UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 10-Q

 

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

FOR THE QUARTERLY PERIOD ENDED March 31, 2023

or

 

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

FOR THE TRANSITION PERIOD FROM _____ TO _____.

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, $1 par value	CSL	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 April 21, 2023, there were 50,967,646 shares of the registrant's common stock, par value $1.00 per share, outstanding.

Carlisle Companies Incorporated

Table of Contents

	Page
PART I—Financial Information
Item 1. Financial Statements	3
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)	3
Condensed Consolidated Balance Sheets (Unaudited)	4
Condensed Consolidated Statements of Cash Flows (Unaudited)	5
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	6
Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosure about Market Risk	28
Item 4. Controls and Procedures	28
PART II—Other Information
Item 1. Legal Proceedings	28
Item 1A. Risk Factors	28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3. Defaults Upon Senior Securities	28
Item 4. Mine Safety Disclosures	28
Item 5. Other Information	29
Item 6. Exhibits	29
Signature	30

2

PART I—Financial Information

Item 1. Financial Statements

Carlisle Companies Incorporated

Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)

	Three Months Ended March 31,
(in millions, except per share amounts)	2023		2022
Revenues	$	1,178.8	$	1,496.3
Cost of goods sold	832.1		1,005.4
Selling and administrative expenses	188.6		203.0
Research and development expenses	15.5		12.3
Other operating expense (income), net	1.6		(1.7)
Operating income	141.0		277.3
Interest expense, net	18.8		22.6
Interest income	(4.6)		(0.2)
Other non-operating (income) expense, net	(1.2)		0.1
Income from continuing operations before income taxes	128.0		254.8
Provision for income taxes	28.4		60.5
Income from continuing operations	99.6		194.3
Discontinued operations:
Income (loss) before income taxes	0.6		(0.7)
Benefit from income taxes	(1.5)		—
Income (loss) from discontinued operations	2.1		(0.7)
Net income	$	101.7	$	193.6
Basic earnings per share attributable to common shares:
Income from continuing operations	$	1.95	$	3.72
Income (loss) from discontinued operations	0.04		(0.01)
Basic earnings per share	$	1.99	$	3.71
Diluted earnings per share attributable to common shares:
Income from continuing operations	$	1.92	$	3.67
Income (loss) from discontinued operations	0.04		(0.01)
Diluted earnings per share	$	1.96	$	3.66
Average shares outstanding:
Basic	51.1		52.1
Diluted	51.7		52.9
Comprehensive income:
Net income	$	101.7	$	193.6
Other comprehensive income (loss):
Foreign currency gains	13.0		3.5
Amortization of unrecognized net periodic benefit costs, net of tax	0.3		1.0
Other, net of tax	1.9		(0.7)
Other comprehensive income	15.2		3.8
Comprehensive income	$	116.9	$	197.4

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

3

Carlisle Companies Incorporated

Condensed Consolidated Balance Sheets (Unaudited)

(in millions, except par values)	March 31, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	423.9	$	400.0
Receivables, net of allowance for credit losses of $6.5 million and $6.3 million, respectively	730.3		829.1
Inventories, net	781.5		748.8
Contract assets	87.3		90.7
Prepaid expenses	28.6		35.6
Other current assets	100.7		140.8
Total current assets	2,152.3		2,245.0
Property, plant, and equipment, net	840.4		822.7
Goodwill	2,203.6		2,200.7
Other intangible assets, net	1,802.2		1,837.3
Other long-term assets	116.9		116.3
Total assets	$	7,115.4	$	7,222.0
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	367.0	$	370.5
Current portion of debt	302.0		301.8
Accrued and other current liabilities	223.0		365.8
Contract liabilities	38.0		40.3
Total current liabilities	930.0		1,078.4
Long-term liabilities:
Long-term debt, less current portion	2,281.9		2,281.5
Contract liabilities	275.9		270.4
Other long-term liabilities	569.3		567.3
Total long-term liabilities	3,127.1		3,119.2
Stockholders' 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; 50.8 and 50.9 shares outstanding, respectively)	78.7		78.7
Additional paid-in capital	516.0		512.6
Treasury shares, at cost (27.6 and 27.5 shares, respectively)	(2,483.6)		(2,436.2)
Accumulated other comprehensive loss	(142.6)		(157.8)
Retained earnings	5,089.8		5,027.1
Total stockholders' equity	3,058.3		3,024.4
Total liabilities and equity	$	7,115.4	$	7,222.0

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

4

Carlisle Companies Incorporated

Condensed Consolidated Statements of Cash Flows (Unaudited)

