Carlisle Companies Incorporated (CSL Quick QuoteCSL - Free Report) reported impressive third-quarter 2022 results, wherein both the bottom and the top line surpassed the Zacks Consensus Estimate. Following this stellar performance, shares of CSL gained 1.4% in after-hours trading on Oct 27.

Carlisle’s adjusted earnings were $5.66 per share, beating the consensus estimate of $5.39 by 5%. The bottom line increased 89.3% on a year-over-year basis, supported by higher sales.

Inside the Headlines

In the reported quarter, Carlisle’s revenues came in at $1,794.1 million, up 36.4% year over year. This increase was attributable to a 28.3% rise in organic revenues and a 9.2% benefit from acquired assets, partially offset by an adverse impact of 1.1% from unfavorable changes in foreign exchange rates.

The top line surpassed the Zacks Consensus Estimate of $1,772 million by 1.3%.

CSL reports results under four segments, namely Carlisle Construction Materials (CCM), Carlisle Weatherproofing Technologies (CWT), Carlisle Interconnect Technologies (CIT) and Carlisle Fluid Technologies (CFT).

The quarterly segmental results are briefly discussed below.

Revenues from CCM totaled $1,090.3 million, increasing 39.3% year over year. The same represented 60.8% of total revenues. Organic revenues grew 40.1% on the back of strong demand for U.S. commercial roofing and price realization. The results were partially offset by an adverse impact of 1% from unfavorable changes in foreign exchange rates.

CWT revenues, representing 22.7% of total revenues, were $406.7 million, up 44.3% year over year. The increase was driven by 2.2% growth in organic revenues on account of price, Henry's acquisition and positive pricing. Acquired assets benefited the results by 42.7%. However, forex headwinds adversely impacted sales by 0.6%.

CIT revenues, accounting for 12.5% of total revenues, were $223.7 million, up 25.2% year over year. Organic revenues grew 25.5% owing to the improving aerospace and medical end markets. However, forex headwinds adversely impacted sales by 0.3%.

CFT revenues, reflecting 4% of total revenues, were $73.4 million, up 3.2% year over year. Organic revenues increased 10.1% on solid price realization and higher volumes. The results were partially offset by an adverse impact of 6.9% from unfavorable changes in foreign exchange rates.

Operating Margin Details

In the reported quarter, Carlisle’s cost of sales increased 27.3% to $1,201.8 million. It represented 67% of net sales compared with 71.8% a year ago.

Selling and administrative expenses increased 8.5% to $209 million. The same represented 11.6% of net sales compared with 14.6% in the year-ago quarter. Research and development expenses totaled $13.1 million, up 2.3%.

Operating income was $348.2 million, up from $166.5 million year over year, while the margin grew 670 basis points to 19.4%.

Balance Sheet and Cash Flow

While exiting the third quarter, Carlisle had cash and cash equivalents of $625.4 million compared with $324.4 million at the end of fourth-quarter 2021. Long-term debt (including the current portion) was $2,931.7 million, up from $2,927.4 million at the end of fourth-quarter 2021.

In the first nine months of 2022, Carlisle generated net cash of $588.6 million from operating activities compared with $283.9 million in the year-ago period.

In the same period, Carlisle rewarded its shareholders with a dividend payout of $95.6 million, increasing 13.5% year over year. The amount spent on share buyback totaled $201.1 million, down 30.8%.

Outlook

In 2022, Carlisle expects revenue growth of 35-40% from the year-ago reported figure. For the CCM segment, revenues are anticipated to grow 35-40% driven by strength across the re-roofing and new construction end markets, favorable pricing measures and robust demand for energy-efficient building products. Approximately 60% growth is anticipated in the CWT segment on the back of strong non-residential demand and the accretive Henry acquisition.

Revenues from the CIT segment are expected to increase more than 20%, driven by increasing backlogs and growing demand in the Commercial Aerospace and Medical end markets. The CFT segment is anticipated to grow in the mid-single-digit on the back of rising backlog, product introductions and price discipline.

The company expects the adjusted EBITDA margin for CSL to increase approximately 650 basis points, year over year.

Zacks Rank & Stocks to Consider

CSL currently carries a Zacks Rank #1 (Strong Buy).

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