Carlisle Companies Reports a 16% Increase in Third Quarter Income from Continuing Operations and Increases Full Year Guidance
CHARLOTTE, N.C.--Oct. 2, 20050, 2005--Carlisle Companies Incorporated reported income from continuing operations of $38.3 million, or $1.24 per diluted share for the quarter ended September 30, 2005, compared to $32.9 million or $1.04 per diluted share for the quarter ended September 30, 2004. Income from continuing operations for the third quarter 2005 included a $3.0 million, or $0.10 per diluted share, benefit for the reduction in income tax liabilities as a result of final settlement of the Company's 2002 and 2003 federal tax filings and settlement of certain state tax filings from 1997 - 1999. Johnson Truck Bodies, reported in the General Industry segment, recorded a year-over-year reduction in quarterly net income of $0.04 per diluted share, partially as a result of an ongoing labor dispute. Changes in foreign exchange rates had a negligible impact on income from continuing operations for the third quarter 2005.Net sales of $601.1 million in the third quarter of 2005 were $16.1 million, or 3%, higher than net sales of $585.0 million recognized in the third quarter of 2004. Strong organic sales growth in the Construction Materials and Transportation Products segments was somewhat offset by weak demand in the Industrial Components segments' lawn and garden market. Acquisitions contributed approximately $0.1 million to the quarter-over-quarter increase in net sales. Changes in foreign currency exchange rates had a favorable impact on net sales of $1.8 million as compared to the third quarter of 2004.
Richmond McKinnish, Carlisle's President and CEO commented, "We continue to be challenged by increasing raw material costs, the labor dispute at Johnson Truck Bodies and soft demand in the lawn and garden market. The impact of these challenges has been offset by strong performance in our Construction Materials and Transportation Products segments, and we remain confident that Carlisle will continue driving earnings improvement in most of its businesses for the remainder of 2005. We are increasing our guidance for 2005 to $4.25 to $4.35 per diluted share for income from continuing operations."
Income from continuing operations for the nine-month period ended September 30, 2005 of $112.7 million, or $3.61 per diluted share, represented a 17% increase over $96.9 million, or $3.08 per diluted share, recognized during the same period of 2004. Johnson Truck Bodies' year-over-year reduction in net income of $0.14 per diluted share for the nine-month period was partially attributable to the ongoing labor dispute. The aforementioned reduction in income tax liabilities increased year-to-date 2005 income from continuing operations by $0.10 per diluted share. Exchange losses on subsidiary debt denominated in foreign currencies resulted in a year-to-date loss of $0.03 per diluted share. Partially offsetting these losses was a gain of $0.08 per diluted share for proceeds received from the favorable resolution of certain legal actions initiated by the Company.
Net sales for the nine months ended September 30, 2005 were $1.84 billion, a 10% increase over net sales of $1.68 billion during the first nine months of 2004. Organic growth of $135.7 million accounted for the majority of the year-over-year improvement with increases primarily occurring in the Construction Materials, Industrial Components and Transportation Products segments. Acquisitions accounted for $17.6 million of the year-over-year improvement. Changes in foreign exchange rates had a favorable impact of $7.5 million on net sales for the nine-month period in 2005.
Acquisitions
The Company has recently made a significant investment in its heavy-duty brake and friction business, represented by the Specialty Products segment. In July 2005, the Company acquired 100% of the heavy-duty brake lining and brake shoe assets of Zhejiang Kete ("Kete") for approximately $34.2 million. Located in Hangzhou, China, Kete is managed by Carlisle Motion Control. The acquisition of Kete enhances Carlisle Motion Control's focused position in the heavy-duty truck brake lining market.
On October 7, 2005, the Company announced the acquisition of the off-highway brake assets of ArvinMeritor, Inc. for approximately $39.0 million. The acquisition includes manufacturing assets from the ArvinMeritor facilities in York, SC and Cwmbran, South Wales, U.K. These assets will be transitioned to the off-highway braking systems and specialty friction products operations of Carlisle Industrial Brake & Friction. The addition of these assets allows for the expansion of the off-highway brake business, which serves one of the Company's most profitable end-markets.
Segment Results
The following segment discussion excludes the impact of discontinued operations.
