Carlisle Companies Reports Second Quarter Results
SYRACUSE, N.Y.--July 16, 2001--Carlisle Companies Incorporated reported record second quarter sales of $490 million over second quarter 2000. Net earnings were $16.6 million, or $.54 per share (diluted), a decrease versus second quarter 2000 earnings of $31.9 million, or $1.04 per share.For the six-month period ended June 30, 2001, sales increased 4% to $954 million from $913 million in 2000. Net earnings of $6.4 million include the $24.0 million after tax restructuring charge taken in the first quarter of 2001. After factoring out the effect of the restructuring charge, net earnings from operations were $30.4 million or $1.00 per share. This result compares to net earnings of $57.4 million or $1.87 per share in 2000.
Second quarter sales were driven by increased volume in the Construction Materials segment and acquisitions in the General Industry segment. The reduction in operating earnings reflects the continued weakness in some of the Company's markets. Diminished absorption of fixed costs on lower production, continued pricing pressures to maintain market share, higher utility and raw material costs were the primary factors responsible for the lower gross margin. Over the last several months actions have been taken to adjust to the slowdown in the economy, and strengthen the operations to take advantage of a future upturn in the economy.
Richmond McKinnish, Carlisle's President and CEO said, "The second quarter results were disappointing, which demonstrates that Carlisle is not immune to the negative economic conditions facing most manufacturing operations this year. However, the current business cycle has provided the opportunity to improve our businesses. Significant internal improvements have been made, but were more than offset by weakness in our transportation, telecommunications and lawn and garden markets. We are committed to improving our competitive position without limiting our ability to grow."
FINANCIAL RESULTS
(In millions, except per share data)
Second Quarter 2001 2000 % Change
---- ---- --------
Sales $ 490.4 $ 479.4 2%
Net Earnings 16.6 31.9 -48%
Basic E.P.S. $0.55 $1.06 -48%
Diluted E.P.S. $0.54 $1.04 -48%
Six Months 2001 2000 % Change
---- ---- --------
Sales $ 953.6 $ 913.4 4%
Net Earnings 6.4 57.4 -89%
Basic E.P.S. $0.21 $1.90 -89%
Diluted E.P.S. $0.21 $1.87 -89%
2001 SEGMENT FINANCIAL DATA
(In millions)
JUNE - QTR 2001 2000
EBIT EBIT
Sales EBIT % Sales Sales EBIT % Sales
---------------------------- ---------------------------
Construction
Materials $ 129.7 $ 17.5 13.5% $ 100.8 $ 16.1 16.0%
Industrial
Components 168.6 11.2 6.6% 184.0 26.4 14.3%
Automotive
Components 71.4 4.2 5.8% 81.0 7.0 8.6%
General Industry
/All Other 120.7 5.0 4.1% 113.6 11.1 9.8%
----- ---- ----- -----
Subtotal 490.4 37.9 7.7% 479.4 60.6 12.6%
Corporate/Elims - - (4.0) - - - - (2.9) - -
----- ----- ----- -----
Total $ 490.4 $ 33.9 6.9% $ 479.4 $ 57.7 12.0%
JUNE -YTD 2001 2000
Sales EBIT Assets Sales EBIT Assets
----- ---- ------ ----- ---- ------
Construction
Materials $ 221.5 $ 26.4 $ 307.7 $ 188.4 $ 25.0 $ 240.6
Industrial
Components 360.4 29.9 529.5 346.9 50.8 465.4
Automotive
Components 140.2 7.4 135.1 164.5 14.2 179.1
General Industry
/All Other 231.5 8.3 365.5 213.6 18.9 312.0
----- ---- ------ ------ ----- -------
Subtotal 953.6 72.0 $1,337.8 913.4 108.9 $1,197.1
Corporate/Elims - - (45.9) 48.8 - - (5.6) 52.5
----- ---- ----- ---- ----- -------
Total $ 953.6 $ 26.1 $1,386.6 $ 913.4 $ 103.3 $1,249.6
Discussion of Results
Summary
Carlisle Companies Incorporated reported record sales of $490.4 million, up 2% over 2000. Net earnings were $16.6 million or $0.54 per share (diluted), compared to $1.04 per share in the second quarter 2000. Second quarter sales were driven by increased volume in the Construction Materials segment and growth through acquisition in the General Industry segment. The reduction in earnings is primarily attributable to the continued decline in demand at operations serving transportation, telecommunications, and outdoor power equipment markets. As the slow market conditions experienced in the beginning of the year continued into the second quarter, Carlisle management reduced production at several manufacturing operations in order to control inventory levels. Diminished absorption of fixed costs on lower production, continued pricing pressures to maintain market share, and higher utility and raw material costs were the primary factors responsible for the lower gross margin. Manufacturing costs continued to receive the utmost attention and cost reduction programs continued. However, the favorable impact of these initiatives was more than offset by lower production levels. Acquisitions made in the last twelve months contributed $27 million of sales growth and $.4 million of earnings.
