Carlisle Companies Reports Record Results
19 July 2000
Carlisle Companies Reports Record Results
SYRACUSE, N.Y. - Carlisle Companies Incorporated reported record second quarter earnings of $31.9 million, or $1.04 per share (diluted) an increase of 14% versus second quarter 1999 earnings of $28.0 million, or $.91 per share. Sales of $479 million were up 13% over 1999. Both sales and earnings were a record for any quarter.For the six-month period ended June 30, 2000, sales increased 12% to $913 million from $816 million in 1999. Net earnings for the same period rose 15%, to $57.4 million or $1.87 per share, exceeding 1999 year-to-date earnings of $49.8 million, or $1.62 per share.
During the second quarter, the Company announced five acquisitions, the largest being the Tire and Wheel consumer products Division of Titan International, Inc. Since the close of the quarter, the Company has announced the acquisition of UniTrek, Inc., a manufacturer of microwave and radio frequency cable assemblies. Additionally, in July, the Company expects to complete the purchase of a 25% interest in Icopal a/s, Europe's leading roofing systems company.
Stephen P. Munn, Carlisle's Chairman and CEO said, "We are pleased by the record results for the quarter. Once again internal programs and previously completed acquisitions drove performance gains. This year has seen significant acquisition activity with nine completed and two announced acquisitions, as well as the minority investment in Icopal. These investments, added to our strong core businesses, will sustain our growth even in a moderating domestic industrial market."
Carlisle is a diversified manufacturer of products serving construction materials, industrial components, automotive components and general industry markets.
CARLISLE COMPANIES INCORPORATED
FINANCIAL RESULTS
As of June 30, 2000
(In millions, except per share data)
2000 1999 % Change
---- ---- --------
Second Quarter
Sales $ 479.4 $ 425.8 13%
Net Earnings $ 31.9 $ 28.0 14%
Basic E.P.S $ 1.06 $ 0.93 14%
Diluted E.P.S $ 1.04 $ 0.91 14%
Six Months 2000 1999 % Change
---- ---- --------
Sales $ 913.4 $ 815.8 12%
Net Earnings $ 7.4 $ 49.8 15%
Basic E.P.S $ 1.90 $ 1.65 15%
Diluted E.P.S $ 1.87 $ 1.62 15%
2000 SEGMENT FINANCIAL DATA
(In millions)
JUNE - QTR 2000 1999
-------------------------- --------------------------
EBIT EBIT
Sales EBIT % Sales Sales EBIT % Sales
Construction
Materials $ 100.8 $ 16.1 16.0% $ 111.2 $ 16.6 14.9%
Industrial
Components 184.0 26.4 14.3% 143.9 20.0 13.9%
Automotive
Components 81.0 7.0 8.6% 83.4 6.1 7.4%
General Industry
/All Other 113.6 11.1 9.8% 87.3 10.5 12.0%
Subtotal 479.4 60.6 12.6% 425.8 53.2 12.5%
Corporate/Elims -- (2.9) -- -- (2.9) --
Total $ 479.4 $ 57.7 12.0% $ 425.8 $ 50.3 11.8%
JUNE -YTD 2000 1999
-------------------------- --------------------------
Sales EBIT Assets Sales EBIT Assets
Construction
Materials $ 188.4 $ 25.0 $ 240.6 $ 187.5 $ 24.9 $ 238.0
Industrial
Components 346.9 50.8 465.4 289.0 40.4 336.5
Automotive
Components 164.5 14.2 179.1 165.3 12.8 215.7
General Industry
/All Other 213.6 18.9 312.0 174.0 17.9 236.8
Subtotal 913.4 108.9 1,197.1 815.8 96.0 1,027.0
Corporate/Elims -- (5.6) 52.5 -- (5.6) 52.3
Total $ 913.4 $ 103.3 $1,249.6 $ 815.8 $ 90.4 $1,079.3
Carlisle Companies Incorporated
July, 2000
Discussion of Results
Summary
Carlisle Companies Incorporated reported record sales for the quarter of $479 million, up 13% over 1999, and net earnings of $31.9 million or $1.04 per share (diluted), an increase of 14% versus second quarter 1999 earnings of $.91 per share. Carlisle Tire & Wheel, Tensolite, Motion Control and Carlisle Industrial Brake & Friction (Industrial Components), Carlisle Engineered Products (Automotive Components), and Carlisle Systems & Equipment (General Industry) recorded strong earnings growth for the quarter. The impact of acquisitions made in 1999 and earlier this year, coupled with improved operating margins were responsible for the favorable results.