	Three Months Ended March 31,
(in millions)	2023		2022
Operating activities:
Net income	$	101.7	$	193.6
Reconciliation of net income to net cash provided by operating activities:
Depreciation	23.3		24.0
Amortization	37.2		40.7
Lease expense	6.9		7.1
Stock-based compensation	11.4		9.6
Deferred taxes	1.5		1.2
Other operating activities, net	2.3		3.3
Changes in assets and liabilities, excluding effects of acquisitions:
Receivables	100.2		(189.2)
Inventories	(28.9)		(122.0)
Contract assets	3.5		(1.5)
Prepaid expenses and other assets	20.2		17.4
Accounts payable	(0.3)		88.5
Accrued and other current liabilities	(126.1)		(23.1)
Contract liabilities	3.2		5.2
Other long-term liabilities	(6.5)		(10.5)
Net cash provided by operating activities	149.6		44.3
Investing activities:
Capital expenditures	(40.2)		(31.1)
Proceeds from sale of discontinued operation, net of cash disposed	—		125.0
Acquisitions, net of cash acquired	—		(24.7)
Investment in securities	0.5		10.3
Other investing activities, net	8.0		1.7
Net cash (used in) provided by investing activities	(31.7)		81.2
Financing activities:
Repurchases of common stock	(50.0)		(125.0)
Dividends paid	(38.9)		(28.7)
Proceeds from exercise of stock options	4.8		7.7
Withholding tax paid related to stock-based compensation	(9.9)		(12.0)
Other financing activities, net	(0.8)		(0.8)
Net cash used in financing activities	(94.8)		(158.8)
Effect of foreign currency exchange rate changes on cash and cash equivalents	0.8		0.6
Change in cash and cash equivalents	23.9		(32.7)
Cash and cash equivalents at beginning of period	400.0		324.4
Cash and cash equivalents at end of period	$	423.9	$	291.7

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

5

Carlisle Companies Incorporated

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Shares in Treasury			Total Stockholders' Equity
(in millions, except per share amounts)	Shares	Amount								Shares	Cost
Balance as of December 31, 2021	52.0	$	78.7	$	481.5	$	(105.2)	$	4,237.7	26.4	$	(2,063.2)	$	2,629.5
Net income	—	—		—		—		193.6		—	—		193.6
Other comprehensive loss, net of tax	—	—		—		3.8		—		—	—		3.8
Dividends - $0.54 per share	—	—		—		—		(28.7)		—	—		(28.7)
Repurchases of common stock	(0.5)	—		—		—		—		0.5	(125.0)		(125.0)
Issuances and deferrals, net for stock-based compensation(1)	0.1	—		2.0		—		—		(0.1)	3.4		5.4
Balance as of March 31, 2022	51.6	$	78.7	$	483.5	$	(101.4)	$	4,402.6	26.8	$	(2,184.8)	$	2,678.6
Balance as of December 31, 2022	50.9	$	78.7	$	512.6	$	(157.8)	$	5,027.1	27.5	$	(2,436.2)	$	3,024.4
Net income	—	—		—		—		101.7		—	—		101.7
Other comprehensive loss, net of tax	—	—		—		15.2		—		—	—		15.2
Dividends - $0.75 per share	—	—		—		—		(39.0)		—	—		(39.0)
Repurchases of common stock	(0.2)	—		—		—		—		0.2	(50.2)		(50.2)
Issuances and deferrals, net for stock-based compensation(1)	0.1	—		3.4		—		—		(0.1)	2.8		6.2
Balance as of March 31, 2023	50.8	$	78.7	$	516.0	$	(142.6)	$	5,089.8	27.6	$	(2,483.6)	$	3,058.3

(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

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, 2022 (the "2022 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.

Note 2—Segment Information

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

Carlisle Construction Materials ("CCM")—this segment produces a complete line of premium single-ply roofing products and warranted roof systems and accessories for the commercial building industry, including ethylene propylene diene monomer ("EPDM"), thermoplastic polyolefin ("TPO") and polyvinyl chloride ("PVC") membrane, polyisocyanurate ("polyiso") insulation, and engineered metal roofing and wall panel systems for commercial and residential buildings.

Carlisle Weatherproofing Technologies ("CWT")—this segment produces building envelope solutions that effectively drive energy efficiency and sustainability in commercial and residential applications. Products include high-performance waterproofing and moisture protection products, protective roofing underlayments, fully integrated liquid and sheet applied air/vapor barriers, sealants/primers and flashing systems, roof coatings and mastics, spray polyurethane foam and coating systems for a wide variety of thermal protection applications and other premium polyurethane products, block-molded expanded polystyrene insulation, and engineered products for HVAC applications.

