# Carlisle Companies Inc: Form 10-Q for the period ended Jun 30, 2023

- Company: [Carlisle Companies Inc](/companies/csl.md) (CIK 790051)
- Form: 10-Q
- Filed: 2023-07-27
- Accepted by EDGAR: Jul 27, 2023, 14:57 ET
- Period: 2023-06-30
- Accession: 0000790051-23-000134
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/790051/000079005123000134/csl-20230630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/790051/000079005123000134/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-04-01 to 2023-06-30 | $1.53bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2023-01-01 to 2023-06-30 | $2.63bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-04-01 to 2023-06-30 | $995.7m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2023-01-01 to 2023-06-30 | $1.79bn | us-gaap:CostOfGoodsAndServicesSold |
| Research and development | 3 months, 2023-04-01 to 2023-06-30 | $13.1m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2023-01-01 to 2023-06-30 | $26.8m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2023-04-01 to 2023-06-30 | $189.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2023-01-01 to 2023-06-30 | $360.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2023-04-01 to 2023-06-30 | $327.6m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-01-01 to 2023-06-30 | $458.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-04-01 to 2023-06-30 | $18.8m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2023-01-01 to 2023-06-30 | $37.6m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-04-01 to 2023-06-30 | $71.6m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-01-01 to 2023-06-30 | $97.5m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-04-01 to 2023-06-30 | $194.6m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-01-01 to 2023-06-30 | $296.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-04-01 to 2023-06-30 | $3.79 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-01-01 to 2023-06-30 | $5.75 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-04-01 to 2023-06-30 | $3.83 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-01-01 to 2023-06-30 | $5.81 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-04-01 to 2023-06-30 | 51,200,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-01-01 to 2023-06-30 | 51,400,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-01-01 to 2023-06-30 | $370.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-01-01 to 2023-06-30 | $70.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2023-01-01 to 2023-06-30 | $77.2m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 6 months, 2023-01-01 to 2023-06-30 | $250.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Current assets | at 2023-06-30 | $2.69bn | us-gaap:AssetsCurrent |
| Total assets | at 2023-06-30 | $7.18bn | us-gaap:Assets |
| Current liabilities | at 2023-06-30 | $1.05bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2023-06-30 | $2.28bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-06-30 | $302.0m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-06-30 | $3.03bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 43,582 characters.

Carlisle Companies Incorporated (“Carlisle”, the “Company”, “we”, “us” or “our”) is a leading manufacturer and supplier of innovative building envelope products and solutions for more energy efficient buildings. Through our building products businesses, Carlisle Construction Materials ("CCM") and Carlisle Weatherproofing Technologies ("CWT"), and family of leading brands, we deliver innovative, labor-reducing and environmentally responsible products and solutions to customers through the Carlisle Experience. Carlisle is committed to generating superior stockholder returns and maintaining a balanced capital deployment approach, including investments in our businesses, strategic acquisitions, share repurchases and continued dividend increases. We are also a leading provider of products to the aerospace and medical technologies markets through our Carlisle Interconnect Technologies ("CIT") business segments.

Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is designed to provide a reader of our financial statements with a narrative from the perspective of Company management. All references to "Notes" refer to our Notes to Condensed Consolidated Financial Statements in Item 1 of this Quarterly Report on Form 10-Q.

### Executive Overview

The second quarter proved to be a nice recovery story for us at Carlisle with greater evidence of our collective efforts to improve earnings and create value for all stakeholders. Our teams continue to provide compelling energy-efficient solutions to building owners and improve upon Carlisle's leadership position as the manufacturer of choice to contractors and our distribution partners. Despite the channel destocking activity in the second quarter, our teams collectively drove excellent profitability from a combination of price discipline, cost management and efficiency gains through the Carlisle Operating System ("COS").

We continue to see strong underlying demand for our building products, particularly in non-residential construction markets. New construction is buoyed by growth in manufacturing construction projects and government-funded activity. Notably, CCM generates two-thirds of its revenue from non-discretionary re-roofing demand that provides sustainable growth runway. Contractor backlogs remain strong, and new products that remove labor from the job site are strongly desired. That said, rising interest rates, concerns of an economic slowdown, weather disruptions and labor constraints are watch items that may hinder construction activity.

The CWT team continues to demonstrate outstanding performance by driving operational efficiencies, pricing to value, and executing its multi-pronged commercial and operational integration. Despite year-over-year volume declines in residential markets, the team achieved a remarkable 390 basis points of adjusted EBITDA margin expansion to 22.5% in the second quarter.

CIT continues to benefit from healthy aerospace demand while reaping benefits from past restructuring actions. With its position as a leading aerospace components supplier, CIT is poised to leverage increasing aircraft production rates of both Boeing and Airbus. Additionally, CIT is improving the profitability of its medical and industrial platforms through customer and product line rationalization, as well as enhanced efficiencies through COS. The CIT team drove impressive adjusted EBITDA margin expansion of 520 basis points year-over-year to 17.9% in the second quarter, and we expect significant year-over-year margin improvement for the full year 2023 and beyond.

In line with our strategy to 'pivot' to a pure-play premier building products company, we signed a definitive agreement to sell Carlisle Fluid Technologies for $520 million. This move represents a significant step forward in our efforts to build a diversified portfolio of premier energy-efficient building envelope solutions and demonstrates our commitment to be superior capital allocators.

