Segment Results for Fourth Quarter 2012
Carlisle Construction Materials (CCM):
Net sales in the fourth quarter 2012 increased 9.7% to $415.2 million, reflecting organic growth of 7.8% and acquisition growth of 2.2%. The acquisition of Hertalan added $8.5 million to net sales during the fourth quarter of 2012. Organic growth of 7.8% primarily reflected higher sales volumes from increased roofing membrane demand along with strong sales of insulation products. Overall EBIT margin at CCM rose 400 basis points to 16.0% in the fourth quarter primarily due to higher sales volume, higher selling price and operational expense savings.
Carlisle Transportation Products (CTP):
Net sales in the fourth quarter 2012 increased by 4.9% to $161.7 million, primarily reflecting higher sales volume. Sales in the high-speed trailer and power transmission belt markets grew by 21% and 14%, respectively. Sales in the outdoor power equipment and agriculture/construction markets were relatively level to the prior year period. EBIT margin improved significantly from negative 2.5% in the prior year period to positive 2.9% in the current quarter due to savings from plant restructuring activities, savings from the Carlisle Operating System and higher sales volume. EBIT in the fourth quarter of 2012 included $1.0 million of restructuring costs for the relocation of transmission belt manufacturing from Buji, China to Springfield, MO and Fort Scott, KS.
Carlisle Brake & Friction (CBF):
Net sales in the fourth quarter 2012 decreased 25% to $87.7 million, due primarily to lower volumes as OEM’s reduced orders to adjust inventory levels. Sales for CBF’s off-highway braking applications to the construction, mining and agriculture markets declined by 41%, 19%, and 8%, respectively. CBF’s EBIT margin during the fourth quarter decreased 320 basis points to 10.1%, primarily due to lower sales volumes, partially offset by cost reduction measures and lower raw material costs.
Carlisle Interconnect Technologies (CIT):
Net sales in the fourth quarter 2012 grew 42% to $122.7 million on organic sales growth of 18% and acquisition growth of 24%. CIT’s sales to the commercial aerospace market increased by 24%. This increase was partially offset by lower sales in the military and test and measurement markets of 1% and 19%, respectively. The acquisition of Tri-Star in December 2011 and Thermax in December 2012 contributed $20.6 million to net sales during the fourth quarter 2012. CIT’s margin improvement of 130 basis points to 13.3% reflected leverage on higher sales volume. Included in EBIT in the fourth quarter 2012 was $1.4 million in charges for acquisition costs and expense recognized in the period for fair valuation of acquired inventory for the Thermax acquisition. By comparison, EBIT in the fourth quarter 2011 included $2.1 million in acquisition related expense.
Carlisle FoodService Products (CFS):
Net sales in the fourth quarter 2012 increased by 6.8% to $58.0 million, primarily reflecting higher selling prices and lower customer rebates compared to the prior year period. CFS incurred restructuring charges of $0.9 million during the fourth quarter to consolidate distribution and manufacturing operations to Oklahoma City, OK. By comparison, CFS’ EBIT during the fourth quarter 2011 included $1.6 million in severance costs. CFS’ EBIT margin during the fourth quarter 2012 increased to 4.0%, inclusive of restructuring costs, from a loss of 3.9% in the same prior year period on higher selling price, lower rebate allowances and lower operating expense.
The increase in corporate expense for the fourth quarter 2012 to $21.3 million from $12.7 million in the prior year period included $5.6 million in non-cash charges related to the settlement of pension obligations. During the quarter, the Company offered certain former employees who participate in the Company’s core pension plan the option to receive a one-time lump sum payment equal to the present value of the participant’s pension benefit. A total of $15 million in lump sum distributions were paid out under this offer, which ended during the fourth quarter of 2012. Also included in corporate expense for the fourth quarter 2012 were $2.9 million in expenses related to acquisition pursuits and business development activity.