For the six-month period ended June 30, 2000, sales rose 12% to $913 million and net earnings increased 15%, to $57.4 million or $1.87 per share, over the same period in 1999. Carlisle Tire & Wheel (Industrial Components), Carlisle Engineered Products (Automotive Components), and Carlisle Systems & Equipment (General Industry) were the primary contributors to the sales and earnings growth for the year.
Construction Materials sales for the second quarter 2000 were down 9% from 1999. The decrease, primarily in the domestic roofing markets, is attributable to sales pulled into the first quarter in anticipation of the April 1, 2000 price increase. Although EBIT margins improved, EBIT for the quarter was down slightly from last year. Favorable product mix and lower warranty expense were offset by the impact of lower sales.
Industrial Components sales increased 28% over the second quarter of 1999 while EBIT increased 32%. All businesses in this segment added positively to the results. Sales and earnings at Carlisle Tire & Wheel fueled much of this segment's growth, with Tensolite, Motion Control, and Carlisle Industrial Brake & Friction contributing to the positive results. Sales at Carlisle Tire & Wheel were aided by the acquisition of the consumer tire and wheel business of Titan International, which was completed in April of 2000. The Company continues to realize synergies from its acquisition integration strategies and will see further improvements as the Titan integration progresses. Strengthening demand at Tensolite's cable assembly and specialty electronic cable businesses, coupled with favorable product mix and operational improvements contributed to this segment's improvement in sales and earnings over 1999. On July 5, 2000, Tensolite announced the acquisition of UniTrek, a manufacturer of radio frequency and microwave cable assemblies and complex wire harnesses, supplying OEM's in the wireless communications, electronic test and measurement, and defense electronics markets. Strong aftermarket sales at both Motion Control Industries and Carlisle Industrial Brake & Friction also contributed to this segment's positive results.
Sales of the Automotive Components segment were down slightly from the second quarter of 1999. On a comparable basis, excluding operations divested or deconsolidated late in 1999, sales of this segment were up approximately 1% for the quarter and 3% for the year. Automotive OEM demand has remained strong, particularly in the light truck and SUV lines. EBIT for the quarter was up 14% over last year as a result of improved process management and cost control. EBIT as a percent of sales improved to 8.6% compared to 7.4% in 1999. Strong cash flow was generated by continuing improvements in asset management.
General Industry sales were up 30% over the second quarter 1999 sales of $87 million, and EBIT increased 6%. Costs, related to acquisitions made during the year, were the primary cause of the difference in sales to earnings growth. Carlisle Systems & Equipment was the leading contributor to the sales and earnings growth of this segment. The full year impact of Johnson Truck Bodies, acquired in May of 1999, and the impact of the four acquisitions completed this year have expanded the capabilities of this business in both market share and product offerings. In April, the Company completed the acquisition of Extract Technologies Limited, a leading UK based provider of containment and bulk powder handling applications, used in the Pharmaceutical and Biotech industries. In July, the Company announced a joint venture, to offer e-commerce capabilities for the purchase of parts to its food and dairy processing customers. Additionally, in June, the Company completed the acquisition of Process Controls Engineering (PCE), a systems design and integration company serving the food and dairy processing industries. These acquisitions will further expand the global reach of this business. The Company's Transportation Products business has experienced softening due to the impact of higher fuel and interest costs, which have negatively impacted the entire market for original equipment commercial trailer and dump truck bodies. Carlisle FoodService reported positive sales gains, driven by acquisitions made during the year. In April, Carlisle FoodService completed the acquisition of the Dura-Ware Company, a manufacturer of commercial cookware and servingware for the foodservice and hospitality markets, which will complement its existing product lines.