In the first six months of 2023, we used cash generated from operations to return $77.2 million to stockholders in the form of cash dividends and repurchased $250.0 million of shares, adding to our cumulative share repurchases since 2017 of over $2.4 billion. As of June 30, 2023, we had 2.3 million shares available for repurchase under our share repurchase program. We also invested $70.1 million into our businesses in the form of capital expenditures to drive innovation and the Carlisle Experience.

Vision 2025 continues to provide Carlisle clear direction. We have stayed the course on our strategy to leverage above-average organic growth in our markets and optimize our business portfolio. This continues to drive higher margins, higher returns, and greater earnings power for Carlisle in an accelerated timeframe. While the pillars of

Vision 2025 are still very much in place, we continue to work on our new strategic plan, Vision 2030, and intend to share in greater detail our path to further value creation for all our stakeholders by the end of the year.

### Summary of Financial Results

*(in millions, except per share amounts and percentages)*

|  | Three Months Ended June 30, 2023 | 2022 | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Revenues | $1,525.9 | $1,774.9 | $2,632.0 | $3,200.1 |
| Operating income | $327.6 | $403.6 | $458.2 | $676.2 |
| Operating margin | 21.5% | 22.7% | 17.4% | 21.1% |
| Income from continuing operations | $241.5 | $290.8 | $333.3 | $481.2 |
| (Loss) income from discontinued operations | $(46.9) | $10.7 | $(37.0) | $13.9 |
| Diluted earnings per share attributable to common shares: |  |  |  |  |
| Income from continuing operations | $4.71 | $5.52 | $6.47 | $9.11 |
| (Loss) income from discontinued operations | $(0.92) | $0.21 | $(0.72) | $0.26 |
| Adjusted EBITDA(1) | $385.4 | $460.2 | $583.7 | $794.4 |
| Adjusted EBITDA margin(1) | 25.3% | 25.9% | 22.2% | 24.8% |

(1) Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items. Refer to Non-GAAP Financial Measures in this MD&A for more information about, and a detailed reconciliation of, these items.

Revenues decreased in the second quarter and the first six months of 2023 primarily reflecting lower sales in the construction end market of our CCM and CWT segments, as distributors continued to adjust inventory to pre-pandemic levels, which was prolonged by inclement weather conditions and uncertainty caused by higher interest rates. Lower construction sales were partially offset by higher sales in the aerospace end market of our CIT segment, as original equipment manufacturers continued to increase the build rate towards pre-pandemic levels.

The decrease in operating margin percentage in the second quarter and the first six months of 2023 primarily reflected lower sales at our CCM segment.

Diluted earnings per share from continuing operations decreased in the second quarter and the first six months of 2023 primarily reflecting lower operating income performance ($1.10 per share in the second quarter and $3.15 per share for the first six months of 2023) partially offset by lower interest expense and higher interest income ($0.11 per share in the second quarter and $0.23 per share for the first six months of 2023), reduced average shares outstanding ($0.13 per share in the second quarter and $0.16 per share for the first six months of 2023) and a lower effective tax rate ($0.03 per share in the second quarter and $0.06 per share for the first six months of 2023).

We generated $370.7 million in operating cash flow in the first six months of 2023 and utilized cash on hand and cash provided by operations to return capital to stockholders through share repurchases and dividends, and to fund capital expenditures.

### Consolidated Results of Operations

### Revenues

*(in millions, except percentages)*

|  | 2023 | 2022 | Change% |  | Organic | Acquisition Effect | Exchange Rate Effect |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Three months ended June 30 | $1,525.9 | $1,774.9 | $(249.0) | (14.0)% | (13.9)% | —% | (0.1)% |
| Six months ended June 30 | $2,632.0 | $3,200.1 | $(568.1) | (17.8)% | (17.5)% | —% | (0.3)% |

Revenues decreased in the second quarter and the first six months of 2023 primarily reflecting lower sales in our construction end markets of $222.3 million and $553.3 million, respectively, as distributors continued to adjust inventory to pre-pandemic levels, which was prolonged by inclement weather conditions and uncertainty caused by higher interest rates. Lower construction sales were partially offset by higher sales in the aerospace end market of $19.0 million and $46.8 million, in the second quarter and the first six months of 2023, respectively, as original equipment manufacturers continued to increase their build rate towards pre-pandemic levels.

### Gross Margin

*(in millions, except percentages)*

| 2023 | Three Months Ended June 30, 2022 |  | Change% | 2023 | Six Months Ended June 30, 2022 |  | Change% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Gross margin | $530.2 | $604.8 | $(74.6) | (12.3)% | $846.7 | $1,069.9 | $(223.2) | (20.9)% |
| Gross margin percentage | 34.7% | 34.1% |  |  | 32.2% | 33.4% |  |  |
| Depreciation and amortization | $22.3 | $23.8 |  |  | $45.0 | $48.7 |  |  |

Gross margin percentage (gross margin expressed as a percentage of revenues) increased in the second quarter of 2023, driven by lower cost of raw materials. Also included in cost of goods sold were exit and disposal costs totaling $1.4 million for the second quarter of 2023, primarily at CIT and CWT attributable to our restructuring initiatives, compared with $1.0 million for the second quarter of 2022.

Gross margin percentage decreased in the first six months of 2023, driven by lower sales. Also included in cost of goods sold were exit and disposal costs totaling $5.4 million for the first six months of 2023, primarily at CIT and CWT attributable to our restructuring initiatives, compared with $2.9 million for the first six months of 2022. Refer to Note 8 for further information on exit and disposal activities.