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. CIT also provides medical device products and solutions for several medical technology applications.

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.

7

A summary of segment information follows:

	Three Months Ended March 31,
	2023				2022
(in millions)	Revenues		Operating Income (Loss)		Revenues		Operating Income (Loss)
Carlisle Construction Materials	$	576.0	$	122.4	$	881.1	$	261.1
Carlisle Weatherproofing Technologies	316.6		24.1		359.1		37.5
Carlisle Interconnect Technologies	213.5		10.9		185.0		(2.5)
Carlisle Fluid Technologies	72.7		10.7		71.1		4.8
Segment total	1,178.8		168.1		1,496.3		300.9
Corporate and unallocated(1)	—		(27.1)		—		(23.6)
Total	$	1,178.8	$	141.0	$	1,496.3	$	277.3

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

Note 3—Acquisitions

MBTechnology

On February 1, 2022, the Company acquired 100% of the equity of MBTechnology (“MBTech”), for consideration of $26.3 million, including $1.6 million of cash acquired and post-closing adjustments, which were finalized in the second quarter of 2022. MBTech is a manufacturer of energy-efficient roofing and underlayment systems for residential and commercial applications.

For the period from February 1, 2022 to March 31, 2022, the related product lines contributed revenues of $2.0 million and operating income of $0.1 million. The results of operations of MBTech are reported within the CWT segment.

Consideration of $12.5 million has been allocated to goodwill, none of which is deductible for tax purposes. All of the goodwill was preliminarily assigned to the CCM reporting unit, which was divided into four reporting units in 2022 with goodwill allocated to the new reporting units based on their relative fair values. Consideration of $7.9 million has been allocated to customer relationships, with a useful life of nine years, $3.4 million to plant, property and equipment, $2.8 million to inventory, $0.8 million to accounts receivable and $0.5 million to accounts payable.

Note 4—Discontinued Operations

On August 2, 2021, the Company completed the sale of the equity interests and assets comprising its former Carlisle Brake & Friction ("CBF") segment for gross proceeds of (i) $250 million 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. On February 23, 2022, the Company received $125 million in cash for the full amount of the contingent consideration. The sale of CBF is consistent with the Company's optimization strategy, as laid out in Vision 2025.

A summary of cash flows from discontinued operations included in the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 follows:

(in millions)	2022
Net cash used in operating activities	$	(0.7)
Net cash provided by investing activities	125.0
Net cash used in financing activities(1)	(124.3)
Change in cash and cash equivalents from discontinued operations	$	—

(1)Represents repayments to the Carlisle cash pool for return of capital upon sale.

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.

8

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.

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.

Income from continuing operations and share data used in the basic and diluted earnings per share computations using the two-class method follows:

		Three Months Ended March 31,
(in millions, except per share amounts and percentages)		2023			2022
Income from continuing operations		$	99.6		$	194.3
Less: dividends declared		39.0			28.7
Undistributed earnings		60.6			165.6
Percent allocated to common stockholders (1)		99.8		%	99.7		%
Undistributed earnings allocated to common stockholders		60.5			165.1
Add: dividends declared to common shares, restricted share units and vested and deferred restricted and performance shares		38.9			28.7
Income from continuing operations attributable to common stockholders		$	99.4		$	193.8
Shares:
Basic weighted-average shares outstanding		51.1			52.1
Effect of dilutive securities:
Performance awards		0.2			0.2
Stock options		0.4			0.6
Diluted weighted-average shares outstanding		51.7			52.9
Per share income from continuing operations attributable to common shares:
Basic		$	1.95		$	3.72
Diluted		$	1.92		$	3.67
(1)	Basic weighted-average shares outstanding	51.1			52.1
	Basic weighted-average shares outstanding and unvested restricted shares expected to vest	51.2			52.3
	Percent allocated to common stockholders	99.8		%	99.7		%

To calculate earnings per share for income (loss) from discontinued operations and for net income, the denominator for both basic and diluted earnings per share is the same as used in the above table.

	Three Months Ended March 31,
(in millions)	2023		2022
Income (loss) from discontinued operations attributable to common stockholders for basic and diluted earnings per share	$	2.1	$	(0.7)
Net income attributable to common stockholders for basic and diluted earnings per share	101.5		193.1
Anti-dilutive stock options excluded from earnings per share calculation(1)	0.7		0.1

(1)Represents stock options excluded from the calculation of diluted earnings per share, as such options’ assumed proceeds upon exercise would result in the repurchase of more shares than the underlying award.

