4 th Quarter 2018 Earnings Conference Call February 7, 2019 - - PowerPoint PPT Presentation

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4 th quarter 2018 earnings conference call
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4 th Quarter 2018 Earnings Conference Call February 7, 2019 - - PowerPoint PPT Presentation

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4 th Quarter 2018 Earnings Conference Call February 7, 2019 Forward-looking statements Non-GAAP financial measures Certain ratios related to our Revolving Credit Facility of Earnings During this presentation, we make certain forward-looking

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February 7, 2019

4th Quarter 2018 Earnings Conference Call

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Forward-looking statements

During this presentation, we make certain forward-looking statements concerning plans and expectations for Carlisle Companies Incorporated. We caution you that actual events

  • r results may differ materially from our plans and
  • expectations. See our Form 10-Q for third quarter 2018 filed

with the Securities and Exchange Committee, these slides and the remarks in the conference call and webcast, the fourth quarter and full year 2018 financial results 8-K and release, and our Form 10-K to be filed for 2018 for risks and uncertainties which could cause actual results to differ materially from current expectations.

Non-GAAP financial measures

Certain ratios related to our Revolving Credit Facility of Earnings before Interest, Income Taxes, Depreciation and Amortization (“EBITDA”), Free Cash Flow, Net Debt, Net Debt to EBITDA ratio, and Net Debt to Capital Ratio are not measures of liquidity

  • r financial condition under US GAAP. Our Revolving Credit

Facility allows us to exclude non-cash impairment charges in the computation of EBITDA. See slide 16 and the appendix to this presentation for a reconciliation of these measures to the most directly comparable GAAP measures. Throughout this presentation each non-GAAP measure is denoted with an *.

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  • Exceeded organic revenue growth target of 5% for Q4 and FY
  • Demonstrated sustained price leadership, driving over 20%

increase in operating income

  • Realized FY COS savings and benefits of 1.6%, in line with
  • ur targeted 1-2% of annual sales
  • Announced the acquisition of Petersen Aluminum

Corporation, which closed Jan 11, 2019, and completed the sale of Carlisle FoodService Products in Mar 20, 2018

  • Returned approximately $550M to shareholders through

share repurchases and dividends YTD

  • $459.8M cash repurchases of shares
  • $93.5M of dividends

Executing on Vision 2025 Plan

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2018 Q4 Highlights

Record Q4 revenue, up 8.8%

  • 5.3% organic revenue growth
  • Strong organic growth at CIT and CFT
  • Solid price realization at CCM, CBF, CFT
  • 4.3% acquisition growth
  • Unfavorable FX and adoption of ASC 606

revenue recognition standard each had a negative 0.4% impact Operating income increased 22.7%

  • Higher volume, price realization, and savings

from COS

  • Partially offset by raw material, freight and

labor-related costs and accelerated restructuring costs at CBF

Financial Summary

(in millions, except per share amounts)

Q4 '18 Q4 '17 Δ

Revenues

$1,077.3 $990.5 +8.8%

Operating income

$114.6 $93.4 +22.7%

Income from continuing operations, net of tax

$89.1 $108.9

  • 18.2%

Diluted EPS from continuing

  • perations

$1.49 $1.73

  • 13.9%

Items affecting comparability

$0.09 $(0.65)

  • 113.8%

Solid operating margin improvement at CIT and CFT 23rd consecutive quarter of year-over- year sales growth

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2018 Q4 Revenue Bridge

Q4 '17 Organic Revenue Recognition Acquisitions FX Q4 '18

+5.3% +4.3% Organic Revenue by Segment

Construction Materials +2.8% Interconnect Technologies +12.7% Fluid Technologies +5.8% Brake & Friction +4.9%

$1,077.3

(in millions)

$990.5

  • 0.4%
  • 0.4%
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2018 Q4 Operating Margin Bridge

Q4 '17 Price/Volume COS Acquisitions Raw Materials/ Other Operating Costs Restructuring/ Rationalization Costs Q4 '18

9.4%

+2.3% +1.3%

  • 0.5%
  • 1.7%
  • 0.2%

10.6%

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2018 Q4 EPS Bridge

Q4 '17 Volume Price COS Raw Material, Freight & Labor Related Costs Tax Items Share Repurchase Q4 '18

$1.73

+$0.10 +$0.14 +$0.21

  • $0.25
  • $0.51

+$0.07

$1.49

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Carlisle Construction Materials

  • Q4 Notable Commercial Items:
  • Strong demand in North American non-residential construction markets
  • $15.9M of price realization through excellent price discipline
  • 40% growth in new product sales
  • Announced acquisition of Petersen Aluminum Corporation
  • Operating Income:
  • Driven by price, COS savings and lower items affecting comparability
  • Partially offset by rising raw material, freight and labor related costs
  • Met year one deal model Accella synergies of $10M

Three Months Ended December 31, Acquisition Effect Price / Volume Effect Exchange Rate Effect (in millions) 2018 2017 Change $ Change % Revenues

$ 676.3 $ 618.7 $ 57.6 9.3% 6.6% 2.8% (0.1)%

Operating income

$ 97.3 $ 87.7 $ 9.6 10.9%

Operating margin percentage

14.4% 14.2% +20bps

Items affecting comparability

$ 0.5 $ 5.8

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Carlisle Interconnect Technologies