### Selling and Administrative Expenses

*(in millions, except percentages)*

| 2023 | Three Months Ended June 30, 2022 |  | Change% | 2023 | Six Months Ended June 30, 2022 |  | Change% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Selling and administrative expenses | $189.5 | $192.0 | $(2.5) | (1.3)% | $360.0 | $376.0 | $(16.0) | (4.3)% |
| As a percentage of revenues | 12.4% | 10.8% |  |  | 13.7% | 11.7% |  |  |
| Depreciation and amortization | $32.5 | $32.8 |  |  | $64.8 | $66.5 |  |  |

The decrease in selling and administrative expenses in the second quarter and the first six months of 2023 primarily reflected lower commissions expense as a result of lower sales. Also included in selling and administrative expenses were exit and disposal costs totaling $0.1 million for the second quarter of 2023 and 2022, and $0.2 million and $0.4 million for the first six months of 2023 and 2022, respectively. Refer to Note 8 for further information on exit and disposal activities.

### Research and Development Expenses

*(in millions, except percentages)*

| 2023 | Three Months Ended June 30, 2022 |  | Change% | 2023 | Six Months Ended June 30, 2022 |  | Change% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Research and development expenses | $13.1 | $11.0 | $2.1 | 19.1% | $26.8 | $21.2 | $5.6 | 26.4% |
| As a percentage of revenues | 0.9% | 0.6% |  |  | 1.0% | 0.7% |  |  |
| Depreciation and amortization | $0.5 | $0.7 |  |  | $1.0 | $1.1 |  |  |

Research and development expenses were higher in the second quarter and the first six months of 2023, primarily reflecting higher new product development expenses at our CCM segment ($1.5 million in the second quarter and $3.6 million for the first six months of 2023) and CIT segment ($0.3 million in the second quarter and $1.5 million for the first six months of 2023).

### Other Operating (Income) Expense, net

*(in millions, except percentages)*

| 2023 | Three Months Ended June 30, 2022 |  | Change% | 2023 | Six Months Ended June 30, 2022 |  | Change% |  |
| --- | ---: | ---: | ---: | --- | ---: | ---: | ---: | --- |
| Other operating (income) expense, net | $— | $(1.8) | $1.8 | NM | $1.7 | $(3.5) | $5.2 | NM |

The change in other operating (income) expense, net in the second quarter of 2023 primarily reflected an increase in legal settlements of $1.4 million and fixed asset impairments of $1.3 million, partially offset by an increase in income from the sale of fixed assets of $1.3 million.

The change in other operating (income) expense, net in the first six months of 2023 primarily reflected an increase in the loss on sale of fixed assets of $2.5 million, an increase in legal settlements of $1.4 million and fixed asset impairments of $1.3 million.

### Operating Income

*(in millions, except percentages)*

| 2023 | Three Months Ended June 30, 2022 |  | Change% | 2023 | Six Months Ended June 30, 2022 |  | Change% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Operating income | $327.6 | $403.6 | $(76.0) | (18.8)% | $458.2 | $676.2 | $(218.0) | (32.2)% |
| Operating margin percentage | 21.5% | 22.7% |  |  | 17.4% | 21.1% |  |  |

Refer to *Segment Results of Operations* within this MD&A for further information related to segment operating income results.

### Interest Expense, net

*(in millions, except percentages)*

| 2023 | Three Months Ended June 30, 2022 |  | Change% | 2023 | Six Months Ended June 30, 2022 |  | Change% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest expense, net | $18.8 | $22.5 | $(3.7) | (16.4)% | $37.6 | $45.0 | $(7.4) | (16.4)% |

Interest expense, net of capitalized interest, decreased in the second quarter and the first six months of 2023 primarily reflecting lower long-term debt balances associated with the redemption of $350.0 million of our 3.75% unsecured senior notes in October 2022. Refer to Note 12 for further information on our long-term debt.

### Interest Income

*(in millions, except percentages)*

| 2023 | Three Months Ended June 30, 2022 |  | Change% | 2023 | Six Months Ended June 30, 2022 |  | Change% |  |
| --- | ---: | ---: | ---: | --- | ---: | ---: | ---: | --- |
| Interest income | $(4.5) | $(0.6) | $(3.9) | NM | $(9.1) | $(0.8) | $(8.3) | NM |

Interest income increased during the second quarter and the first six months of 2023 primarily reflecting higher yields and a higher invested cash balance.

### Other Non-operating Expense (Income), net

*(in millions, except percentages)*

| 2023 | Three Months Ended June 30, 2022 |  | Change% | 2023 | Six Months Ended June 30, 2022 |  | Change% |  |
| --- | ---: | ---: | ---: | --- | ---: | ---: | ---: | --- |
| Other non-operating expense (income), net | $0.2 | $2.3 | $(2.1) | NM | $(1.1) | $2.5 | $(3.6) | NM |

Other non-operating expense (income), net, decreased in the second quarter of 2023 and the first six months of 2023 primarily reflecting unrealized gains on Rabbi Trust investments, compared with unrealized losses in the 2022 periods.