Net sales in the first half of 2001 were $953.6 million, a 4% increase over 2000. Current year to date net earnings of $6.4 million or $0.21 per share, include the $24.0 million or $0.79 per share, after tax restructuring charge recorded in the first quarter. After factoring out the effect of the restructuring charge, net earnings from operations were $30.4 million or $1.00 per share. This result compares to $1.87 per share over the same period in 2000.
Construction Materials sales of $130 million in the second quarter increased 29% over 2000 first quarter sales of $101 million. The increase was primarily in the domestic roofing market on higher shipments of rubber membrane and accessories, thermoplastic polyolefin (TPO) roofing membrane, and insulation shipments. Although operating earnings improved 9% over last year the increase did not keep pace with sales. Steps implemented in 2000 to reduce selling and administrative costs had a positive impact on current year operating costs, but did not offset the market pressures on selling prices and increased raw material costs. Comparative results were also impacted by stronger sales of lower margin products.
Industrial Component sales decreased 8% from the second quarter 2000 with operating earnings down 58%. Most of the change was the result of lower sales and earnings at Carlisle Tire & Wheel Company. Shipments to original equipment customers were significantly off when compared to a year ago, particularly in the lawn and garden markets. As a result of the sharp decline in orders from these customers, CT&W reduced production throughout many of its operations. In addition, competitive pricing pressures in other markets, and rising energy and raw material costs negatively impacted operating earnings. Carlisle Industrial Brake & Friction and Motion Control also reported lower sales and earnings. The market softness experienced during the first quarter in the heavy duty truck, heavy construction and mining equipment markets continued into the second quarter. Sales at Tensolite were up in the second quarter as a result of the acquisition of UniTrek, in July 2000, and Connecting Devices, Inc., in March of this year. Tensolite earnings continued to be negatively impacted by softness in the telecommunications market.
Automotive Components sales for the quarter were down 12%, which reflect lower automotive build levels. Operating earnings of $4.2 million, decreased 39% as compared to the same period last year as production levels were adjusted to coincide with softer demand. The benefits of reduced overhead and labor costs, as a result of the restructuring charge recorded in the first quarter, were more than offset by the under absorption of fixed costs due to lower production levels.
General Industry sales of $121 million were up 6% over the second quarter 2000, while operating earnings were down 55%. Reduced production volume at most of the operations in this business segment was the primary factor behind the deterioration in earnings. Excluding the contribution of acquisitions, Transportation Products net sales were below the second quarter 2000, and earnings declined due to competitive pricing, unabsorbed fixed costs associated with lower production levels, and increased utility costs. Carlisle FoodService sales and earnings were down from last year as consumer discretionary spending continued to be limited due to the uncertainty in the economy. Lower sales, coupled with production cutbacks are the primary factors causing the decrease in earnings. Sales at Carlisle Systems & Equipment increased primarily as a result of acquisitions completed over the last nine months. Earnings in this business have been negatively impacted by depressed conditions in the perishable food delivery markets served by Johnson Truck Bodies.
Cash Flows
Cash flow from operations in the second quarter was $37 million, up from $35 million in 2000. For the six months ended June 30, 2001, cash generated from operations of $56 million was equal to a year ago. The increase for the quarter was attributable to working capital improvements as demonstrated by a $28 million reduction in inventory. Higher receivable balances, principally due to special dating programs in the roofing business, dampened working capital improvements.
Backlog
The June 30, 2001 backlog of $290 million was 10% over June 30, 2000 of $264 million. Improved backlog positions at Tensolite and Carlisle Systems & Equipment were driven by acquisitions and increased market demand.
Overall
Carlisle continues to be affected by the manufacturing slowdown evidenced throughout most of the manufacturing community. We have taken appropriate steps to reduce costs and maintain inventories in line with sales projections. Although the decisions to reduce production, invest in cost reduction programs and upgrade our capabilities are detrimental to our short-term results, we are confident that these actions will strengthen our competitive position to take advantage of more favorable economic conditions.
