Carlisle Companies' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Carlisle Companies Incorporated (CSL)

Q1 2012 Earnings Conference Call

April 24, 2012, 08:00 AM ET


David Roberts - Chairman, President and CEO

Steven Ford - Vice President and Chief Financial Officer


James Bank - Citi Investment Research

Joshua Chan - Robert W. Baird & Co.

Saul Ludwig - Northcoast Research

Ivan Marcuse - KeyBanc Capital Markets



Good morning. My name is Brandy and I will be your conference operator today. At this time I would like to welcome everyone to the Carlisle Companies First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you, Mr. David Roberts. You may begin your conference.

David Roberts

Thank you, Brandy. Good morning and welcome to Carlisle’s First Quarter 2012 Conference Call. Attending call with me is our CFO, Steve Ford, our CAO, Kevin Zdimal, and our Treasurer, Julie Chandler. On our website, you will find slides for today’s conference call. Those slides detail our first quarter performance. As in the past this call will provide additional color on our performance, but before we start the slide deck, let me say that our performance in the first quarter was nothing short of outstanding.

We made terrific progress in reaching our long term financial goals plus made another step in the globalization of our business, as we purchased the Dutch EPDM roofing manufacturer, Hertalan.

As we turn to the presentation please review Slide 2, titled forward-looking statements, which details the risk involved in making an investment in Carlisle.

I encourage everyone considering an investment in our company to read this statement and refer to our SEC filings before making any investment decision. Now let’s turn to Slide 3. Slide 3 is a summary of the company’s overall performance in the first quarter. Sales are $890 million, up 28% over the previous year, a first quarter record. 22% of our growth was organic, led by Construction Materials growing organically at 34%, Interconnect Technologies at 29%, Transportation at 15%, Brake & Friction at 12%, and Food Service at 5%. 6% of our total growth or $44 million came from the acquisitions of PDT, Tri-Star, and Hertalan. As a reminder, PDT was purchased on August of 2011, Tri-Star was purchased in December of 2011, and Hertalan was purchased in March of this year.

We gained tremendous leverage on our sales growth with EBIT earnings being up 74% to $96 million in the quarter. Our 28% sales growth and the 96 million we have earned, which included 4.6 million of related acquisition cost was especially strong for our first quarter performance.

Our EBIT margin percentage was 10.8%. Since 1994, we reported double-digit margins in the first quarter three [ph] of the times, but the 10.8% this quarter was the highest margins we have generated in any first quarter in that 18-year period. In addition, our EPS was up 77% to $0.94.

Slide 4 is the sales bridge for the first quarter. Price contributed 6.6% to our growth, volume contributed 15.5% and acquisitions contributed 6.3%. FX had very little impact with a negative 20 basis points.

Slide 5 details our increase in margin from 8% in 2011 to 10.8% this quarter. 1.1% of our margin increase came from volume, 1.1% came from price debt of raw materials, 0.8% came from the improvements through the Carlisle operating system, while other costs negatively impacted our margin 0.2%.

Slide 6, begins our review of the individual business segments, starting with our largest segment, Construction Materials. On March 9, we acquired Hertalan, which is headquartered in the Netherlands. When Hertalan and PDT which was acquired in 2011 are combined, we are now one of the largest manufacturers of the EPDM roofing in Europe.

These acquisitions added 7% to our 41% sales growth in the quarter. When analyzing our 34% organic growth, you will see that 10% came from price and the remaining 24% was volume. Considering the volume was up 24%, you get a feel for the strength of our Construction Materials market.

EBIT was up a 133% with the business earning $42 million compared to $18 million last year. Reaching price parity with raw material cost at the end of 2011 enabled us to increase our profitability compared to last year during the quarter. Negatively impacting the 42 million of EBIT was $3.1 million of expenses associated with our acquisition of Hertalan.

Slide 7 gives you a snapshot of the progress we’ve made improving the profitability in our transportation products segment. Our sales grew 15% in the quarter with 8% of that growth coming from price. We’re seeing strong volume coming from our Ag markets. Our largest customer in this segment continues to increase their forecast, which in turn drives higher demand for our products that we are supplying them.

We’re also seeing strong growth in our high speed trailer business, driven by the penetration of a large national tire retailer with our new radial trail RH trailer tire. Our power sports customers are also enjoying strong sales of their ATV and UTV products which drive the demand of our tires and wheels.

EBIT was up 46%, from $13.5 million in 2011 to $19.7 million in 2012. We received price increases that offset our raw material cost increases and our Jackson plant is running at forecasted level of efficiency with scrap rates slightly below our original planned rates. As a reminder, we had $2 million with the plant restructuring cost in the first quarter of 2011 last year, which didn’t repeat.

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