Carlisle Companies Inc: Form 10-Q for the period ended Sep 30, 2026

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 recorded third quarter diluted earnings per share from continuing operations of $5.22, up 5% year-over-year, on 9% revenue growth to $1.5 billion. Both CCM and CWT again grew faster than their underlying markets, reflecting our Vision 2030 strategic initiatives, the strength of our resilient business model, and the Carlisle Experience we deliver to contractors, distributors, and building owners. Even as petroleum-derived input and freight costs rose sharply, our teams grew volume, built price realization, and delivered solid results.

CCM grew revenue 8%, driven by strong volume from our strategic initiatives, including growing traction in data centers, together with solid re-roofing demand and price realization. Re-roofing has grown steadily since we launched Vision 2030, supported by an aging building stock and the non-discretionary nature of roof replacement. CCM operating income was $281 million and adjusted EBITDA increased 1% to $306 million, driven by higher volumes, Carlisle Operating System productivity gains, and disciplined cost management. At CWT, share gains more than offset continued softness in new construction. CWT operating income increased 31% to $39 million, and adjusted EBITDA grew 13% with 60 basis points of margin expansion, reflecting our investments in automation, manufacturing consolidation, and in-house expanded polystyrene resin capacity. We also continued to advance our innovation pipeline, with nine of the twelve new products planned for this year now in the market.

Price realization continued to build through the quarter, supported by the freight surcharges and broad-based price increases implemented across CCM and CWT. Customers have continued to choose Carlisle as these actions have taken hold, and we have not seen a material change in demand. Renewed escalation of the conflict in the Middle East drove petroleum-derived raw material, diesel, and freight costs higher, well above what we anticipated in our July outlook. As in prior inflationary cycles, pricing typically lags cost inflation, which drove the year-over-year decline in margins. We view this as a timing issue, not a structural one. We expect the benefit of our pricing actions to keep building through the fourth quarter and into 2027, and margin expansion to resume as raw material costs normalize.

Our strong cash generation continues to support our balanced and disciplined approach to capital allocation. During the quarter, we repurchased $350 million of shares. We also increased our quarterly dividend by 14%, marking our 50th consecutive annual dividend increase and earning Carlisle the distinction of a "Dividend King." This milestone reflects the durability of our business model and our long-standing commitment to returning capital to shareholders. Our balance sheet remains strong, and we remain on track with our $1.2 billion share repurchase target for 2026. Our M&A framework remains unchanged, focused on disciplined, synergistic building envelope acquisitions that enhance our systems offering, increase content per square foot, and meet our strict returns criteria.

For the fourth quarter, we expect high-single-digit revenue growth with flat margins, as the benefits of our pricing actions continue to build. Our outlook does not assume a near-term recovery in new construction markets. With the strength of our business model, resilient re-roofing demand, and our leadership position in North America, we remain committed to advancing Vision 2030 through organic growth, acquisitions, margin expansion, and increased cash flow, and we remain confident in our path to our Vision 2030 financial objectives.

Summary of Financial Results

(in millions, except per share amounts and percentages)

(1) Refer to Non-GAAP Financial Measures in this MD&A for more information.

Consolidated Results of Operations

Revenues

(in millions, except percentages)

Revenues increased 9% in the third quarter of 2026. Higher volumes at both CCM and CWT contributed approximately 6%, and realization of price increases and freight surcharges implemented in the second and third quarters to offset input cost inflation contributed approximately 3%.

Revenues increased 5% in the first nine months of 2026. Higher volumes at both CCM and CWT contributed approximately 3%, realization of price increases and freight surcharges implemented in the second and third quarters to offset input cost inflation contributed approximately 1%, and revenues from acquisitions contributed less than 1%.

Gross Profit

(in millions, except percentages)

Gross margin decreased in the third quarter and the first nine months of 2026, primarily driven by inflation of our petrochemical-based raw material inputs, diesel, and freight costs. The rapid increase in oil prices caused by the conflict in the Middle East outpaced the impact of price increases put in place during the second and third quarters.

Selling and Administrative Expenses

(in millions, except percentages)

Selling and administrative expenses increased in the third quarter, primarily due to higher wage and benefit expenses of $7.1 million, driven by increased incentive compensation, and higher commissions expense of $2.8 million, partially offset by lower advertising expenses of $1.3 million.

Selling and administrative expenses decreased in the first nine months of 2026, primarily due to an $11.9 million decrease in acquisition-related costs and professional fees.

Research and Development Expenses

(in millions, except percentages)

Research and development expenses were relatively flat in the third quarter and the first nine months of 2026. Consistent with a key pillar of Vision 2030, the Company remains committed to investing in innovation through the development of new products and solutions that create value by advancing sustainability and energy and labor efficiency.

Interest

(in millions, except percentages)

Interest expense increased in the third quarter and the first nine months of 2026, primarily due to higher long-term debt balances associated with the notes issued on August 20, 2025. Refer to Note 9 for further information on our long-term debt.

Interest income decreased during the third quarter of 2026, primarily due to lower average invested cash balances compared to the third quarter of 2025. Interest income increased during the first nine months of 2026, primarily due to higher average invested cash balances compared to the corresponding period in 2025.