CARLISLE COMPANIES INCORPORATED
Consolidated Statement of Earnings
----------------------------------
For the periods ended June 30,
(In thousands except per share data)
Second Quarter Six Months
2001 2000 % Change 2001 2000 % Change
---------------------------- --------------------------
Net sales $490,433 $479,430 2.3% $953,591 $913,448 4.4%
Cost and
expenses:
Cost of
goods sold 399,790 371,894 7.5% 778,336 708,422 9.9%
Selling and
administrative
expenses 52,521 46,526 12.9% 104,034 95,449 9.0%
Research and
development
expenses 4,467 4,075 9.6% 8,472 8,166 3.7%
Restructuring
charges
and other - - -- 37,694 - 100.0%
Other (income)
& expense, net (246) (717) -65.7% (1,090) (1,906) -42.8%
------------------------------------------ --------------------------
Earnings before
interest &
income taxes 33,901 57,652 -41.2% 26,145 103,317 -74.7%
Interest
expense, net 7,898 6,989 13.0% 16,112 12,167 32.4%
------------------------------------------ --------------------------
Earnings before
income taxes 26,003 50,663 -48.7% 10,033 91,150 -89.0%
Income taxes 9,411 18,723 -49.7% 3,630 33,750 -89.2%
------------------------------------------ --------------------------
Net earnings $16,592 $31,940 -48.1% $6,403 $57,400 -88.8%
% of Net Sales 3.4% 6.7% 0.7% 6.3%
Basic earnings
per share $0.55 $1.06 -48.1% $0.21 $1.90 -88.9%
------------------------------------------ --------------------------
Average shares
outstanding
(000's)
- basic 30,262 30,255 30,259 30,223
------------------------------------------ --------------------------
Diluted earnings
per share $0.54 $1.04 -48.1% $0.21 $1.87 -88.8%
------------------------------------------ --------------------------
Average shares
outstanding
(000's)
- diluted 30,494 30,615 30,499 30,592
------------------------------------------ --------------------------
Dividends $6,059 $5,446 $12,106 $10,889
------------------------------------------ --------------------------
Per share $0.20 $0.18 11.1% $0.40 $0.36 11.1%
CARLISLE COMPANIES INCORPORATED
Comparative Balance Sheet
-------------------------
As of June 30,
(In thousands)
2001 2000
-------- --------
Assets
Current Assets
Cash and cash equivalents $ 9,225 $ 7,828
Receivables 285,622 272,167
Inventories 247,489 242,068
Prepaid expenses and other 79,318 71,160
-------- --------
Total current assets 621,654 593,223
-------- --------
Property, plant and equipment, net 397,579 392,827
Other assets 367,394 263,508
-------- --------
$1,386,627 $1,249,558
===================================
Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt,
including current maturities $206,480 $111,421
Accounts payable 139,114 121,053
Accrued expenses 150,153 139,253
-------- --------
Total current liabilities 495,747 371,727
-------- --------
Long-term debt 283,199 282,594
Other liabilities 72,707 76,877
Shareholders' equity 534,974 518,360
-------- --------
$1,386,627 $1,249,558
=================================
CARLISLE COMPANIES INCORPORATED
Comparative Consolidated Statement of Cash Flows
------------------------------------------------
For the periods ended June 30,
(In thousands)
Second Quarter Six Months
2001 2000 2001 2000
----------------------------------------------------------------------
Operating activities
Net earnings $16,592 $31,940 $6,403 $57,400
Reconciliation of
net earnings to
cash flows:
(Gain) Loss on
property, equipment
& business (8) - 29,525 -
Depreciation and
amortization 18,002 15,913 36,097 29,917
Working capital 2,226 (11,348) (12,539) (30,571)
Other 367 (1,469) (3,365) (923)
------- ------ ------ ------
Net cash provided by
operating activities 37,179 35,036 56,121 55,823
------- ------ ------ ------
Investing activities
Capital expenditures (15,940) (13,577) (36,955) (26,451)
Acquisitions, net of cash - (124,691) (37,934) (129,619)
Proceeds from sale of
property, equipment
and business 261 32 6,635 32
Other (1,480) 7,728 (4,699) 4,463
------- ------ ------ ------
Net cash used in
investing activities (17,159) (130,508) (72,953) (151,575)
------- ------ ------ ------
Financing activities
Net change in
short-term debt (12,243) 108,945 32,718 109,428
Proceeds from
long-term debt - - - -
Reductions of
long-term debt 903 (1,520) (122) (1,885)
Dividends (6,059) (5,446) (12,106) (10,889)
Purchases of
treasury shares (2,723) (2,303) (3,400) (3,491)
------- ------ ------ ------
Net cash (used in)
provided by financing
activities (20,122) 99,676 17,090 93,163
------- ------ ------ ------
Change in cash and
cash equivalents (102) 4,204 258 (2,589)
Cash and cash equivalents
Beginning of period 9,327 3,624 8,967 10,417
------- ------ ------ ------
End of period $9,225 $7,828 $9,225 $7,828