### Income Taxes

*(in millions, except percentages)*

| 2023 | Three Months Ended June 30, 2022 |  | Change% | 2023 | Six Months Ended June 30, 2022 |  | Change% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Provision for income taxes | $71.6 | $88.6 | $(17.0) | (19.2)% | $97.5 | $148.3 | $(50.8) | (34.3)% |
| Effective tax rate | 22.9% | 23.4% |  |  | 22.6% | 23.6% |  |  |

The effective income tax rate on continuing operations for the first six months of 2023 was 22.6%. The year-to-date provision for income taxes included taxes on earnings at an anticipated rate of 23.4% and a tax impact of $3.4 million of discrete activity primarily related to excess tax benefits from employee stock compensation.

The effective income tax rate on continuing operations for the first six months of 2022 was 23.6%.

### (Loss) Income from Discontinued Operations

*(in millions)*

| 2023 | Three Months Ended June 30, 2022 |  | Change% | 2023 | Six Months Ended June 30, 2022 |  | Change% |  |
| --- | ---: | ---: | ---: | --- | ---: | ---: | ---: | --- |
| (Loss) income from discontinued operations before taxes | $(62.3) | $11.7 | $(74.0) | NM | $(51.4) | $15.6 | $(67.0) | NM |
| (Benefit from) provision for income taxes | (15.4) | 1.0 |  |  | (14.4) | 1.7 |  |  |
| (Loss) income from discontinued operations | $(46.9) | $10.7 |  |  | $(37.0) | $13.9 |  |  |

Loss from discontinued operations for the second quarter and the first six months of 2023 primarily reflects a goodwill impairment of $24.8 million and loss on classification to held for sale of $50.8 million, partially offset by operating results from CFT product lines.

### Segment Results of Operations

### Carlisle Construction Materials

This segment produces a complete line of premium energy-efficient single-ply roofing products and warranted roof systems and accessories for the commercial building industry, including EPDM, TPO and polyvinyl chloride (“PVC”) membrane, polyisocyanurate ("polyiso") insulation, and engineered metal roofing and wall panel systems for commercial and residential buildings.

*(in millions)*

| 2023 | Three Months Ended June 30, 2022 |  | Change% |  | Organic | Acquisition Effect | Exchange Rate Effect |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenues | $947.5 | $1,113.4 | $(165.9) | (14.9)% | (14.9)% | —% | —% |
| Operating income | $280.7 | $358.9 | $(78.2) | (21.8)% |  |  |  |
| Operating margin | 29.6% | 32.2% |  |  |  |  |  |
| Adjusted EBITDA(1) | $295.7 | $371.3 | $(75.6) | (20.4)% |  |  |  |
| Adjusted EBITDA margin(1) | 31.2% | 33.3% |  |  |  |  |  |

*(in millions, except percentages)*

| 2023 | Six Months Ended June 30, 2022 |  | Change% |  | Organic | Acquisition Effect | Exchange Rate Effect |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenues | $1,523.5 | $1,994.5 | $(471.0) | (23.6)% | (23.4)% | —% | (0.2)% |
| Operating income | $403.1 | $620.0 | $(216.9) | (35.0)% |  |  |  |
| Operating margin | 26.5% | 31.1% |  |  |  |  |  |
| Adjusted EBITDA(1) | $432.5 | $646.6 | $(214.1) | (33.1)% |  |  |  |
| Adjusted EBITDA margin(1) | 28.4% | 32.4% |  |  |  |  |  |

(1) Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items. Refer to Non-GAAP Financial Measures in this MD&A for more information about, and a detailed reconciliation of, these items.

CCM’s revenue decreased in the second quarter and the first six months of 2023 primarily reflecting lower volumes as distributors continued destocking into the second quarter, which was prolonged by inclement weather conditions during the first half of the year. CCM’s operating margin and adjusted EBITDA margin decrease in the second quarter and the first six months of 2023 primarily reflected higher per unit cost as a result of lower volumes.

### Carlisle Weatherproofing Technologies

This segment produces building envelope solutions that effectively drive energy efficiency and sustainability in commercial and residential applications. Products include high-performance waterproofing and moisture protection products, protective roofing underlayments, fully integrated liquid and sheet applied air/vapor barriers, sealants/primers and flashing systems, roof coatings and mastics, spray polyurethane foam and coating systems for a wide variety of thermal protection applications and other premium polyurethane products, block-molded expanded polystyrene insulation, and engineered products for HVAC applications.

*(in millions)*

| 2023 | Three Months Ended June 30, 2022 |  | Change% |  | Organic | Acquisition Effect | Exchange Rate Effect |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenues | $359.5 | $448.9 | $(89.4) | (19.9)% | (19.6)% | —% | (0.3)% |
| Operating income | $59.5 | $59.0 | $0.5 | 0.8% |  |  |  |
| Operating margin | 16.6% | 13.1% |  |  |  |  |  |
| Adjusted EBITDA(1) | $80.8 | $83.5 | $(2.7) | (3.2)% |  |  |  |
| Adjusted EBITDA margin(1) | 22.5% | 18.6% |  |  |  |  |  |

*(in millions, except percentages)*

| 2023 | Six Months Ended June 30, 2022 |  | Change% |  | Organic | Acquisition Effect | Exchange Rate Effect |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenues | $676.1 | $808.0 | $(131.9) | (16.3)% | (15.9)% | —% | (0.4)% |
| Operating income | $83.6 | $96.5 | $(12.9) | (13.4)% |  |  |  |
| Operating margin | 12.4% | 11.9% |  |  |  |  |  |
| Adjusted EBITDA(1) | $134.7 | $146.6 | $(11.9) | (8.1)% |  |  |  |
| Adjusted EBITDA margin(1) | 19.9% | 18.1% |  |  |  |  |  |

(1) Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items. Refer to Non-GAAP Financial Measures in this MD&A for more information about, and a detailed reconciliation of, these items.

