Carlisle Companies Reports A Record First Quarter
15 April 1999
Carlisle Companies Reports A Record First Quarter
SYRACUSE, N.Y.--April 15, 1999--scheduled for 11:00 a.m., Eastern Standard Time, Thursday,
April 15, 1999. To participate, please dial 212-676-5370. A
playback of the Conference Call will be available from 5:00 p.m.
(EST) on April 15th until 5:00 p.m. (EST) on April 16h by dialing
1-800-633-8284. The reservation number is 11465757.
Carlisle Companies Incorporated reported record earnings of $21.8 million, or diluted earnings per share of $.71, for its first quarter ending March 31, 1999, an increase of 15 percent over 1998 earnings of $19.0 million, or diluted earnings per share of $.62. Sales in 1999 increased 7 percent to $390.0 million compared to $363.1 million in 1998.
Carlisle's record first quarter results were spurred by strong sales in the automotive components segment and market gains in the industrial components segment coupled with operational improvements across the Company's major businesses.
Stephen P. Munn, Carlisle's Chairman and CEO, said, "Our favorable competitive position, coupled with good demand in most of our markets, gives us confidence that we will continue to meet our performance objectives."
Carlisle is a diversified manufacturer of products serving construction materials, industrial components, automotive components and general industry markets.
FINANCIAL RESULTS
(In millions, except per share data)
1999 1998 % Change
---- ---- --------
First Quarter
Sales $390.0 $363.1 7%
Net Earnings 21.8 19.0 15%
Basic E.P.S. 0.72 0.63 14%
Diluted E.P.S. 0.71 0.62 15%
SEGMENT FINANCIAL DATA
(In Millions)
1999 1998 % Change
---- ---- --------
First Quarter
Sales
Construction Materials $76.3 $69.4 10%
Industrial Components 145.1 139.4 4%
Automotive Components 81.9 68.4 20%
General Industry 86.7 85.9 1%
-- ----
$390.0 $363.1 7%
===== =====
EBIT(a)
Construction Materials $ 8.3 $ 8.1 3%
Industrial Components 20.4 18.2 12%
Automotive Components 6.6 6.0 10%
General Industry 7.5 7.0 7%
--- ---
$ 42.8 $ 39.3 9%
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(a) Earnings before income tax, interest and corporate expense.
Carlisle Reports Record Sales and Earnings
Discussion of Results
Carlisle Companies Incorporated achieved record first quarter sales of $390.0 million and net earnings of $21.8 million or $0.71 a share, diluted. First quarter sales increased 7% over 1998 sales of $363.1 million, reflecting strong sales in automotive components and market gains in the industrial components segment.
Net earnings for the first quarter are up 15% over 1998 earnings of $19.0 million, or $0.62 a share. Included in this quarter's earnings is a pretax gain of approximately $16.6 million, due to the reduction of Company's interest in its perishable cargo business, in both the leasing operations and the container manufacturing operations. Excluding this gain, the impact of this divestiture on anticipated 1999 net earnings, is a reduction of approximately $.06 a share. In conjunction with the implementation of the 1999 business plan, the Company completed certain product line realignments, manufacturing improvements and facility relocations and upgrades at its operating businesses resulting in a $15.9 million pretax charge to earnings for the write-off of certain machinery and equipment and intangible assets. These charges will result in reduced depreciation and amortization, generating an earnings gain of approximately $1.6 million, or $.05 per share, that will be recognized ratably over the remainder of 1999. These two items resulted in a net increase to first quarter earnings per share of $.01 a share. In addition, through the implementation of various tax strategies, net earnings for the first quarter reflects a reduction in the Company's effective tax rate from 39.5% to 38.5%. The positive impact to net earnings resulting from this change is $0.3 million or $.01 a share. Net earnings for the first quarter 1999, before the effect of the net gain, impairment charges, and tax rate change, would be $21.0 million or $0.69 a share, an 11% increase over 1998 earnings. The increase in earnings reflects the increased level of sales and operational improvements versus first quarter last year.
Construction Materials segment sales of $76.3 million are up 10% over 1998 sales of $69.4 million. Domestic roofing sales remain strong and the Company's TPO and FleeceBACK product lines have been well received into the market. The unusually good first quarter results in 1998, due to favorable weather conditions, overshadow the 1999 sales gains achieved by this segment. First quarter earnings before interest and taxes ("EBIT") of $8.3 million are up 3% from $8.1 million in 1998. First quarter 1999 EBIT reflects unrecovered raw material price increases and a higher percentage of lower margin insulation sales versus first quarter last year.
Industrial Components segment sales increased 4%, over 1998, to $145.1 million. The increase is primarily due to expanded sales of tire and wheel assemblies. Sales of the Company's cable assembly operation were above 1998, driven by two acquisitions made during 1998. These sales gains were dampened by a major customer's implementation of lean manufacturing methods and are expected to return to normal levels in the second half of the year. The Company also announced the 5-year extension of its supply contract with Boeing for the supply of its patented Tufflite 2000, which will be used on all Next-Generation 737 and 757 single-aisle airplanes. This segment's industrial friction and off-highway brake businesses have been negatively impacted by the slowdown in the agriculture and mining industries. Segment EBIT of $20.4 million increased 12% over 1998 EBIT of 18.2 million. This increase primarily reflects the sales changes in each of this segment's businesses, as well as lower raw material costs and operational efficiencies achieved by the tire and wheel operations. A changing product mix and new product introductions negatively impacted the company's off-highway brake operations. Increased EBIT in the cable assembly operations were slightly offset by lower aerospace sales volumes for the quarter. In January of 1999, the tire and wheel operation completed the acquisition of Global Manufacturers Corporation, a leading manufacturer of stamped wheel components, supplying the aftermarket, and Acro Coat, Inc., an affiliated powder coating business.
