Carlisle Companies Inc: Form 10-Q for the period ended Sep 30, 2025

Carlisle Companies Incorporated (“Carlisle,” the “Company,” “we,” “us” or “our”) is a leading 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.

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

Carlisle’s third quarter performance remained resilient despite a challenging macroeconomic environment. Revenue grew 1% year-over-year to $1.3 billion, and diluted EPS was $4.97 We remain committed to our Vision 2030 strategy and delivering on our key initiatives and long-term financial targets to create value for our stakeholders. We fully appreciate the impact that current headwinds are having on the building products market, and we are working diligently to navigate the uncertainty in new construction activity and the ongoing changes driven by consolidation of distributors, manufacturers and contractors.

In the third quarter, CCM continued to benefit from solid commercial re-roofing demand, a core driver of Carlisle’s value creation history. Re-roofing is an imperative business, meaning it is not a discretionary item for building owners. Re-roofing demand remained healthy with stable contractor backlogs offsetting weaker new construction and temporary fluctuations in order patterns driven by the changes in our distribution channel. CCM’s ability to capitalize on the favorable fundamentals supporting long-term commercial re-roofing growth, including an aging building stock and a growing footprint, are reinforced by our scale in the U.S.—arguably the best global construction market, our drive to deliver meaningful innovation to the market, and our superior Carlisle Experience. We believe the temporary changes seen in the distribution channel in 2025 will ultimately be resolved and result in a return to a more stable and improved situation.

At CWT, the well understood and ongoing end market headwinds continued to affect results in the third quarter, particularly in residential new construction, where affordability challenges and higher interest rates continue to negatively impact demand. Our progress on strategic initiatives is gaining traction and positioning the business for steady margin expansion as we move forward and closer to a return to an improved housing market. Synergies from our recent acquisitions are tracking ahead of plan, and share gain initiatives in retail category expansion with UltraTouch® denim insulation and advanced waterproofing technologies are creating multiple paths to sales growth and margin improvement.

Innovation is a critical pillar of our Vision 2030 strategy and has always been a leading differentiator for Carlisle. Our focus on innovation has delivered key new products in 2025. We are seeing strong market adoption of recently launched products such as RapidLock™, SeamShield™, APEEL™, VP Tech™, and UltraTouch®, all of which address the mega trends around energy efficiency and labor-saving solutions. We are continuing to drive increased R&D investment, including expanding our Research and Innovation Center in Carlisle, PA, to accelerate product introductions and sustain above-market growth.

We remain committed to disciplined capital deployment and strong cash flow generation. During the quarter, we repurchased 0.8 million shares for $300 million and raised our dividend by 10%, marking Carlisle’s 49th consecutive annual increase. Our ability to consistently generate cash from operations provides meaningful capacity to reinvest in innovation, pursue strategic acquisitions, and return capital to shareholders.

Our commercial re-roofing leadership, prudent operational enhancements, strategic growth avenues and consistent execution under Vision 2030 give us confidence even in times of prolonged economic uncertainty. We are not waiting for a recovery. We are building the next phase of growth, focused on innovation, operational excellence, and long-term value creation as we progress toward our Vision 2030 objectives.

Summary of Financial Results

(in millions, except per share amounts and percentages)

(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.

Consolidated Results of Operations

Revenues

(in millions, except percentages)

Revenues increased in the third quarter of 2025, primarily reflecting higher sales in our residential construction end-market of $7.8 million, driven by recent acquisitions. Sales in our non-residential construction end-market were flat, as increases from recent acquisitions and re-roofing activity were offset by decreases in new construction activity.

Revenues increased in the first nine months of 2025, primarily reflecting higher sales in our non-residential construction end-market of $25.5 million, driven by recent acquisitions, partially offset by lower sales in our residential construction end-market of $12.1 million, primarily resulting from lower new construction activity.

Gross Profit

(in millions, except percentages)

Gross margin decreased in the third quarter and the first nine months of 2025, primarily due to increased unit costs resulting from higher absorption of fixed costs on lower volumes.