Industrial Components: Net sales of $164.5 million for the three months ended September 30, 2005 decreased 8% from net sales of $178.1 million for the same period of 2004. Increased tire and wheel sales for the ATV market were more than offset by lower sales for the high speed, styled wheels and consumer lawn and garden markets. Sales in the power transmission belt business were 10% lower than third quarter 2004 due primarily to reduced demand in the lawn and garden and agricultural markets. Earnings before interest and income taxes ("EBIT") of $5.1 million in the third quarter of 2005 were 54% lower than $11.2 million recorded in the third quarter of 2004. Lower demand resulting from extended shutdowns and model changeovers by the Company's lawn and garden OE customers has been the largest contributor to the segment's disappointing results. Increased freight, energy costs, and rising raw material costs have also contributed to the negative earnings comparison. The Company continues to incur costs associated with the plant closure of its union belt facility in Red Wing, MN and start-up costs for increased production at the belt operations in Fort Scott, KS and Shenzhen, China.
Construction Materials: Net sales increased 9% from $215.5 million for the third quarter 2004 to $235.1 million for the third quarter 2005 primarily due to higher selling prices across most product lines which offset higher raw material costs. Increased revenues for membrane, coatings and waterproofing products and accessories sales contributed to the 26% increase in EBIT from $33.7 million for the three months ended September 30, 2004 to $42.6 million in 2005. The Company's equity share of earnings at its European roofing joint venture, Icopal, was $4.2 million in the third quarter of 2005 compared to $3.2 million recognized in the same period of 2004.
Transportation Products: Net sales of $50.2 million recorded for the third quarter 2005 increased 26% over third quarter 2004 net sales of $39.8 million primarily led by growth in large construction and specialized trailers. EBIT of $6.6 million for the three months ended September 30, 2005 represented a significant increase over 2004 EBIT of $2.2 million. Selling price increases, strong demand and favorable product mix contributed to the positive year-over-year comparison.
Specialty Products: Net sales of $33.7 million recorded for the third quarter 2005 were comparable with third quarter 2004 net sales of $33.1 million. Increased sales for molded consumer products and on-highway heavy friction and relined brake shoes were offset by decreased sales of off-highway braking systems. EBIT for the third quarter 2005 was $1.2 million compared to $1.9 million recorded in the same quarter 2004. The unfavorable earnings comparison is due primarily to start-up costs for the new brake operation in China, continuing production inefficiencies and increased freight and raw material costs.
General Industry: Net sales in the third quarter 2005 were $117.6 million compared to net sales of $118.5 million in the 2004 period. Net sales at Carlisle FoodService Products and Tensolite improved in the third quarter of 2005, but were offset by lower sales at Johnson Truck Bodies due primarily to the continuing labor dispute which began in April of this year. EBIT of $7.6 million for the third quarter 2005 decreased 7% from $8.2 million recorded in the third quarter 2004 as the impact of the labor dispute at Johnson Truck Bodies offset favorable results at Carlisle Systems and Equipment.
Discontinued Operations
Losses from discontinued operations, net of tax, in the third quarter of 2005 were $18.6 million as compared to $3.9 million recorded in the third quarter 2004. The third quarter 2005 results include an after-tax loss of $10.1 million on the sale of substantially all the operations of the automotive components business. The August 17, 2005 sale of these operations did not include the sale of trade accounts receivable dated prior to the effective date of the sale or certain assets of two small plants. On October 8, 2005, Delphi Corporation filed for bankruptcy protection under chapter 11 of the U.S. Bankruptcy Code. The third quarter 2005 loss on discontinued operations of $18.6 million includes charges to increase the Company's allowance for doubtful accounts for trade receivables due from Delphi Corporation as well as losses associated with the liquidation of the remaining automotive components assets. Losses from discontinued operations for the nine months ended September 30, 2005 were $30.1 million as compared with losses of $6.8 million for the same period in 2004. The Company will continue its disposition of the remaining assets of this business during the remainder of 2005.
Net Income
Net income for the three months ended September 30, 2005 was $19.7 million, or $0.64 per diluted share, compared to $29.0 million, or $0.92 per diluted share, for the three months ended September 30, 2004. Net income for the nine months ended September 30, 2005 was $82.6 million, or $2.65 per diluted share, compared to $90.1 million, or $2.86 per diluted share for the same period last year. The current year three and nine-month periods included the previously discussed losses from discontinued operations.
