4th quarter 2020 earnings conference call · 2021. 2. 4. · 2020 q4 results q4 revenue declined 7%...

February 4, 2021

4th Quarter2020 Earnings Conference Call

### ### Earnings Call 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 based on various factors and uncertainties,

including risks from the global coronavirus (COVID-19)

pandemic. The risk factors are contained in Carlisle's

Securities and Exchange Commission filings. Carlisle

undertakes no duty to update forward-looking statements.

Non-GAAP financial measures

Certain ratios related to Earnings before Interest, Income

Taxes, Depreciation and Amortization (“EBITDA”), Free Cash

Flow, Net Debt, Debt to EBITDA ratio, and Net Debt to Capital

Ratio are not measures of liquidity or financial condition under

US GAAP. See slide 23 in 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 *.


2020 Q4 Results

Q4 revenue declined 7% y/y

• Organic revenue down 9.0%

• 1.4% acquisition growth

• FX was a favorable 0.6% impact

Operating income declined 20.9% driven by:

• Volume declines and subsequent unfavorable

absorption

• Wage inflation

• Partially offset by raw material savings, reduced

SG&A and COS

Financial Summary

(in millions, except per share amounts) Q4 '20 Q4 '19 Δ

Revenues $1,064.1 $1,144.3 -7.0%

Operating income $111.8 $141.3 -20.9%

Income from continuing operations, net of tax $84.7 $104.0 -18.6%

Diluted EPS from continuing operations $1.57 $1.81 -13.3%

Positioned to accelerate through the

recovery


2020 Demonstrated the Earnings Power of CCM

• CCM delivers consistent organic growth, sustained OI and margin expansion

• CCM's exceptional and experienced team accelerating results in past three years

• CCM delivered over 70% of revenues and over 90% of earnings in 2020

• CCM has consistently delivered ROIC of over 30%

Organic Growth (y/y%)'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

+4.5% (23.5%) +8.7% +18.8% +10.2% +4.4% +9.0% +5.5% +2.6% +8.6% +5.1% +6.2% (7.5%)

$0.15 $0.16 $0.16 $0.18 $0.27 $0.26 $0.27 $0.35 $0.43 $0.42 $0.44 $0.58 $0.58

0%

5%

10%

15%

20%

25%

$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

CC

M O

per

atin

g M

argi

n

CC

M R

even

ue

and

OI i

n $

B

Sales OI $ OI %


Evolution of CCM

1960s to mid-2010s - A Roofing

Membrane Company

• CCM introduced EPDM to

market in early 1960s

• Focus on single-ply products,

including EPDM, TPO, PVC

2015 to 2021: The Building

Envelope

• Accelerated investments in

innovation

• Acquired or launched products

and solutions beyond the

rooftop

2021: Delivering the Carlisle

Experience for the Sustainable

Building

• 40% of global GHG emissions

are related to buildings

• 20% of energy use in the U.S.

goes to powering buildings

• CCM's suite of solutions help

building owners decrease

operating costs and greatly

reduce the effect of buildings

on the environment

Source Architecture 2030,SRWA, EPA


0%

5%

10%

15%

20%

25%

Before1920

1920 to1945

1946 to1959

1960 to1969

1970 to1979

1980 to1989

1990 to1999

2000 to2012

CCM Core Business Positioned for Sustainable Growth

• Replacement Roofing Demand:

◦ Increasing capital investments to drive growth

in $6B market growing to $8B in next decade

◦ Continually improving the Carlisle Experience

◦ Deferred 2020 demand due to COVID

◦ Continued labor shortages

• New Construction:

◦ Non-residential construction follows

residential cycles

Buildings from past 10-20 years make up

25% of current infrastructure


Expand the CCM Business Model into New Platforms

Europe

~$10B+ market opportunity

Opportunities/Key Drivers:

• Regulations support energy

efficient building products

• New leadership

• Investing $25M in German facility

• Launching multiple NPIs

• Scaling through M&A

• Improving operational efficiencies

Architectural Metals

~$2.5B market growing ~2x GDP


• Expanding reach by opening 3

new locations in 2021

• Raising margin profile with NPIs

and supply chain consolidation


• Leveraging sustainable attributes

◦ 100% recyclable

◦ Increased energy

efficiency vs traditional

materials over 20%

Spray Foam Insulation

~$3B market growing HSD


• Leverage 2020 launch of

industry-first integrated spray

foam insulation (CCM) and

application equipment (CFT)

system solution

• Greater efficiency


• Improving operational efficiencies


Pandemic Impacted CIT, CFT and CBF but Fundamentals of Businesses Remain Intact

• Reduced costs and positioned for future

recovery

• New product and sales pipelines robust

• Markets for CBF/CFT signaling bottom and

order books strengthening

• Expect longer-term recovery at CIT due to well-

documented crisis in aerospace


2020 Capital Deployment Results

• Generated over $600 million in FCF for second

consecutive year

• ROI focused investments:

◦ $96 million of CapEx in 2020 with significant

increases planned in 2021

◦ $36 million on M&A

Capital deployment crucial to Vision 2025

strategy driving to $15 EPS

• Returned capital to shareholders:

◦ $112 million of dividends, increased dividend

for the 44th consecutive year

◦ $382 million of share repurchases with an

additional 5 million shares authorized recently


Carlisle's Commitment to ESG

Source Architecture 2030,SRWA, EPA

Environmental• Buildings generate ~40% of annual

GHG emissions – our solutions mitigate

• Diverted over 32,000 tons of EPDM scrap from landfills over past 5 years

• Recycled 1.3B pounds of tires since 1985

• Re-lamped to LED 2.1M sqft, or roughly 20% of total footprint

• Retained more than 3M gallons of water since 2012 using our rooftop garden systems

Carlisle is a leading supplier of energy efficient building products and solutions

Social• Doubled women in senior leadership

roles since 2019• Engaged with over 100 community

organizations in 15 countries• Raised Carlisle’s minimum starting

wage to $15/hr for 100% of our U.S. workforce in 2020

• Committed to gender pay equity• Launched “The Path to Zero,” an

initiative to drive our safety incident rate to zero

Committed to talent development, D&I, safety and community engagement

Governance• Increasingly diverse Board of Directors

(50% gender, racial and ethnicdiversity)

• Launched Carlisle’s Sustainability Policy in 2020

• Business Code of Ethics strictly enforced

• Conduct business throughout all operations with the highest level of integrity

• Committed to the highest ethical standards

Through these efforts, we have earned the respect and trust of our stakeholders

Reflecting our legacy of responsible stewardship, Carlisle is committed to driving sustainable and efficient processes in the design and manufacture of our products


COS Continues to Drive Our Culture

• Delivered 1.3% of savings and benefits in 2020,

well within our 1-2% of sales annual target

• Launched Path to Zero – our commitment to

creating the safest possible work environment

and features the goal of zero accidents and zero

injuries

• COS continues to be a cultural imperative


2020 Q4 Revenue Bridge

-9.0% +1.4%

Organic Revenue by Segment

Construction Materials +0.6%

Interconnect Technologies -40.3%

Fluid Technologies -16.1%

Brake & Friction +2.8%

$1.06B

$1.14B

+0.6%


2020 Q4 Operating Margin Bridge

-3.2%

-0.4%

+1.2%

+0.6%

12.3%

10.5%


2020 Q4 EPS Bridge

$1.81 -$0.74

+$0.16

+$0.09 +$0.09

-$0.03+$0.19

$1.57


Carlisle Construction Materials

• Q4 Notable Commercial Items:

◦ Finished 2020 with positive momentum

◦ Team continues to perform at an extremely high standard delivering the premium Carlisle

Experience

◦ Newer platforms of Architectural Metals and Polyurethanes performing well

• Operating Income Increase:

◦ Strong leverage on sales improvement

◦ Margin driven by favorable raw materials, COS savings and lower SG&A

◦ Partially offset by wage inflation

Three Months Ended December 31, Acquisition Effect

Price / Volume Effect

Exchange Rate Effect

(in millions) 2020 2019 Change $ Change %

Revenues $ 760.8 $ 753.7 $ 7.1 0.9 % — % 0.6 % 0.3 %

Operating income $ 155.0 $ 127.6 $ 27.4 21.5 %

Operating margin percentage 20.4 % 16.9 % +350 bps

Items affecting comparability $ 0.1 $ (0.4)


Carlisle Interconnect Technologies


◦ Record decline in Commercial Aerospace demand continuing to negatively impact CIT

◦ Some positive signs:

▪ 737Max-8 cleared to return to flight

▪ Passenger traffic continues to improve and will be supported by vaccine roll out

▪ Customers raising production schedules for 2nd half of 2021

◦ Medical sales pipeline robust

• Operating Income Decline:

◦ Lower volumes, and wage and raw material inflation

◦ Partially offset by savings from COS and lower SG&A





Revenues $ 154.6 $ 239.2 $ (84.6) (35.4)% 4.8 % (40.3)% 0.1 %

Operating income $ (13.3) $ 29.1 $ (42.4) (145.7)%

Operating margin percentage (8.6)% 12.2 % NM

Items affecting comparability $ 9.5 $ 6.9


Carlisle Fluid Technologies


◦ Positive price realization, improved operational execution and new product introductions

◦ End markets stabilizing

• Operating Income Decline:

◦ Driven by volume declines, wage and raw material inflation and higher restructuring costs

◦ Partially offset by pricing, savings from COS and lower SG&A





Revenues $ 72.9 $ 79.5 $ (6.6) (8.3)% 5.0 % (16.1)% 2.8 %

Operating income $ 3.3 $ 10.1 $ (6.8) (67.3)%

Operating margin percentage 4.5 % 12.7 % -820bps

Items affecting comparability $ 1.7 $ (0.6)


Carlisle Brake & Friction


◦ End markets stabilizing

◦ Order book improving entering 2021

• Operating Income Flat:

◦ Driven by higher volumes, savings from COS and lower SG&A

◦ Offset by unfavorable mix and wage inflation





Revenues $ 75.8 $ 71.9 $ 3.9 5.4 % — % 2.8 % 2.6 %

Operating income $ 0.8 $ 0.8 $ — — %

Operating margin percentage 1.1 % 1.1 % NC

Items affecting comparability $ 0.9 $ 0.5


Focused on Capital Structure Optimization

• Cash on hand of $902M as of 12/31/20

• $1B available under revolver

• $112.4M capital returned to shareholders in

dividends

• Utilized $382M of cash to repurchase shares

◦ ~7M shares authorized as of February 2, 2020

• Net debt to cap ratio of 32%*

• Net Debt to EBITDA of 1.7x*

• EBITDA to interest of 9.5x*

Senior

Note

$400M

3.5%

Senior

Note

$600M

3.75% Senior

Note

$350M

3.75%

Senior

Note

$750M

2.75%

*Represents non-GAAP measure


Another Strong Year of Cash Flow

Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20

Operating Cash Flow $213.6 $53.2 $173.1 $213.9 $256.5

Capital Expenditures $(32.3) $(22.8) $(25.7) $(24.2) $(22.8)

Free Cash Flow * $181.3 $30.4 $147.4 $189.7 $233.7

*Represents non-GAAP measure


2021 Outlook

2021 Revenue Outlook

Items Affecting Comparability* ($M)

1Q21F FY21F

CCM +HSD ~$0 ~$0

CIT -MSD/HSD ~$4-6 ~$15-20

CFT +LDD ~$0-1 ~$2-3

CBF +LDD ~$1-2 ~$2-3

Total CSL +MSD ~$5-8 ~$20-25

FY 2021F

Corporate Expense ~$105M

D&A ~$225M

CapEx $150-175M

FCF Conversion 120%

Interest Expense, Net ~$75M

Tax Rate ~25%

* Includes restructuring, facility rationalization costs, acquisition and

divestiture related items


Reconciliation of GAAP to Non-GAAP Measures

Unaudited Leverage Ratios

(in millions except for ratios) LTM 12/31/2020

Income from Continuing Operations $ 324

Income tax expense 77

Interest expense 77

Depreciation and amortization 224

Non-cash stock based compensation expense 30

EBITDA $ 732

Short-term debt including current maturities $ 1

Long-term debt 2,100

Total debt $ 2,101

Less: Cash 887

Net Debt $ 1,214

Net Debt to EBITDA1 1.7x

EBITDA to interest 9.5x

Net Debt to Capital Ratio(in millions except for ratios) Capital

Total debt $ 2,101 Net debt $ 1,199

Less: cash $ 902 Total shareholders' equity $ 2,538

Net debt $ 1,199 Total capital (net of cash) $ 3,737

Net debt to capital 32 %

4th quarter 2020 earnings conference call · 2021. 2. 4. · 2020 q4 results q4 revenue declined 7%...

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