Carlisle Benefits From Business Strength Amid Persisting Headwinds

Carlisle Companies Incorporated CSL has been benefiting from strength in the Construction Materials segment, driven by the solid demand for reroofing products. Growing re-roof activity and inventory normalization in the non-residential construction market have been driving the segment’s performance. Driven by the strength across its businesses, CSL projects revenues to increase 10% in 2024 from the year-ago level.

The company remains focused on acquiring businesses to gain access to new customers, regions and product lines. In October 2024, it entered into an agreement to acquire Plasti-Fab. The buyout is expected to expand its building envelope product portfolio and strengthen its position in the North American polystyrene insulation market.

In May 2024, Carlisle acquired MTL Holdings from GreyLion Partners. The inclusion of MTL’s solid pre-fabricated edge metal products portfolio enabled CSL to expand its customer offerings and boost its architectural metals business.  Also, its buyout of Polar Industries in November 2023 expanded its polystyrene and graphite polystyrene portfolio, thereby boosting its Weatherproofing Technologies segment. Buyouts had a positive impact of 2% on net sales growth in the nine months of 2024.

The company also remains committed to rewarding its shareholders with dividend payouts and share buybacks. For instance, in the first nine months of 2024, it remunerated its shareholders with a dividend of $127.4 million and repurchased shares worth $1.17 billion. Also, the quarterly dividend rate was hiked 18% in August 2024.

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In the past six months, this Zacks Rank #3 (Hold) company’s shares have gained 10.4% against the industry’s 8.2% decline.

However, the slowdown in the residential construction market and project delays are adversely affecting the Weatherproofing Technologies segment. In the third quarter, organic revenues from the segment declined 4% on a year-over-year basis.

The company has been dealing with escalating operating costs and expenses. In the first nine months of 2024, its selling and administrative expenses and cost of sales rose 17.2% and 6.8%, respectively, on a year-over-year basis.

Also, the high debt level is an added concern. Exiting the third quarter, CSL’s long-term debt and current maturities totaled $2.3 billion. Considering the high debt level, its cash and cash equivalents of $1.5 billion do not look impressive.

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