2		(0.4)
Income (loss) from discontinued operations before income taxes	11.0		(1.1)		15.5		(5.2)
Pre-close transaction expenses(1)	(4.7)		—		(4.7)		—
Provision for (benefit from) income taxes	1.1		(0.5)		2.5		(1.6)
Income (loss) from discontinued operations	$	5.2	$	(0.6)	$	8.3	$	(3.6)

(1)Includes legal fees and stock-compensation expense directly related to the sale incurred prior to the close of the transaction.

10

A summary of the carrying amounts of major assets and liabilities, which were classified as held for sale in the Condensed Consolidated Balance Sheets follows:

(in millions)	June 30, 2021		December 31, 2020
ASSETS
Cash and cash equivalents	$	12.0	$	5.1
Receivables, net	79.7		58.3
Inventories	72.3		70.8
Prepaid other current assets	10.4		10.4
Current assets	174.4		144.6
Long-term assets reclassified to current assets	275.5		—
Total current assets	449.9		144.6
Property, plant, and equipment, net	101.2		102.0
Goodwill, net	96.5		96.5
Other intangible assets, net	71.3		73.9
Other long-term assets	6.5		2.6
Long-term assets	275.5		275.0
Long-term assets reclassified to current assets	(275.5)		—
Total long-term assets	$	—	$	275.0
LIABILITIES
Accounts payable	$	44.8	$	33.1
Accrued liabilities and other	22.7		20.4
Current liabilities	67.5		53.5
Long-term liabilities reclassified to current liabilities	25.3		—
Total current liabilities	92.8		53.5
Other long-term liabilities	25.3		21.9
Long-term liabilities	25.3		21.9
Long-term liabilities reclassified to current liabilities	(25.3)		—
Total long-term liabilities	$	—	$	21.9

A summary of cash flows from discontinued operations included in the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, follows:

(in millions)	2021		2020
Net cash provided by operating activities	$	10.8	$	15.4
Net cash used in investing activities	(5.6)		(5.0)
Net cash provided by (used in) financing activities(1)	1.8		(9.5)
Change in cash and cash equivalents from discontinued operations	$	7.0	$	0.9

(1)Represents borrowings or (repayments) from the Carlisle cash pool to fund working capital and capital expenditures.

Note 5—Earnings Per Share

The Company’s restricted shares contain non-forfeitable rights to dividends and are considered participating securities for purposes of computing earnings per share pursuant to the two-class method. The computation below of earnings per share excludes income attributable to the unvested restricted shares from the numerator and excludes the dilutive impact of those underlying shares from the denominator.

The computation below of earnings per share includes the income attributable to the vested and deferred restricted shares and restricted stock units in the numerator and includes the dilutive impact of those underlying shares in the denominator.

11

Stock options are included in the calculation of diluted earnings per share utilizing the treasury stock method and performance share awards are included in the calculation of diluted earnings per share considering those are contingently issuable. Neither is considered to be a participating security as they do not contain non-forfeitable dividend rights.

Net income and share data used in the basic and diluted earnings per share computations using the two-class method follows:

	Three Months Ended June 30,		Six Months Ended June 30,
(in millions, except per share amounts)	2021	2020	2021	2020
Income from continuing operations	$