CWT’s revenue decreased in the second quarter and the first six months of 2023 primarily reflecting lower volumes from a slowdown in residential construction. CWT’s operating margin increase in the second quarter and the first six months of 2023 primarily reflected efficiencies gained through targeted restructuring, automated manufacturing, and realized synergies from the acquisition of ASP Henry Holdings, Inc. on September 1, 2021.

### Carlisle Interconnect Technologies

This segment produces high-performance wire and cable, including optical fiber, for the commercial aerospace, military and defense electronics, medical device, industrial, and test and measurement markets. CIT's product portfolio also includes sensors, connectors, contacts, cable assemblies, complex harnesses, racks, trays, and installation kits, in addition to engineering and certification services. CIT also provides medical device products and solutions for several medical technology applications.

During the first quarter of 2023, the Company initiated plans to exit its manufacturing operations in Lugano, Switzerland, and relocate the majority of those operations to its existing facilities in North America. The project is estimated to take an additional twelve to fifteen months to complete. During the second quarter and for the six months ended June 30, 2023, project costs totaled $1.3 million and $1.8 million, respectively, primarily for employee termination benefit costs. Total project costs are expected to approximate $6.8 million, with approximately $5.0 million costs remaining to be incurred, primarily in 2023.

The Company has substantially completed its plan to exit its manufacturing operations in Carlsbad, California, and relocate the majority of those operations to its existing facilities in North America for cumulative project costs of approximately $7.2 million.

*(in millions)*

| 2023 | Three Months Ended June 30, 2022 |  | Change% |  | Organic | Acquisition Effect | Exchange Rate Effect |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenues | $218.9 | $212.6 | $6.3 | 3.0% | 3.2% | —% | (0.2)% |
| Operating income | $19.7 | $7.9 | $11.8 | 149.4% |  |  |  |
| Operating margin | 9.0% | 3.7% |  |  |  |  |  |
| Adjusted EBITDA(1) | $39.2 | $27.0 | $12.2 | 45.2% |  |  |  |
| Adjusted EBITDA margin(1) | 17.9% | 12.7% |  |  |  |  |  |

26

*(in millions, except percentages)*

| 2023 | Six Months Ended June 30, 2022 |  | Change% |  | Organic | Acquisition Effect | Exchange Rate Effect |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenues | $432.4 | $397.6 | $34.8 | 8.8% | 9.0% | —% | (0.2)% |
| Operating income | $30.6 | $5.4 | $25.2 | 466.7% |  |  |  |
| Operating margin | 7.1% | 1.4% |  |  |  |  |  |
| Adjusted EBITDA(1) | $69.7 | $45.4 | $24.3 | 53.5% |  |  |  |
| Adjusted EBITDA margin(1) | 16.1% | 11.4% |  |  |  |  |  |

(1) Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items. Refer to Non-GAAP Financial Measures in this MD&A for more information about, and a detailed reconciliation of, these items.

CIT’s revenue increase in the second quarter and the first six months of 2023 primarily reflected increased sales in the aerospace market of $19.0 million and $46.8 million, respectively. The increase in revenues was partially offset by decreased sales in the medical market of $13.2 million and $12.0 million, in the second quarter and the first six months of 2023, respectively. CIT’s operating margin and adjusted EBITDA margin increase in the second quarter and the first six months of 2023 primarily reflected savings from restructuring initiatives.

### Liquidity and Capital Resources

A summary of our cash and cash equivalents by region follows:

*(in millions)*

|  | June 30, 2023 | December 31, 2022 |
| --- | ---: | ---: |
| Europe | $20.4 | $19.7 |
| North America (excluding U.S.) | 17.9 | 25.9 |
| China | 10.6 | 4.2 |
| Asia Pacific (excluding China) | 21.6 | 11.2 |
| International cash and cash equivalents | 70.5 | 61.0 |
| U.S. cash and cash equivalents | 308.8 | 327.7 |
| Total cash and cash equivalents | $379.3 | $388.7 |

We maintain liquidity sources primarily consisting of cash and cash equivalents as well as availability under the Company's Fourth Amended and Restated Credit Agreement (as amended, the "Facility"). In the near term, cash on hand is our primary source of liquidity. The increase in cash and cash equivalents compared to December 31, 2022, is primarily related to cash generated from operations partially offset by share repurchases, capital expenditures and payment of dividends to stockholders.

In certain countries, primarily China, our cash is subject to local laws and regulations that require government approval for conversion of such cash to U.S. Dollars, as well as for transfer of such cash, both temporarily and permanently outside of that jurisdiction. In addition, upon permanent transfer of cash outside of certain jurisdictions, primarily in Canada and China, we may be subject to withholding taxes, and as such we have accrued $7.6 million in anticipation of those taxes as of June 30, 2023.

We believe we have sufficient cash on hand, availability under the Facility and operating cash flows to meet our anticipated business requirements for at least the next 12 months. At the discretion of management, the Company may use available cash on capital expenditures, dividends, common stock repurchases, acquisitions and strategic investments.