Income Taxes

(in millions, except percentages)

The provision for income taxes on continuing operations decreased during the third quarter of 2026, primarily due to lower pre-tax income. The provision for income taxes on continuing operations increased during the first nine months of 2026, primarily due to lower excess tax benefits from employee stock compensation.

The year-to-date provision reflects an anticipated tax rate of 23.2% and a $3.9 million discrete tax benefit, primarily from excess tax benefits from employee stock compensation, compared to a $12.1 million discrete tax benefit in the first nine months of 2025.

Segment Results of Operations

Carlisle Construction Materials

This segment produces a complete line of premium 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, except percentages)

(1) Refer to Non-GAAP Financial Measures in this MD&A for more information.

CCM’s revenue increased 8% in the third quarter of 2026. Higher volumes from continued execution of strategic initiatives and solid re-roofing demand contributed approximately 5%, and realization of price increases and freight surcharges implemented in the second and third quarters to offset input cost inflation contributed approximately 3%.

CCM’s revenue increased 4% in the first nine months of 2026. Higher volumes from continued execution of strategic initiatives and solid re-roofing demand contributed approximately 3%, and realization of price increases and freight surcharges implemented in the second and third quarters to offset input cost inflation contributed approximately 1%.

CCM's operating margin and adjusted EBITDA margin decreased in the third quarter and the first nine months of 2026, primarily due to raw material, diesel, and freight inflation driven by the conflict in the Middle East, which outpaced pricing realization.

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, except percentages)

(1) Refer to Non-GAAP Financial Measures in this MD&A for more information.

CWT’s revenue increased 9% in the third quarter of 2026. Higher volumes from share gains and weather conditions that drove demand for roof coatings contributed approximately 7%, and realization of price increases implemented in the second and third quarters to offset input cost inflation contributed approximately 2%.

CWT’s revenue increased 6% in the first nine months of 2026. Higher volumes from share gains contributed approximately 5%, realization of price increases implemented in the second and third quarters to offset input cost inflation contributed less than 1%, and the 2025 acquisition of Bonded Logic contributed less than 1%.

CWT’s operating margin and adjusted EBITDA margin increased in the third quarter, driven by the benefits of operating leverage on higher volumes, which were supported by our investments in automation, manufacturing footprint consolidation, and in-house expanded polystyrene resin capacity, combined with building price realization. This more than offset elevated input and freight costs resulting from higher oil prices. Margins for the first nine months of 2026 were relatively flat as higher volumes were offset by elevated input and freight costs.

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 general corporate purposes that include the repayment of outstanding debt, additions to working capital, capital expenditures, investments in our subsidiaries, acquisitions, investments in third parties or the repurchase, redemption or retirement of securities, including our common stock. For further details regarding long-term debt, refer to Note 9.

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

Net cash provided by operating activities for the first nine months of 2026 was $511.2 million, compared to $715.8 million for the first nine months of 2025. The $204.6 million decrease was primarily driven by lower income from continuing operations, excluding non-cash reconciling items, of $42.0 million, higher working capital uses of $74.3 million, and a $125 million post-year-end settlement of an accrued liability related to a transferable energy tax credit acquired in 2025. These decreases were partially offset by larger increases in accrued incentive compensation of $14.9 million and accrued rebates and commissions of $19.2 million driven by higher sales.

Net working capital requirements for the first nine months of 2026 increased by $74.3 million compared to the prior year. Larger increases in accounts receivable of $107.5 million driven by increased sales and inventory of $84.8 million driven by higher raw material costs were partially offset by a $118.0 million larger increase in accounts payable resulting from increased raw material and freight costs.

Investing Activities

Net cash used in investing activities of $106.2 million for the first nine months of 2026 primarily reflected capital expenditures of $106.8 million. 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.

Financing Activities

Net cash used in financing activities of $970.1 million in the first nine months of 2026 primarily reflected share repurchases of $850.0 million and cash dividend payments of $139.6 million. Cash used in financing activities of $165.4 million in the first nine months of 2025 primarily reflected share repurchases of $1.0 billion and cash dividend payments of $135.3 million, partially offset by net proceeds of $987.8 million from the issuance of the notes on August 20, 2025.

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 follow. 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)

20

(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, about our expectations, plans, objectives, future financial performance and other matters that are not historical facts. You can identify these forward-looking statements by our use of words such as "anticipate," "believe," "continues," "estimate," "expect," "forecast," "foresee," "intends," "may," "plans," "project," "pursue," "should," "will" and similar expressions. We cannot guarantee that any forward-looking statement will be realized, although we believe that we have been prudent in our plans, estimates and assumptions. 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 and to assumptions that may prove to be inaccurate. It is possible that our future performance may differ materially from current expectations expressed in, or implied by, these forward-looking statements due to a variety of factors, including:

• increasing price and product/service competition by foreign and domestic competitors, including new entrants;
• significant reliance on our key customers;
• damage to, or prolonged disruption of, our manufacturing facilities;
• 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, energy, and freight 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;
• 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, including product liability claims, and governmental proceedings;
• 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;
• any conflict in the international arena, including the Russian invasion of Ukraine and war in the Middle East; and
• the other factors discussed in the reports we file with, or furnish to, the Securities and Exchange Commission from time to time.

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 us to predict all of those factors, nor can we 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, 2026. 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, 2025 ("2025 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, 2026, 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 2026, 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 2025 Annual Report on Form 10-K.