Selling and Administrative Expenses

(in millions, except percentages)

21

Selling and administrative expenses decreased in the third quarter of 2025, primarily resulting from lower wage and benefit expenses of $9.0 million due to lower discretionary compensation and lower acquisition-related costs and professional fees of $5.6 million. These decreases were partially offset by the increase in expenses attributable to the recent acquisitions of PFB Holdco, Inc. ("PFB"), selected assets of ThermaFoam Operating LLC, PowerFoam LLC, and ThermaFoam Real Estate LLC (collectively, "ThermaFoam"), and selected assets of Bonded Logic, Inc. and Phoenix Fibers, LLC (collectively, "Bonded Logic"), including $2.6 million of additional wages and benefits and $2.7 million of additional amortization expense.

Selling and administrative expenses increased in the first nine months of 2025, primarily due to the recent acquisitions of MTL Holdings LLC ("MTL"), PFB, ThermaFoam, and Bonded Logic, which added $12.9 million of wage and benefit expense, $13.3 million of amortization expense, and $5.0 million of acquisition-related costs. These increases were partially offset by lower wage and benefit expenses of $6.3 million at our legacy businesses driven by lower discretionary compensation.

Research and Development Expenses

(in millions, except percentages)

Research and development expenses increased in the third quarter and the first nine months of 2025, primarily due to higher new product development expenses. The increase in research and development expenses is consistent with a key pillar of Vision 2030 to drive innovation with a commitment to investing in the creation of new products and solutions that add value through advancements in sustainability and energy and labor efficiencies.

Interest Expense

(in millions, except percentages)

Interest expense increased in the third quarter of 2025, primarily due to higher long-term debt balances associated with the 5.25% notes due September 15, 2035 (the "2035 Notes") and the 5.55% notes due September 15, 2040 (the "2040 Notes") that were issued on August 20, 2025. Refer to Note 10 for further information on our long-term debt.

Interest expense decreased in the first nine months of 2025, primarily due to lower long-term debt balances associated with the redemption of $400.0 million of 3.50% notes in December 2024, partially offset by the issuance of the 2035 Notes and 2040 Notes.

Interest Income

(in millions, except percentages)

Interest income decreased during the third quarter and the first nine months of 2025, primarily due to a lower invested cash balance and lower yields compared to 2024.

Income Taxes

(in millions, except percentages)

The provision for income taxes on continuing operations decreased during the third quarter and the first nine months of 2025, primarily due to lower pre-tax income. The year-to-date provision for income taxes included taxes on earnings at an anticipated rate of 23.1% and a tax benefit of $12.1 million from discrete activity primarily related to excess tax benefits from stock compensation and reduced prior year tax liabilities.

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 ethylene propylene diene monomer ("EPDM"), thermoplastic polyolefin ("TPO") and polyvinyl chloride ("PVC") membrane, polyisocyanurate ("polyiso") insulation, and engineered metal roofing and wall panel systems for commercial and residential buildings.

(in millions)

(in millions, except percentages)

(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 was essentially flat in the third quarter of 2025 as re-roofing activity offset lower new construction activity. CCM's revenue increase in the first nine months of 2025 was primarily driven by the acquisition of MTL.

CCM's operating margin and adjusted EBITDA margin decreased in the third quarter, driven by materials inflation of $12.6 million, higher operating costs of $13.3 million, primarily to enhance the Carlisle Experience, and increased research and development expenses of $3.3 million. Margins for the first nine months of 2025 decreased primarily due to higher operating costs of $35.8 million, primarily to enhance the Carlisle Experience, and increased research and development expenses of $5.1 million.

Carlisle Weatherproofing Technologies

This segment produces building envelope solutions that 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, engineered products for HVAC applications, and premium products for a variety of industrial and surfacing applications.