Acquisitions
In the second quarter, Carlisle completed four acquisitions: The consumer tire and wheel business of Titan International, Inc.; the Dura-Ware Company, a manufacturer of commercial cookware and servingware; Extract Technologies Limited, a leading biotech/pharmaceutical systems provider, headquartered in Huddersfield, England; Process Controls Engineering, a systems design and integration company serving the food and dairy processing industries. Additionally, the Company announced a 25% equity investment in Icopal a/s, Europe's leading commercial roofing systems company. Also, the Company announced the intent to acquire Red River Manufacturing Inc., a specialty trailer manufacturer. In early July, the Company announced the acquisition of UniTrek, a manufacturer of radio frequency and microwave cable assemblies and complex wire harnesses, supplying OEM's in the wireless communications, electronic test and measurement, and defense electronics markets.
Cash Flows
Cash generated from operations for the second quarter was $35 million, and increase of $31 million over 1999 second quarter operating cash flows of $4 million. For the six months ended June 30, 2000, cash generated from operations was $56 million, compared to $60 million in 1999, for the same period. The increase for the quarter is attributable to higher earnings and improved working capital management. The 1999 six-month cash flows reflect the impact of the proceeds, net of a $39 million tax payment, from the divestiture of the Perishable Cargo business, completed in the first quarter of 1999.
Backlog
The consolidated backlog of $264 million at June 30, 2000 rose 15% over June 30, 1999 level of $229 million. Improved backlog positions at Carlisle Tire & Wheel, Tensolite and Carlisle Systems & Equipment were driven by acquisitions made by these companies as well as increased market demand.
Overall
Carlisle's record second quarter results reflect the Company's successful implementation of its growth strategies. Our acquisition activity has been strong this year, which will support continued growth even if some of our diverse markets soften. We are optimistic that the contributions of these new acquisitions, added to our strong core businesses, will produce another record year for Carlisle.
CARLISLE COMPANIES INCORPORATED
Consolidated Statement of Earnings
For the periods ended June 30, 2000
(In thousands except per share data)
Second Quarter
2000 1999 % Change
Net sales $ 479,430 $ 425,813 12.6%
Cost and expenses:
Cost of goods sold 371,894 327,712 13.5%
Selling and administrative expenses 46,526 44,248 5.1%
Research and development expenses 4,075 4,052 0.6%
Gain on divestiture of business
($16.6m), net of other charges ($15.9m) -- -- --
Other (income) & expense, net (717) (502) 42.9%
Earnings before interest & income taxes 57,652 50,303 14.6%
Interest expense, net 6,989 4,778 46.3%
Earnings before income taxes 50,663 45,525 11.3%
Income taxes 18,723 17,527 6.8%
Net earnings $ 31,940 $ 27,998 14.1%
% of Net Sales 6.7% 6.6%
Basic earnings per share $ 1.06 $ 0.93 13.9%
Average shares outstanding (000's)
- basic 30,255 30,178
Diluted earnings per share $ 1.04 $ 0.91 14.3%
Average shares outstanding (000's)
- diluted 30,615 30,651
Dividends $ 5,446 $ 4,820
Per share $ 0.18 $ 0.16 12.5%
Six Months