We also anticipate we will have sufficient cash on hand, availability under the Facility and operating cash flows to meet our anticipated long-term business requirements and to pay outstanding principal balances of our existing notes by the respective maturity dates. Another potential source of liquidity is access to public capital markets, subject to market conditions. We may access the capital markets for a variety of reasons, including to repay the outstanding balances of our outstanding debt and fund acquisitions. Refer to Note 12.

### Sources and Uses of Cash and Cash Equivalents

*(in millions)*

|  | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $370.7 | $223.5 |
| Net cash (used in) provided by investing activities | (55.9) | 36.9 |
| Net cash used in financing activities | (327.1) | (229.9) |
| Effect of foreign currency exchange rate changes on cash and cash equivalents | 0.8 | (1.7) |
| Change in cash and cash equivalents | $(11.5) | $28.8 |

#### Operating Activities

We generated operating cash flows of $370.7 million for the first six months of 2023 (including working capital uses of $87.0 million), compared with $223.5 million for the first six months of 2022 (including working capital uses of $415.8 million). Higher operating cash flows of $147.2 million for the first six months of 2023 primarily reflected lower working capital uses of $328.8 million related to a decrease in accounts receivable of $175.7 million from collections and lower inventory investment of $243.9 million, partially offset by a reduction in accounts payable of $74.7 million and accrued expenses of $61.2 million, and lower income from continuing operations of $147.9 million.

#### Investing Activities

Cash used in investing activities of $55.9 million for the first six months of 2023 primarily reflected capital expenditures of $70.1 million, partially offset by proceeds from the sale of equipment of $14.0 million. Cash provided by investing activities of $36.9 million for the first six months of 2022 primarily reflected the proceeds of the contingent consideration from the earn out payment and sale of real estate associated with the 2021 sale of CBF of $132.0 million and proceeds from investment in securities of $10.3 million, partially offset by capital expenditures of $82.7 million and the acquisition of MBTechnology for $24.7 million.

#### Financing Activities

Cash used in financing activities of $327.1 million in the first six months of 2023 primarily reflected share repurchases of $250.0 million and cash dividend payments of $77.2 million, reflecting the increased quarterly dividend of $0.75 per share. Cash used in financing activities of $229.9 million during the first six months of 2022 primarily reflected share repurchases of $175.0 million and cash dividend payments of $56.7 million.

### Debt Instruments

#### Revolving Credit Facility

On June 15, 2023, the Company entered into a second amendment to the Facility administered by JPMorgan Chase Bank, N.A. to implement, effective as of July 1, 2023, a replacement of the benchmark interest rates following the cessation of certain LIBOR rates. The benchmark rate for loans denominated in (i) U.S. dollars is Term SOFR, (ii) Canadian dollars is CDOR, (iii) sterling is SONIA, (iv) euros is EURIBOR and (v) yen is TIBOR.

During the six months ended June 30, 2023, we had no borrowings or repayments under the Facility. As of June 30, 2023 and December 31, 2022, the Facility had no outstanding balance and $1.0 billion available for use.

#### Debt Covenants

We are required to meet various covenants and limitations under our senior notes and Facility, including certain leverage ratios, interest coverage ratios and limits on outstanding debt balances held by certain subsidiaries. We were in compliance with all covenants and limitations as of June 30, 2023 and December 31, 2022.

Refer to Note 12 for further information on our debt instruments.

### Non-GAAP Financial Measures

### EBIT, Adjusted EBIT, Adjusted EBITDA and Adjusted EBITDA Margin

Earnings before interest and taxes ("EBIT"), adjusted EBIT, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") and adjusted EBITDA margin are intended to provide investors and others with information about our performance and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items. As a result, management believes that these measures enhance the ability of investors to analyze trends in our business and evaluate our performance relative to similarly-situated companies. This information differs from net income, operating income, and operating margin determined in accordance with GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with GAAP. Our and our segments' EBIT, adjusted EBIT, adjusted EBITDA and adjusted EBITDA margin follows. These non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies.

*(in millions, except percentages)*

|  | Three Months Ended June 30, 2023 | 2022 | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Net income (GAAP) | $194.6 | $301.5 | $296.3 | $495.1 |
| Less: (loss) income from discontinued operations (GAAP) | (46.9) | 10.7 | (37.0) | 13.9 |
| Income from continuing operations (GAAP) | 241.5 | 290.8 | 333.3 | 481.2 |
| Provision for income taxes | 71.6 | 88.6 | 97.5 | 148.3 |
| Interest expense, net | 18.8 | 22.5 | 37.6 | 45.0 |
| Interest income | (4.5) | (0.6) | (9.1) | (0.8) |
| EBIT | 327.4 | 401.3 | 459.3 | 673.7 |
| Exit and disposal, and facility rationalization costs | 2.0 | 0.7 | 6.5 | 2.8 |
| Inventory step-up amortization and transaction costs | — | 0.8 | 1.6 | 0.8 |
| Impairment charges | 0.4 | — | 1.3 | 0.2 |
| (Gains) losses from acquisitions and disposals | (1.3) | 0.1 | 2.7 | 0.3 |
| Losses from insurance | — | — | — | 0.3 |
| Losses from litigation | 1.6 | — | 1.5 | — |
| Total non-comparable items | 2.7 | 1.6 | 13.6 | 4.4 |
| Adjusted EBIT | 330.1 | 402.9 | 472.9 | 678.1 |
| Depreciation | 21.8 | 22.6 | 43.8 | 45.1 |
| Amortization | 33.5 | 34.7 | 67.0 | 71.2 |
| Adjusted EBITDA | $385.4 | $460.2 | $583.7 | $794.4 |
| Divided by: |  |  |  |  |
| Total revenues | $1,525.9 | $1,774.9 | $2,632.0 | $3,200.1 |
| Adjusted EBITDA margin | 25.3% | 25.9% | 22.2% | 24.8% |