  • Q4 Notable Commercial Items:
  • Strong finish to 2018
  • Aerospace/higher content per plane driving growth
  • MedTech and Test & Measurement pipeline still strong
  • Revenue Recognition of -$4.4M of sales, or -2.1%
  • Operating Income:
  • Strong leverage on sales driven by higher volume, lower facility rationalization and

restructuring costs, and COS

  • Offset partially by unfavorable mix and labor-related costs

Three months ended December 31, Acquisition Effect Price / Volume Effect Exchange Rate Effect (in millions) 2018 2017 Change $ Change % Revenues

$ 231.6 $ 208.5 $ 23.1 11.1% 0.7% 10.6% (0.2)%

Operating income

$ 33.3 $ 21.9 $ 11.4 52.1%

Operating margin percentage

14.4% 10.5% +390bps

Items affecting comparability

$ 2.2 $ 3.9

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Carlisle Fluid Technologies

  • Q4 Notable Commercial Items:
  • Strength in General Industrial market
  • Powder sales up over 20%
  • Solid demand in U.S. and Europe
  • Pricing gains of 1.5%
  • Operating Income:
  • Excellent operating income performance
  • Executing on discipline around cost controls, vertical integration and COS initiatives

Three Months Ended December 31, Acquisition Effect Price / Volume Effect Exchange Rate Effect (in millions) 2018 2017 Change $ Change % Revenues

$ 82.4 $ 79.0 $ 3.4 4.3% — % 5.8% (1.5)%

Operating income

$ 12.0 $ 3.7 $ 8.3 224.3%

Operating margin percentage

14.6% 4.7% +990bps

Items affecting comparability

$ 0.4 $ 3.5

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Carlisle Brake & Friction

  • Q4 Notable Commercial Items:
  • Construction, Ag, Mining markets moderated but stable
  • Price recovery of 4.0% offset raw material headwinds
  • Sales pipeline for carbon products growing
  • Operating Income:
  • Accelerated footprint consolidation drove operating loss as expected
  • Footprint consolidation largely complete
  • Price and COS positive drivers

Three Months Ended December 31, Acquisition Effect Price / Volume Effect Exchange Rate Effect (in millions) 2018 2017 Change $ Change % Revenues

$ 87.0 $ 84.3 $ 2.7 3.2 % — % 4.9% (1.7)%

Operating income

$ (7.1) $ (1.2) $ (5.9) (491.7)%

Operating margin percentage

(8.2)% (1.4)%

  • 680bps

Items affecting comparability

$ 9.1 $ 2.1

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Focused on Capital Structure Optimization

  • Cash on hand of $803.6M as of 12/31/18
  • $1B available under revolver
  • $93.5M capital returned to shareholders

FY18 in quarterly dividends

  • Utilized $459.8M of cash to repurchase

shares FY18

  • 2.7M shares remaining under authorization as
  • f 12/31/18
  • Net debt to cap ratio of 23%*
  • Net debt to EBITDA of 1.1x*
  • EBITDA to interest of 11.2x*

Debt Maturity Schedule

2020 2022 2024 2027

Senior Note $250M 5.125% Senior Note $400M 3.5% Senior Note $600M 3.75% Senior Note $350M 3.75%

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Cash Flow

Operating Cash Flow Capital Expenditures Free Cash Flow * $450 $350 $250 $150 $50

  • $50
  • $150

(in millions) Q4 '17 FY '17 Q4 '18 FY '18

Q4 '17 FY '17 Q4 '18 FY '18 Operating Cash Flow $159.1 $458.7 $236.6 $339.2 Capital Expenditures $(54.1) $(159.9) $(24.6) $(120.7) Free Cash Flow * $105.0 $298.8 $212.0 $218.5

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2019 Outlook

FY2019 Revenue Restructuring, facility rationalization acquisition/ divestiture related items

Growth y/y 1Q19 FY19 CCM HSD/LDD ~$5-7 ~$5-7 CIT MSD ~$5-6 ~$14-16 CFT MSD ~$0-1 ~$1-3 CBF LSD ~$0-1 ~$1-2 Corporate ~$0-1 ~$1-2 Total CSL HSD ~$10-15 ~$23-27

FY 2019

Corporate Expense ~$75-$80M D&A ~$200M CapEx ~$110-$125M FCF Conversion ~100% Net Interest Expense ~$55-60M Tax Rate ~25%

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Appendix

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Reconciliation of GAAP to Non-GAAP Measures

Unaudited Leverage Ratios under Credit Agreement

(in millions except for ratios) LTM 12/31/2018 Income from Continuing Operations $ 359 Income tax expense 87 Interest expense 65 Depreciation and amortization 186 Non-cash stock based compensation expense 26 EBITDA per revolving credit agreement $ 723 Short-term debt including current maturities $ Long-term debt principal 1,600 Total debt $ 1,600 Less: Cash in excess of $151 789 Debt per revolving credit agreement $ 811 Net debt to EBITDA 1.1x EBITDA to interest 11.2

1 If the outstanding balance on the revolving credit facility is $0, cash in excess of

$15 million is deducted from debt. $0 outstanding on 12/31/2018

Net Debt to Capital Ratio

(in millions except for ratios) Capital Total debt $ 1,600 Net debt $ 796 Less: cash $ 804 Total shareholders' equity $ 2,597 Net debt $ 796 Total capital (net of cash) $ 3,394 Net debt to capital 23%