Automotive Components segment sales increased 20% over 1998 to $81.9 million, reflecting robust demand at all OEMs, and the continued ramp-up of programs that were delayed due to the GM strike in the summer of 1998. This segment reported EBIT of $6.6 million, an increase of 10% over first quarter 1998. The aggressive build levels and rapid ramp-up of various programs, which have required us to adjust labor and production requirements, resulted in inefficiencies, which have negatively impacted EBIT.
Sales in the General Industry (All Other) category of $86.7 million increased slightly over first quarter 1998 sales. Sales gains at the Company's stainless processing equipment, specialty trailer and foodservice operations offset lower volumes at the container manufacturing operations, due to the planned shutdown. EBIT of $7.5 million is up 7% over 1998, reflecting operational improvements in the processing equipment and foodservice businesses.
Working capital of $249.7 million at March 31, 1999, compared to $223.2 million at December 31, 1998 and $152.6 million at March 31, 1998. The increase is due to debt reductions, net of cash, as well as the seasonal buildup up of receivables and inventory.
Backlog of $236.5 million at March 31, 1999 is up 18% over March 31,1998, excluding the one-time contract at the container manufacturing operations, reflecting stronger positions at all of the Company's major operations.
Carlisle's first quarter results reflect strong operational performance within our major businesses. Last year, our earnings for the first quarter were up 42%; therefore, combined with this recent quarter, Carlisle's operating earnings are up 57% over the last two years, a significant accomplishment. There are a few mixed signals about the months ahead. Commercial transportation and related components have softened. Additionally, aircraft wire demand is down sharply due to customer inventory adjustments. However, for Carlisle, there are more signs of strength than weakness. Our favorable competitive position, coupled with good demand in most of our markets, gives us confidence that we will continue to meet our performance objectives.
CONDENSED CONSOLIDATED FINANCIAL DATA
(Amounts in thousands, except per share data; unaudited)
BALANCE SHEET
March 31
1999 1998
---- ----
Assets
Cash and cash equivalents $ 23,305 $ 9,709
Receivables 248,624 219,260
Inventories 205,681 189,115
Prepaid expenses & other 56,750 52,137
------ ------
Total current assets 534,360 470,221
Plant and equipment, net 355,837 315,549
Other assets 176,845 171,666
------- -------
$1,067,042 $957,436
========= =======
Liabilities and Equity
Short-term borrowings $ 1,749 $92,421
Accounts payable 116,195 101,961
Accrued expenses 166,751 123,190
------- -------
Total current liabilities 284,695 317,572
Long-term debt 281,823 199,700
Other liabilities 77,150 77,193
Shareholders' equity 423,374 362,971
------- -------
$1,067,042 $957,436
========= =======
EARNINGS
First Quarter
1999 1998 % Change
---- ---- --------
Net Sales $ 390,024 $ 363,090 7.4%
Cost of goods sold 305,401 284,535 7.3%
Selling and
administrative
expenses 42,945 40,107 7.1%
Research and
development
expenses 3,925 3,886 1.0%
Gain on divestiture
of business
($16.6m), net of
other charges
($15.9m) 685 -- --
Other income &
expense, net 1,679 1,380 20.9%
--------- --------
Earnings before
interest & taxes 40,117 35,942 11.6%
Interest, net (4,657) (4,571) 1.9%
------- --------
Earnings before tax 35,460 31,371 13.0%
Income taxes 13,652 12,392 10.2%
-------- -------
Net earnings $ 21,808 $ 18,979 14.9%
======== ========
Basic earnings
per share $ .72 $ 0.63 14.3%
Diluted earnings
per share $ .71 $ 0.62 14.5%
Dividends $ 4,830 $ 4,225 14.3%
$ .1600 $ 0.1400 --
Average shares
outstanding - basic 30,183 30,176 --
Average shares
outstanding - diluted 30,639 30,735 --
CASH FLOWS (Amounts in thousands, except per share data; unaudited)
First Quarter
1999 1998
Operating Activities
Net earnings $21,808 $18,979
Reconciliation of net
earnings to cash flows:
Depreciation and amortization 12,884 11,866
Working capital (18,562) (20,337)
Other 1,112 254
--------- ---------
17,242 10,762
--------- ---------
Investing Activities
Capital expenditures (14,638) (29,087)
Acquisitions, net of cash (10,584) (17,240)
Sales of property, equipment
& business 50,068 3,763
Other 3,863 (11,747)
-------- --------
28,709 (54,311)
--------- ---------
Financial Activities
Net change in short-term borrowings (29,285) 68,178
Proceeds from long-term debt 8,441 --
Reductions of long-term debt (346) (10,031)
Dividends (4,830) (4,225)
Purchases of treasury shares (509) (2,396)
-------- ---------
(26,529) 51,526
-------- ---------
Change in cash and cash equivalents 19,422 7,977
Cash and cash equivalents
Beginning of period 3,883 1,732
------- --------
End of period $23,305 $9,709
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