2000 1999 % Change
Net sales $ 913,448 $ 815,837 12.0%
Cost and expenses:
Cost of goods sold 708,422 633,113 11.9%
Selling and administrative expenses 95,449 87,193 9.5%
Research and development expenses 8,166 7,977 2.4%
Gain on divestiture of business
($16.6m), net of other charges ($15.9m) -- (685) --
Other (income) & expense, net (1,906) (2,181) -12.6%
Earnings before interest & income taxes 103,317 90,420 14.3%
Interest expense, net 12,167 9,435 28.9%
Earnings before income taxes 91,150 80,985 12.6%
Income taxes 33,750 31,179 8.2%
Net earnings $ 57,400 $ 49,806 15.2%
% of Net Sales 6.3% 6.1%
Basic earnings per share $ 1.90 $ 1.65 15.2%
Average shares outstanding (000's)
- basic 30,223 30,181
Diluted earnings per share $ 1.87 $ 1.62 15.4%
Average shares outstanding (000's)
- diluted 30,592 30,644
Dividends $ 10,889 $ 9,650
Per share $ 0.36 $ 0.32 12.5%
CARLISLE COMPANIES INCORPORATED
Condensed Consolidated Balance Sheet
As of June 30, 2000
(In thousands)
2000 1999 % Change
Assets
Current Assets
Cash and cash equivalents $ 7,828 $ 6,651 17.7%
Receivables 272,167 265,445 2.5%
Inventories 242,068 206,927 17.0%
Prepaid expenses and other 71,160 54,763 29.9%
Total current assets 593,223 533,786 11.1%
Property, plant and equipment, net 392,827 344,336 14.1%
Other assets 263,508 201,218 31.0%
$1,249,558 $1,079,340 15.8%
Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt, including current
maturities $ 111,421 $ 22,171 402.6%
Accounts payable 121,053 116,753 3.7%
Accrued expenses 139,253 138,589 0.5%
Total current liabilities 371,727 277,513 33.9%
Long-term debt 282,594 280,171 0.9%
Other liabilities 76,877 77,760 -1.1%
Shareholders' equity 518,360 443,896 16.8%
$1,249,558 $1,079,340 15.8%
Supplemental Information 2000 1999
Working capital $ 221,496 $ 256,273
Working capital turnover * 8.66 6.65
Net debt $ 386,187 $ 295,691
Net debt / Total capitalization 42.7% 40.0%
* Quarterly sales annualized divided by June working capital
CARLISLE COMPANIES INCORPORATED
Comparative Consolidated Statement of Cash Flows
For the periods ended June 30, 2000
(In thousands)
Second Quarter Six Months
2000 1999 2000 1999
Operating activities
Net earnings $ 31,940 $ 27,998 $ 57,400 $ 49,806
Reconciliation of net
earnings to cash flows:
Depreciation and
amortization 15,913 12,233 29,917 25,117
Working capital (11,348) (34,177) (30,571) (14,238)
Other (1,469) (1,568) (923) (457)
Net cash provided by
operating activities 35,036 4,486 55,823 60,228
Investing activities
Capital expenditures (13,577) (9,685) (26,451) (24,324)
Acquisitions, net of cash (124,691) (17,644) (129,619) (28,228)
Proceeds from sale of
property, equipment and
business 32 3,762 32 15,330
Other 7,728 (11,313) 4,463 (7,449)
Net cash used in
investing activities (130,508) (34,880) (151,575) (44,671)
Financing activities
Net change in short-term
debt 108,945 20,000 109,428 (9,285)
Proceeds from long-term
debt 0 0 0 8,441
Reductions of long-term
debt (1,520) (1,231) (1,885) (1,577)
Dividends (5,446) (4,820) (10,889) (9,650)
Purchases of treasury
shares (2,303) (209) (3,491) (718)
Net cash provided by
(used in) financing
activities 99,676 13,740 93,163 (12,789)
Change in cash and cash
equivalents 4,204 (16,654) (2,589) 2,768
Cash and cash equivalents
Beginning of year 3,624 23,305 10,417 3,883
End of year $ 7,828 $ 6,651 $ 7,828 $ 6,651