3rd Quarter 2018 Earnings Conference Call. October 23, 2018

Transcription

1 3rd Quarter 2018 Earnings Conference Call October 23, 2018

2 Forward-looking statements During this presentation, we make certain forward-looking statements concerning plans and expectations for Carlisle Companies Incorporated. We caution you that actual events or results may differ materially from our plans and expectations. See our Form 10-K for 2017 filed with the Securities and Exchange Commission, these slides and the remarks in the conference call and webcast, the third quarter of 2018 financial results 8-K and release, and our Form 10-Q to be filed for the third quarter of 2018 for risks and uncertainties which could cause actual results to differ materially from current expectations. Non-GAAP financial measures Certain ratios related to our Revolving Credit Facility of Earnings before Interest, Income Taxes, Depreciation and Amortization ( EBITDA ), Free Cash Flow, Net Debt, Net Debt to EBITDA ratio, and Net Debt to Capital Ratio are not measures of liquidity or financial condition under US GAAP. Our Revolving Credit Facility allows us to exclude non-cash impairment charges in the computation of EBITDA. See slide 17 and the appendix to this presentation for a reconciliation of these measures to the most directly comparable GAAP measures. Throughout this presentation each non-gaap measure is denoted with an *. 4th Quarter 2017 Earnings Call 2

3 Executing on Vision 2025 Plan Exceeded organic revenue growth target of 5% YTD Returned approximately $365M to shareholders through share repurchases and dividends YTD $295M of share repurchases $70M of dividends Executed on CFT margin improvement initiatives driving to ~13% operating margin, excluding gain from sale of a facility in Mexico Realized COS savings of 1.5% YTD, in line with our targeted 1-2% Made small but meaningful acquisition in MedTech and are working a robust pipeline of opportunities 4th Quarter 2017 Earnings Call 3

4 2018 Q3 Highlights Record Q3 revenue up 17.9% 5.5% organic revenue growth Strong organic growth at CIT and CBF 11.7% acquisition growth 26.2% increase in EPS from Continuing Operations Operating income increased 3.9% Higher volume, price realization, and savings from COS, Freight, labor-related, executive retirement costs offsets Financial Summary (in millions, except per share amounts) Q3 '18 Q3 '17 Δ Revenues $1,181.4 $1, % Operating income $140.0 $ % Income from continuing operations, net of tax Diluted EPS from continuing operations $96.9 $ % $1.59 $ % Items affecting comparability $0.09 $ % Solid Organic Sales Despite Record Setting Rainfall Impacting CCM 4th Quarter 2017 Earnings Call 4

5 2018 Q3 Revenue Bridge +11.7% +0.1% $1,181.4 $1, % +0.6% Organic Revenue by Segment Construction Materials +3.2% Interconnect Technologies +9.8% Fluid Technologies +2.8% Brake & Friction +14.9% (in millions) Q3 '17 Organic Revenue Recognition Acquisitions FX Q3 '18 4th Quarter 2017 Earnings Call 5

6 2018 Q3 Operating Margin Bridge +13.4% +1.3% +1.4% -1.4% -3.5% +0.7% +11.9% Q3 '17 Price/Volume COS Acquisitions Raw Materials/ Other Operating Costs Restructuring/ Rationalization Costs Q3 '18 4th Quarter 2017 Earnings Call 6

7 2018 Q3 EPS Bridge +$0.15 -$0.22 +$0.30 +$0.14 +$0.06 -$0.06 -$0.07 -$0.12 $1.59 $1.26 +$0.15 Q3 '17 Volume Tax Items COS Share Repurchase Price Raw Material, Interest Freight & Labor Expense Related Costs Product Mix Other Q3 '18 4th Quarter 2017 Earnings Call 7

8 Carlisle Construction Materials Three Months Ended September 30, (in millions) Change $ Change % Acquisition Effect Price / Volume Effect Q3 Notable Commercial Items: Wet weather in Texas and Eastern United States limited days on the roof Metal roofing up 32% 44% growth in new product sales Operating Income: Higher volume, price and COS savings More than offset by rising raw material, freight, and executive retirement costs Accella synergies on track Lingering effects of MDI increases remain Exchange Rate Effect Revenues $ $ $ % 18.2% 3.2% (0.1)% Operating income $ $ $ (3.5) (2.8)% Operating margin percentage 15.6% 19.4% -380bps Items affecting comparability $ 1.0 $ 2.8 4th Quarter 2017 Earnings Call 8

9 Carlisle Interconnect Technologies Three Months Ended September 30, (in millions) Change $ Change % Acquisition Effect Price / Volume Effect 1 Exchange Rate Effect Revenues $ $ $ % 0.3% 12.8% 0.8% Operating income $ 29.3 $ 25.9 $ % Operating margin percentage 12.2% 12.3% -10bps Items affecting comparability $ 2.5 $ 4.2 Q3 Notable Commercial Items: Aerospace driving growth Satellite connectivity sales continue on track in 2018 MedTech and Test & Measurement pipeline strong Revenue Recognition contributed $6.3M of sales, or 3% Operating Income: Higher volume, lower facility rationalization and restructuring costs, and COS Unfavorable mix and labor-related costs Revenue Recognition contributed $1.4M of operating income 4th Quarter 2017 Earnings Call 9