29

*(in millions)*

|  | Three Months Ended June 30, 2023 CCM | CWT | CIT | Corporate and unallocated |
| --- | ---: | ---: | ---: | ---: |
| Operating income (loss) (GAAP) | $280.7 | $59.5 | $19.7 | $(32.3) |
| Non-operating (income) expense, net(1) | (0.2) | 0.4 | 0.5 | (0.5) |
| EBIT | 280.9 | 59.1 | 19.2 | (31.8) |
| Exit and disposal, and facility rationalization costs | — | 0.5 | 1.5 | — |
| Impairment charges | — | 0.4 | — | — |
| (Gains) losses from acquisitions and disposals | (0.1) | (1.2) | 0.1 | (0.1) |
| Losses from litigation | — | — | 1.5 | 0.1 |
| Total non-comparable items | (0.1) | (0.3) | 3.1 | — |
| Adjusted EBIT | 280.8 | 58.8 | 22.3 | (31.8) |
| Depreciation | 10.8 | 4.3 | 5.8 | 0.9 |
| Amortization | 4.1 | 17.7 | 11.1 | 0.6 |
| Adjusted EBITDA | $295.7 | $80.8 | $39.2 | $(30.3) |
| Divided by: |  |  |  |  |
| Total revenues | $947.5 | $359.5 | $218.9 | $— |
| Adjusted EBITDA margin | 31.2% | 22.5% | 17.9% | NM |

(1) Includes other non-operating expense (income), net, which may be presented in separate line items on the Condensed Consolidated Statements of Income and Comprehensive Income.

*(in millions)*

|  | Three Months Ended June 30, 2022 CCM | CWT | CIT | Corporate and unallocated |
| --- | ---: | ---: | ---: | ---: |
| Operating income (loss) (GAAP) | $358.9 | $59.0 | $7.9 | $(22.2) |
| Non-operating expense (income), net(1) | 0.9 | 0.1 | (0.3) | 1.6 |
| EBIT | 358.0 | 58.9 | 8.2 | (23.8) |
| Exit and disposal, and facility rationalization costs | — | — | 0.7 | — |
| Inventory step-up amortization and transaction costs | — | 0.1 | — | 0.7 |
| (Gains) losses from acquisitions and disposals | (0.1) | — | 0.2 | — |
| (Gains) losses from litigation | — | — | (0.1) | 0.1 |
| Total non-comparable items | (0.1) | 0.1 | 0.8 | 0.8 |
| Adjusted EBIT | 357.9 | 59.0 | 9.0 | (23.0) |
| Depreciation | 9.3 | 6.4 | 6.1 | 0.8 |
| Amortization | 4.1 | 18.1 | 11.9 | 0.6 |
| Adjusted EBITDA | $371.3 | $83.5 | $27.0 | $(21.6) |
| Divided by: |  |  |  |  |
| Total revenues | $1,113.4 | $448.9 | $212.6 | $— |
| Adjusted EBITDA margin | 33.3% | 18.6% | 12.7% | NM |

(1) Includes other non-operating expense (income), net, which may be presented in separate line items on the Condensed Consolidated Statements of Income and Comprehensive Income.

*(in millions, except percentages)*

|  | Six Months Ended June 30, 2023 CCM | CWT | CIT | Corporate and unallocated |
| --- | ---: | ---: | ---: | ---: |
| Operating income (loss) (GAAP) | $403.1 | $83.6 | $30.6 | $(59.1) |
| Non-operating (income) expense, net(1) | (0.3) | 0.2 | 0.4 | (1.4) |
| EBIT | 403.4 | 83.4 | 30.2 | (57.7) |
| Exit and disposal, and facility rationalization costs | 0.1 | 2.7 | 3.7 | — |
| Inventory step-up amortization and transaction costs | — | — | — | 1.6 |
| Impairment charges | — | 1.3 | — | — |
| (Gains) losses from acquisitions and disposals | (0.3) | 2.9 | 0.2 | (0.1) |
| Losses (gains) from litigation | — | — | 1.6 | (0.1) |
| Total non-comparable items | (0.2) | 6.9 | 5.5 | 1.4 |
| Adjusted EBIT | 403.2 | 90.3 | 35.7 | (56.3) |
| Depreciation | 21.1 | 9.1 | 11.7 | 1.9 |
| Amortization | 8.2 | 35.3 | 22.3 | 1.2 |
| Adjusted EBITDA | $432.5 | $134.7 | $69.7 | $(53.2) |
| Divided by: |  |  |  |  |
| Total revenues | $1,523.5 | $676.1 | $432.4 | $— |
| Adjusted EBITDA margin | 28.4% | 19.9% | 16.1% | NM |

(1) Includes other non-operating expense (income), net, which may be presented in separate line items on the Condensed Consolidated Statements of Income and Comprehensive Income.