Note 6—Revenue Recognition

The Company receives payment at the inception of the contract for separately priced extended service warranties, and revenue is deferred and recognized on a straight-line basis over the life of the contracts. Remaining performance obligations for extended service warranties represent the transaction price for the remaining stand-

9

ready obligation to perform warranty services. A summary of estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of March 31, 2023, follows:

(in millions)	Remainder of 2023		2024		2025		2026		2027		2028		Thereafter
Extended service warranties	$	19.2	$	24.6	$	23.7	$	22.7	$	21.6	$	20.6	$	168.2

The Company has applied the practical expedient to not disclose information about remaining performance obligations that have original expected durations of one year or less.

Contract Balances

Contract liabilities relate to payments received in advance of performance under a contract, primarily related to extended service warranties in the CCM and CWT segments, systems contracts in the CFT segment and highly customized product contracts in the CIT segment. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract. A summary of the change in contract liabilities for the three months ended March 31, follows:

(in millions)	2023		2022
Balance as of January 1	$	310.7	$	283.9
Revenue recognized	(17.0)		(20.0)
Revenue deferred	20.2		25.2
Balance as of March 31	$	313.9	$	289.1

Contract assets relate to the Company's right to payment for performance completed to date under a contract, primarily related to highly customized product contracts within the CIT and CFT segments. Accounts receivable are recorded when the right to payment becomes unconditional, which generally occurs over twelve months or less. A summary of the change in contract assets for the three months ended March 31, follows:

(in millions)	2023		2022
Balance as of January 1	$	90.7	$	72.1
Balance as of March 31	87.3		73.6
Change in contract assets	$	(3.4)	$	1.5

Revenues by End-Market

A summary of revenues disaggregated by major end-market industries and reconciliation of disaggregated revenue by segment follows:

	Three Months Ended March 31, 2023
(in millions)	CCM		CWT		CIT		CFT		Total
General construction	$	576.0	$	272.4	$	—	$	—	$	848.4
Aerospace	—		—		111.1		—		111.1
Medical	—		—		65.8		—		65.8
Transportation	—		—		—		36.3		36.3
Heavy equipment	—		26.1		—		—		26.1
General industrial and other	—		18.1		36.6		36.4		91.1
Total revenues	$	576.0	$	316.6	$	213.5	$	72.7	$	1,178.8
	Three Months Ended March 31, 2022
(in millions)	CCM		CWT		CIT		CFT		Total
General construction	$	881.1	$	298.3	$	—	$	—	$	1,179.4
Aerospace	—		—		83.3		—		83.3
Medical	—		—		64.6		—		64.6
Transportation	—		—		—		38.4		38.4
Heavy equipment	—		30.8		—		—		30.8
General industrial and other	—		30.0		37.1		32.7		99.8
Total revenues	$	881.1	$	359.1	$	185.0	$	71.1	$	1,496.3

10

Revenues by Geographic Area

A summary of revenues based on the country to which the product was delivered and reconciliation of disaggregated revenue by segment follows:

	Three Months Ended March 31, 2023
(in millions)	CCM		CWT		CIT		CFT		Total
United States	$	495.8	$	282.3	$	157.7	$	36.7	$	972.5
International:
Europe	55.2		5.2		20.2		11.0		91.6
North America (excluding U.S.)	17.9		24.3		12.1		3.8		58.1
Asia and Middle East	3.8		2.4		17.6		19.9		43.7
Africa	0.5		0.8		3.4		0.2		4.9
Other	2.8		1.6		2.5		1.1		8.0
Total international	80.2		34.3		55.8		36.0		206.3
Total revenues	$	576.0	$	316.6	$	213.5	$	72.7	$	1,178.8
	Three Months Ended March 31, 2022
(in millions)	CCM		CWT		CIT		CFT		Total
United States	$	787.5	$	318.5	$	129.9	$	33.4	$	1,269.3
International:
Europe	59.9		5.4		18.2		12.9		96.4
North America (excluding U.S.)	27.6		28.2		10.8		4.5		71.1
Asia and Middle East	2.7		2.9		19.3		19.3		44.2
Africa	0.7		2.2		2.7		0.2		5.8
Other	2.7		1.9		4.1		0.8		9.5
Total international	93.6		40.6		55.1		37.7		227.0
Total revenues	$	881.1	$	359.1	$	185.0	$	71.1	$	1,496.3

Note 7—Stock-Based Compensation

Stock-based compensation cost by award type follows:

(in millions)	Three Months Ended March 31,
	2023		2022
Stock option awards	$	5.5	$	3.1
Restricted stock awards	3.2		3.3
Performance share awards	2.4		3.2
Total stock-based compensation cost incurred	11.1		9.6
Capitalized cost during the period	(1.7)		—
Amortization of capitalized cost during the period	2.0		—
Total stock-based compensation expense	$	11.4	$	9.6

Note 8—Exit and Disposal and Other Restructuring Activities

The Company has undertaken operational restructuring and other cost reduction actions to streamline processes and manage costs throughout various departments. These actions resulted in exit, disposal and employee termination benefit costs, primarily resulting from planned reductions in workforce, facility consolidation and relocation, and lease termination costs. The primary actions are discussed below by operating segment.