10 Carlisle Fluid Technologies Three Months Ended September 30, (in millions) Change $ Change % Acquisition Effect Price / Volume Effect Exchange Rate Effect Revenues $ 72.4 $ 70.9 $ % % 2.8% (0.7)% Operating income $ 11.6 $ 0.1 $ 11.5 NM Operating margin percentage 16.0% 0.1% NM Items affecting comparability $ (2.0) $ 8.1 Q3 Notable Commercial Items: General Industrial market up double digits Partially offset by weakness in Transportation and Automotive Refinish markets Standard product sales up driven by Asia Pacific Pricing gains of 1.6% Operating Income: Excellent operating income performance Efficiencies gained from our multiple facility rationalization efforts, progress on vertical integration, and COS Gain from sale of facility in Mexico 4th Quarter 2017 Earnings Call 10

11 Carlisle Brake & Friction Three Months Ended September 30, (in millions) Change $ Change % Acquisition Effect Price / Volume Effect Exchange Rate Effect Revenues $ 92.0 $ 80.5 $ % % 14.9% (0.6)% Operating income $ (1.1) $ 1.3 $ (2.4) (184.6)% Operating margin percentage (1.2)% 1.6% -280bps Items affecting comparability $ 4.8 $ 1.0 Q3 Notable Commercial Items: Construction revenue up 15%, Mining up 32%, Ag up 5% Pricing up 4.2% European sales up 8% Operating Income: Footprint consolidation drove Operating Loss as expected Volume, price, and COS positive drivers Footprint consolidation on-track to be completed by year end 4th Quarter 2017 Earnings Call 11

12 Restructuring, Facility Rationalization, Acquisition/Divestiture Related Items ($ in millions) Q Q Forecast FY 2018 Forecast CCM $1.0 ~$0-1 ~$0-1 CIT $2.5 ~$2-3 ~$9-10 CFT $(2.0) ~$0-1 ~$0-1 CBF $4.8 ~$10-12 ~$21-23 CORP $0.8 ~$1-2 ~$3-4 TOTAL OI Pre-Tax $7.1 ~$14-18 ~$ th Quarter 2017 Earnings Call 12

13 Focused on Capital Structure Optimization Debt Maturity Schedule Senior Note $250M 5.125% Senior Note $350M 3.75% Senior Note $400M 3.5% Senior Note $600M 3.75% Cash on hand of $780.5M as of 9/30/18 $1B available under revolver $70M capital returned YTD to shareholders in quarterly dividends Repurchased $295.4M of shares YTD 4.4M shares remaining under authorization Net debt to cap ratio of 23%* Net debt to EBITDA of 0.8x* EBITDA to interest of 16.4x* th Quarter 2017 Earnings Call 13

14 Cash Flow $175 $125 (in millions) $75 $25 -$25 -$75 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Operating Cash Flow Capital Expenditures Free Cash Flow * Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Operating Cash Flow $164.9 $159.1 $33.2 $(36.0) $105.4 Capital Expenditures $(39.7) $(54.1) $(42.5) $(24.4) $(29.2) Free Cash Flow * $125.2 $105.0 $(9.3) $(60.4) $76.2 The decrease in free cash flow was due to the timing of cash taxes paid related to the sale of Carlisle FoodService Products and increased working capital to support revenue growth. 4th Quarter 2017 Earnings Call 14

15 2018 Outlook Total revenue growth from continuing operations high-teens CCM: up low twenty percent CIT: up double-digits CFT: up mid-single digits CBF: up mid-teens Corporate expense ~$75-80M Depreciation & amortization ~$190M Capital expenditures ~$ M Free cash flow conversion ~100%** Net interest expense ~$55-60M Tax rate ~22-24% Restructuring, facility rationalization, acquisition/divestiture related items ~$33-37M **Excluding effect of sale of Carlisle FoodService Products 4th Quarter 2017 Earnings Call 15

16 Appendix 4th Quarter 2017 Earnings Call 16

17 Reconciliation of GAAP to Non-GAAP Measures Leverage Ratios under Credit Agreement Net Debt to Capital Ratio (in millions except for ratios) LTM 9/30/2018 (in millions except for ratios) Capital Net income $ 638 Income tax expense (continuing and discontinued) 100 Interest expense 62 Depreciation and amortization 192 Non-cash stock based compensation expense 19 EBITDA per revolving credit agreement $ 1,010 Total debt $ 1,600 Net debt $ 819 Less: cash $ 781 Total shareholders' equity $ 2,706 Net debt $ 819 Total capital (net of cash) $ 3,525 Net debt to capital 23% Short-term debt including current maturities $ 0 Long-term debt principal 1,600 Total debt $ 1,600 Less: Cash in excess of $ Debt per revolving credit agreement $ 834 Net debt to EBITDA 0.8x EBITDA to interest If the outstanding balance on the revolving credit facility is $0, cash in excess of $15 million is deducted from debt. $0 outstanding on 9/30/2018 4th Quarter 2017 Earnings Call 17