Cash Flow
Cash flow provided by continuing operations of $114.9 million in the first nine months of 2005 compares with cash provided of $65.6 million for the same period in 2004. Cash used to fund working capital levels improved for the 2005 nine-month period as compared with the 2004 nine-month period, primarily due to higher collections of accounts receivable during the 2005 period. During the nine months ended September 30, 2005, the Company's receivables securitization program contributed $2.9 million to cash provided by operating activities compared with a contribution of $43.0 million for the same period in 2004. Cash used in investing activities was $85.3 million in 2005 compared to $70.8 million in 2004. Capital expenditures of $76.5 million were 48% above $51.6 million in 2004. The increase in capital expenditures was due primarily to new production plants for the Construction Materials segment and a new distribution center for Carlisle FoodService Products in the General Industry segment. Cash used in investing activities in 2005 included the acquisition of Kete for approximately $34.2 million, of which approximately $28.3 million was paid in July 2005, and the remainder will be paid within one year of the transaction closing date. Cash used in investing activities in 2004 included the acquisition of Trintex Corporation, a specialty tire and wheel company, for approximately $32.5 million. Proceeds from the sale of investments, property and equipment in 2005 included the cash proceeds from the sale of certain assets of the Company's automotive components business. Proceeds in 2004 included the sale of properties acquired with the 2003 acquisition of Flo-Pac Corporation. Cash flow provided by financing activities of $29.3 million for the nine months ended September 30, 2005 compared with a use of cash of $5.1 million in 2004. Short-term borrowings in the first nine months of 2005 included borrowings required to fund organic growth as well as $39.0 million of borrowings on September 30, 2005 to fund the acquisition of certain assets of ArvinMeritor. The ArvinMeritor acquisition did not close until October 7, 2005 resulting in the increased cash and cash equivalents balance at September 30, 2005. The Company also used approximately $36.0 million to finance the purchase of 0.5 million shares of its common stock which was partially offset from proceeds for the exercise of stock options.
Backlog
Backlog from continuing operations at September 30, 2005 of $328.0 million was 12% lower than $370.7 million one year ago and 6% lower than backlog as of June 30, 2005. The decline as compared to the prior year is primarily due to lower backlog in the General Industry segment as a large project for Carlisle Systems and Equipment in the southwestern U.S. nears completion. This decline is partially offset by higher backlog in the Transportation Products segment.
Conference Call and Webcast
The Company will discuss second quarter 2005 results on a conference call for investors on Thursday, October 20, 2005 at 11:00 a.m. Eastern. The call may be accessed live at http://www.carlisle.com/investors/conference_call.html, or the taped call may be listened to shortly following the live call at the same website location until November 3, 2005. A slide presentation will also be available for viewing and/or printing at the same website location.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in global economic, business, competitive, market and regulatory factors. More detailed information about these factors is contained in the Company's filings with the Securities and Exchange Commission. The Company undertakes no duty to update forward-looking statements.
Carlisle is a diversified global manufacturing company serving the construction materials, commercial roofing, specialty tire and wheel, power transmission, heavy-duty brake and friction, foodservice, data transmission, and process systems industries.