(in millions)

(in millions, except percentages)

(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 increase in the third quarter of 2025 was primarily driven by the acquisitions of PFB, ThermaFoam, and Bonded Logic, which more than offset the impact of lower sales volumes due to continued market softness. CWT’s revenue decrease in the first nine months of 2025 was primarily the result of lower sales volumes due to continued softness in new construction activity, partially offset by the acquisitions of PFB, ThermaFoam, and Bonded Logic.

CWT’s operating margin and adjusted EBITDA margin decreased in the third quarter and the first nine months of 2025, primarily due to increased unit costs resulting from higher absorption of fixed costs on lower volumes.

Liquidity and Capital Resources

We believe that our current cash reserves, available credit facilities, and anticipated operating cash flows are adequate to meet our short-term projected business requirements for at least the next 12 months and our long-term financial requirements, including the repayment of outstanding principal balances on existing notes by their respective maturity dates.

Additional sources of liquidity may be obtained through access to the capital markets, subject to market conditions. The Company may consider such access for purposes that include the repayment of outstanding debt and the funding of acquisitions. For further details regarding long-term debt, refer to Note 10.

Management retains discretion over the allocation of available cash and may deploy resources toward capital expenditures, acquisitions, strategic investments, dividends, or share repurchases.

(in millions)

Operating Activities

Cash provided by operating activities for the first nine months of 2025 of $715.8 million increased by $56.1 million compared to the first nine months of 2024, primarily due to lower working capital uses of $100.1 million, partially offset by lower income from continuing operations, excluding non-cash reconciling items, of $60.4 million.

Inventory has remained steady throughout the first nine months of 2025, resulting in a $103.6 million decrease in working capital uses compared to the first nine months of 2024, which experienced higher investment in inventory due to the end of destocking from 2023 followed by increased construction activity. Additionally, our working capital used in other current liabilities in the first nine months of 2025 decreased by $64.3 million compared to the first nine months of 2024, primarily due to the timing of tax expenses and payments. These reductions in working capital uses were partially offset by an additional $27.5 million in working capital used in accounts receivable due to timing of sales and an additional $37.4 million used in accounts payable due to timing of expenses and payments when comparing the first nine months of 2025 to the first nine months of 2024.

Investing Activities

Cash used in investing activities of $199.4 million for the first nine months of 2025 primarily reflected the purchases of ThermaFoam for $52.9 million and Bonded Logic for $57.7 million, and capital expenditures of $91.3 million. Cash provided by investing activities of $1,508.9 million for the first nine months of 2024 primarily reflected proceeds from the sale of Carlisle Interconnect Technologies, net of cash disposed, of $1,998.0 million, partially offset by the purchase of MTL for $414.3 million, net of cash acquired, and capital expenditures of $76.7 million.

Financing Activities

Cash used in financing activities of $165.4 million in the first nine months of 2025 primarily reflected share repurchases of $1,000.0 million and cash dividend payments of $135.3 million, offset by proceeds from the issuance of the 5.55% Notes due 2040 and 5.25% Notes due 2035 of $987.8 million. Cash used in financing activities of $1,242.9 million in the first nine months of 2024 primarily reflected share repurchases of $1,166.1 million and cash dividend payments of $127.4 million, partially offset by net proceeds of $55.4 million from the exercising of stock options.

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)

(in millions, except percentages)

26

(in millions, except percentages)

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 of our customers to maintain appropriate labor levels under U.S. immigration laws, policies and practices; 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, artificial intelligence 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; 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, interest rate and currency exchange rate fluctuations, and tariffs. Further, any conflict in the international arena, including the Russian invasion of Ukraine and war in the Middle East, 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.

There have been no material changes in the Company’s market risk for the nine months ended September 30, 2025. For additional information, refer to "PART II—Item 7A. Quantitative and Qualitative Disclosures About Market Risk" of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Annual Report on Form 10-K").

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 Rule 13a-15 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation and as of September 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective.

b. Changes in internal control over financial reporting. During the third quarter of 2025, 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.

There have been no material changes in the Company's risk factors disclosed in "PART I—Item 1A. Risk Factors" in our 2024 Annual Report on Form 10-K.