*(in millions, except percentages)*

|  | Six Months Ended June 30, 2022 CCM | CWT | CIT | Corporate and unallocated |
| --- | ---: | ---: | ---: | ---: |
| Operating income (loss) (GAAP) | $620.0 | $96.5 | $5.4 | $(45.7) |
| Non-operating expense (income), net(1) | 0.9 | 0.2 | (0.8) | 2.2 |
| EBIT | 619.1 | 96.3 | 6.2 | (47.9) |
| Exit and disposal, and facility rationalization costs | — | 0.1 | 2.7 | — |
| Inventory step-up amortization and transaction costs | — | — | — | 0.8 |
| Impairment charges | — | 0.2 | — | — |
| (Gains) losses from acquisitions and disposals | (0.1) | — | 0.4 | — |
| Losses from insurance | — | 0.3 | — | — |
| (Gains) losses from litigation | — | — | (0.1) | 0.1 |
| Total non-comparable items | (0.1) | 0.6 | 3.0 | 0.9 |
| Adjusted EBIT | 619.0 | 96.9 | 9.2 | (47.0) |
| Depreciation | 18.5 | 12.7 | 12.2 | 1.7 |
| Amortization | 9.1 | 37.0 | 24.0 | 1.1 |
| Adjusted EBITDA | $646.6 | $146.6 | $45.4 | $(44.2) |
| Divided by: |  |  |  |  |
| Total revenues | $1,994.5 | $808.0 | $397.6 | $— |
| Adjusted EBITDA margin | 32.4% | 18.1% | 11.4% | NM |

(1) Includes other non-operating expense (income), net, which may be presented in separate line items on the Condensed Consolidated Statements of Income and Comprehensive Income.

### Outlook

Our expectations for segment and total revenues for 2023, compared to 2022 follow:

|  | 2023 Revenue | Primary Drivers |
| --- | --- | --- |
| CCM | Low teens decline | •Challenging year-over-year comparisons; channel destocking in 2023 •Project delays due to weather; limited contractor labor constraining recovery •Contractor backlog remains strong |
| CWT | Low teens decline | •Headwinds in residential markets •Partially offset by channel penetration, steady commercial and R&R demand •Exit of rubber business |
| CIT | Mid single-digit growth | •Growing demand in commercial aerospace markets •Lower sales in medical markets •Positive pricing |
| Total Carlisle | Low double-digit decline |  |

For the year 2023, we expect:

- Corporate expenses of approximately $115 million to $120 million;
- Depreciation and amortization expense of approximately $230 million;
- Capital expenditures of approximately $175 million to $200 million;
- Interest expense, net of interest income, of approximately $60 million; and
- Base tax rate of approximately 23% to 24%.

### Forward-Looking Statements

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally use words such as "expect," "foresee," "anticipate," "believe," "project," "should," "estimate," "will," "plans," "intends," "forecast," and similar expressions, and reflect our expectations concerning the future. Such statements are made based on known events and circumstances at the time of publication and, as such, are subject in the future to unforeseen risks and uncertainties. It is possible that our future performance may differ materially from current expectations expressed in these forward-looking statements, due to a variety of factors such as: increasing price and product/service competition by foreign and domestic competitors, including new entrants; technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; our mix of products/services; increases in raw material costs that cannot be recovered in product pricing; domestic and foreign governmental and public policy changes including environmental and industry regulations; the ability to meet our goals relating to our intended reduction of greenhouse gas emissions, including our net zero commitments; threats associated with and efforts to combat terrorism; protection and validity of patent and other intellectual property rights; the identification of strategic acquisition targets and our successful completion of any transaction and integration of our strategic acquisitions; our successful completion of strategic dispositions; the cyclical nature of our businesses; the impact of information technology, cybersecurity or data security breaches at our businesses or third parties; the outcome of pending and future litigation and governmental proceedings; the emergence or continuation of widespread health emergencies such as the COVID-19 pandemic, including, for example, expectations regarding their impact on our businesses, including on customer demand, supply chains and distribution systems, production, our ability to maintain appropriate labor levels, our ability to ship products to our customers, our future results, or our full-year financial outlook; and the other factors discussed in the reports we file with or furnish to the Securities and Exchange Commission from time to time. In addition, such statements could be affected by general industry and market conditions and growth rates, the condition of the financial and credit markets and general domestic and international economic conditions, including inflation and interest rate and currency exchange rate fluctuations. Further, any conflict in the international arena, including the Russian invasion of Ukraine, may adversely affect general market conditions and our future performance. Any forward-looking statement speaks only as of the date on which that statement is made, and we undertake no duty to update any forward-looking statement to reflect events or circumstances, including unanticipated events, after the date on which that statement is made, unless otherwise required by law. New factors emerge from time to time and it is not possible for management to predict all of those factors, nor can it assess the impact of each of those factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

## Market risk

As filed, 269 characters.

There have been no material changes in the Company’s market risk for the six months ended June 30, 2023. For additional information, refer to "PART II—Item 7A. Quantitative and Qualitative Disclosures About Market Risk" of the Company’s 2022 Annual Report on Form 10-K.

## Controls and procedures

As filed, 856 characters.

a. Evaluation of disclosure controls and procedures. Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation and as of June 30, 2023, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective.

b. Changes in internal controls. During the second quarter of 2023, there were no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

## Risk factors

As filed, 149 characters.

There have been no material changes in the Company's risk factors disclosed in "PART I—Item 1A. Risk Factors" in our 2022 Annual Report on Form 10-K.

Filed Jul 27, 2023.
Source: SEC EDGAR, the filing index for accession 0000790051-23-000134. Last ingested by Listed: Oct 29, 2026, 16:20 ET. No prices; not investment advice.