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CIT

During the first quarter of 2023, the Company initiated plans to exit its manufacturing operations in Lugano, Switzerland, and relocate the majority of those operations to its existing facilities in North America. The project is estimated to take fifteen to eighteen months to complete. During the three months ended March 31, 2023, exit and disposal costs totaled $0.5 million, primarily for employee termination benefit costs. Total exit and disposal costs are expected to approximate $7.0 million, with approximately $6.5 million costs remaining to be incurred, primarily in 2023.

The Company has substantially completed its plan to exit its manufacturing operations in Carlsbad, California, and relocate the majority of those operations to its existing facilities in North America for cumulative exit and disposal costs of $5.6 million. During the three months ended March 31, 2023, project costs totaled $1.1 million, primarily for relocation expenses and employee termination benefit costs.

Consolidated Summary

The Company's exit and disposal costs by activity follows:

(in millions)	Three Months Ended March 31,
	2023		2022
Employee severance and benefit arrangements	$	1.9	$	1.1
Accelerated depreciation and impairments	1.4		0.6
Relocation costs	0.3		—
Facility cleanup costs	—		0.1
Lease termination costs	—		0.1
Other restructuring costs	0.7		0.3
Total exit and disposal costs	$	4.3	$	2.2

The Company's exit and disposal costs by segment follows:

(in millions)	Three Months Ended March 31,
	2023		2022
Carlisle Weatherproofing Technologies	$	2.2	$	0.3
Carlisle Interconnect Technologies	1.8		1.9
Carlisle Fluid Technologies	0.2		—
Carlisle Construction Materials	0.1		—
Total exit and disposal costs	$	4.3	$	2.2

The Company's exit and disposal costs by financial statement line item follows:

(in millions)	Three Months Ended March 31,
	2023		2022
Cost of goods sold	$	4.1	$	1.9
Selling and administrative expenses	0.2		0.3
Total exit and disposal costs	$	4.3	$	2.2

The Company's change in exit and disposal activities liability follows:

(in millions)	2023		2022
Balance as of January 1,	$	1.6	$	6.5
Charges	4.3		2.2
Settlements	(5.0)		(6.5)
Balance as of March 31,	$	0.9	$	2.2

The liability of $0.9 million as of March 31, 2023, primarily relates to employee severance and benefit arrangements and is included in accrued and other current liabilities.

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Note 9—Income Taxes

The effective income tax rate on continuing operations for the three months ended March 31, 2023, was 22.2%. The year-to-date provision for income taxes included taxes on earnings at an anticipated rate of 23.4% and a tax impact of $1.5 million of discrete activity primarily related to excess tax benefits from employee stock compensation.

The effective income tax rate on continuing operations for the three months ended March 31, 2022, was 23.7%.

Note 10—Inventories, net

(in millions)	March 31, 2023		December 31, 2022
Raw materials	$	265.5	$	315.0
Work-in-process	84.0		94.1
Finished goods	466.1		375.7
Reserves	(34.1)		(36.0)
Inventories, net	$	781.5	$	748.8

Note 11—Accrued and Other Current Liabilities

(in millions)	March 31, 2023		December 31, 2022
Compensation and benefits	$	71.9	$	123.0
Customer incentives	40.6		131.2
Standard product warranties	25.9		25.7
Income and other accrued taxes	15.2		13.5
Other accrued liabilities	69.4		72.4
Accrued and other current liabilities	$	223.0	$	365.8

Standard Product Warranties

The Company offers various standard warranty programs on its products, primarily for certain installed roofing systems, high-performance cables and assemblies and fluid technologies. The Company’s liability for such warranty programs is included in accrued and other current liabilities. The change in standard product warranty liabilities for the three months ended March 31, follows:

(in millions)	2023		2022
Balance as of January 1	$	25.7	$	26.8
Provision	3.4		3.0
Claims	(3.3)		(2.6)
Foreign exchange	0.1		(0.1)
Balance as of March 31	$