CARLISLE COMPANIES INCORPORATED
Financial Results
For the periods ended September 30
(In millions, except per share data)
Third Quarter Nine Months
------------------------- ---------------------------
2005 2004* % Change 2005 2004* % Change
------------------------- ---------------------------
Net sales $601.1 $585.0 3% $1,839.4 $1,678.6 10%
Income from
continuing
operations, net
of tax $38.3 $32.9 17% $112.7 $96.9 16%
Loss from
discontinued
operations,
net of tax (18.6) (3.9) NM (30.1) (6.8) NM
---------------- ------------------
Net income $19.7 $29.0 -32% $82.6 $90.1 -8%
================ ==================
Basic earnings
per share
Continuing
operations $1.25 $1.06 18% $3.66 $3.12 17%
Discontinued
operations (0.61) (0.13) NM (0.98) (0.22) NM
---------------- ------------------
Net income $0.64 $0.93 -31% $2.68 $2.90 -8%
================ ==================
Diluted earnings
per share
Continuing
operations $1.24 $1.04 19% $3.61 $3.08 17%
Discontinued
operations (0.60) (0.12) NM (0.96) (0.22) NM
---------------- ------------------
Net income $0.64 $0.92 -30% $2.65 $2.86 -7%
================ ==================
SEGMENT FINANCIAL DATA (Continuing Operations)
(In millions)
Third Quarter 2005 2004*
-----------------------------------------------------
Sales EBIT % Sales Sales EBIT % Sales
------------------------- ---------------------------
Industrial
Components $164.5 $5.1 3.1% $178.1 $11.2 6.3%
Construction
Materials 235.1 42.6 18.1% 215.5 33.7 15.6%
Transportation
Products 50.2 6.6 13.1% 39.8 2.2 5.5%
Specialty
Products 33.7 1.2 3.6% 33.1 1.9 5.7%
General Industry 117.6 7.6 6.5% 118.5 8.2 6.9%
---------------- ------------------
Subtotal 601.1 63.1 10.5% 585.0 57.2 9.8%
Corporate - (6.4) - (5.5)
---------------- ------------------
Total $601.1 $56.7 9.4% $585.0 $51.7 8.8%
================ ==================
Nine Months 2005 2004*
-----------------------------------------------------
Sales EBIT % Sales Sales EBIT % Sales
------------------------- ---------------------------
Industrial
Components $595.7 $49.7 8.3% $565.6 $55.8 9.9%
Construction
Materials 634.6 96.0 15.1% 525.9 68.3 13.0%
Transportation
Products 141.6 17.2 12.1% 112.5 5.7 5.1%
Specialty
Products 110.1 8.6 7.8% 102.6 8.4 8.2%
General Industry 357.4 25.2 7.1% 372.0 30.1 8.1%
---------------- ------------------
Subtotal 1,839.4 196.7 10.7% 1,678.6 168.3 10.0%
Corporate - (21.6) - (14.1)
---------------- ------------------
Total $1,839.4 $175.1 9.5% $1,678.6 $154.2 9.2%
================ ==================
* 2004 figures have been revised to reflect discontinued operations.
NM = Not Meaningful
CARLISLE COMPANIES INCORPORATED
Comparative Consolidated Statement of Earnings
For the periods ended September 30
(In thousands except per share data)
Third Quarter
-----------------------------
2005 2004* % Change
-----------------------------
Net sales $601,120 $585,026 2.8%
-----------------------------
Cost and expenses:
Cost of goods sold 486,148 477,375 1.8%
Selling and administrative expenses 56,621 54,743 3.4%
Research and development expenses 4,237 3,976 6.6%
Other income, net (2,607) (2,808) -7.2%
-----------------------------
Earnings before interest & income taxes 56,721 51,740 9.6%
Interest expense, net 4,547 3,713 22.5%
-----------------------------
Earnings before income taxes 52,174 48,027 8.6%
Income taxes 13,831 15,154 -8.7%
-----------------------------
26.5% 31.6%
Income from continuing operations 38,343 32,873 16.6%
-----------------------------
% of Net Sales 6.4% 5.6%
Loss from discontinued operations, net of
tax (18,640) (3,897) NM
-----------------------------
Net Income $ 19,703 $ 28,976 -32.0%
=============================
Basic earnings per share
------------------------
Continuing operations $ 1.25 $ 1.06 17.9%
Discontinued operations (0.61) (0.13) NM
-----------------------------
Basic earnings per share $ 0.64 $ 0.93 -31.2%
=============================
Diluted earnings per share
--------------------------
Continuing operations $ 1.24 $ 1.04 19.2%
Discontinued operations (0.60) (0.12) NM
-----------------------------
Diluted earnings per share $ 0.64 $ 0.92 -30.4%
=============================
Average shares outstanding (000's) -
basic 30,593 31,135
-------------------
Average shares outstanding (000's) -
diluted 30,895 31,502
-------------------
Per share
Dividends $ 7,650 $ 7,170
-----------------------------
Dividends per share $ 0.250 $ 0.230 8.7%
-----------------------------
Nine Months
---------------------------------
2005 2004* % Change
---------------------------------
Net sales $1,839,394 $1,678,551 9.6%
---------------------------------
Cost and expenses:
Cost of goods sold 1,477,020 1,348,755 9.5%
Selling and administrative expenses 176,940 165,083 7.2%
Research and development expenses 12,605 12,220 3.2%
Other income, net (2,295) (1,772) 29.5%
---------------------------------
Earnings before interest & income
taxes 175,124 154,265 13.5%
Interest expense, net 13,148 11,558 13.8%
---------------------------------
Earnings before income taxes 161,976 142,707 13.5%
Income taxes 49,244 45,831 7.4%
---------------------------------
30.4% 32.1%
Income from continuing operations 112,732 96,876 16.4%
---------------------------------
% of Net Sales 6.1% 5.8%
Loss from discontinued operations,
net of tax (30,095) (6,816) NM
---------------------------------
Net Income $ 82,637 $ 90,060 -8.2%
=================================
Basic earnings per share
------------------------
Continuing operations $ 3.66 $ 3.12 17.3%
Discontinued operations (0.98) (0.22) NM
---------------------------------
Basic earnings per share $ 2.68 $ 2.90 -7.6%
=================================
Diluted earnings per share
--------------------------
Continuing operations $ 3.61 $ 3.08 17.2%
Discontinued operations (0.96) (0.22) NM
---------------------------------
Diluted earnings per share $ 2.65 $ 2.86 -7.3%
=================================
Average shares outstanding (000's) -
basic 30,836 31,043
-----------------------
Average shares outstanding (000's) -
diluted 31,193 31,447
-----------------------
Per share
Dividends $ 21,954 $ 20,838
---------------------------------
Dividends per share $ 0.710 $ 0.670 6.0%
---------------------------------
* 2004 figures have been revised to reflect discontinued operations.
NM = Not Meaningful
CARLISLE COMPANIES INCORPORATED
Comparative Condensed Consolidated Balance Sheet
(In thousands)
September December
30, 2005 31, 2004*
------------------------
Assets
Current Assets
Cash and cash equivalents $ 82,631 $ 25,018
Receivables 232,973 227,423
Inventories 339,750 315,528
Prepaid expenses and other 68,908 67,845
Current assets held for sale 2,761 16,455
------------------------
Total current assets 727,023 652,269
------------------------
Property, plant and equipment, net 446,174 409,704
Other assets 403,221 388,734
Non-current assets held for sale 1,954 50,534
------------------------
$1,578,372 $1,501,241
========================
Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt, including current maturities $ 122,827 $ 59,990
Accounts payable 149,443 167,950
Accrued expenses 141,026 130,373
Current liabilities associated with assets
held for sale 3,063 25,709
------------------------
Total current liabilities 416,359 384,022
------------------------
Long-term debt 282,878 259,554
Other liabilities 162,329 157,208
Non-current liabilities associated with assets
held for sale - 1,970
Shareholders' equity 716,806 698,487
------------------------
$1,578,372 $1,501,241
========================
CARLISLE COMPANIES INCORPORATED
Comparative Condensed Consolidated Statement of Cash Flows
For the Nine months ended September 30
(In thousands)
2005 2004*
------------------
Operating activities
Net income $82,637 $90,060
Reconciliation of net earnings to cash flows:
Loss from discontinued operations, net of
tax 30,095 6,816
Depreciation and amortization 42,420 39,924
Gain on equity investments (1,214) (584)
Foreign exchange loss 1,610 -
Deferred taxes 3,869 3,441
Gain on investments, property and
equipment, net (1,831) (2,329)
Receivables under securitization program 2,900 43,000
Working capital (45,428) (118,610)
Other (165) 3,919
------------------
Net cash provided by operating activities 114,893 65,637
------------------
Investing activities
Capital expenditures (76,483) (51,607)
Acquisitions, net of cash (28,339) (34,709)
Proceeds from investments, property and
equipment 18,626 14,554
Other 853 979
------------------
Net cash used in investing activities (85,343) (70,783)
------------------
Financing activities
Net change in short-term debt and revolving
credit lines 83,015 10,124
Reductions of long-term debt (1,762) (2,338)
Dividends (21,954) (20,838)
Treasury shares and stock options, net (31,530) 7,913
Other 1,486 -
------------------
Net cash provided by (used in) financing
activities 29,255 (5,139)
------------------
Net cash (used in) provided by discontinued
operations (665) 39
------------------
Effect of exchange rate changes on cash (527) (214)
------------------
Change in cash and cash equivalents 57,613 (10,460)
Cash and cash equivalents
Beginning of period 25,018 23,361
------------------
End of period $82,631 $12,901
------------------
* Reflects reclassification of cash flows from discontinued operations