Carlisle Companies Incorporated — FY2021 Form 10-K
Business context and period. This annual report covers the fiscal year ended December 31, 2021; it is not a standalone fourth-quarter report. Carlisle manufactures building-envelope products (CCM), interconnect products for aerospace, defense, medical and industrial markets (CIT), and fluid-finishing equipment (CFT). Management reported record fourth-quarter revenue, operating income, EPS and adjusted EBITDA, but the filing text does not provide clear fourth-quarter amounts.
Key financial results
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $4,810.3 million | $3,969.9 million |
| Operating income / margin | $567.5 million / 11.8% | $487.8 million / 12.3% |
| Gross margin / rate | $1,314.7 million / 27.3% | $1,137.4 million / 28.7% |
| Income from continuing operations | $387.0 million | $325.7 million |
| Net income | $421.7 million | $320.1 million |
| Diluted EPS, continuing operations | $7.26 | $5.90 |
| Diluted EPS, total | $7.91 | $5.80 |
| Adjusted EBITDA (non-GAAP) / margin | $833.5 million / 17.3% | $722.4 million / 18.2% |
| Operating cash flow | $421.7 million | $696.7 million |
| Capital expenditures | $134.8 million | $95.5 million |
| Cash and cash equivalents at year-end | $324.4 million | $897.1 million |
Revenue rose 21.2%, primarily on CCM and CFT volume and price realization, the Henry acquisition and favorable currency effects; CIT volumes remained weak. Operating income grew 16.3%, but operating and gross margins declined, mainly due to raw-material, wage and freight inflation, acquisition-related amortization and costs, and higher stock compensation.
Segments
- CCM: Revenue $3,836.7 million, up 28.1%; operating income $684.3 million, up 17.7%; margin 17.8%, down from 19.4%. Growth reflected roofing demand, pricing and Henry.
- CIT: Revenue $687.8 million, down 6.0%; operating loss $17.5 million versus a $2.1 million loss. Aerospace demand remained depressed; restructuring and cost actions continued.
- CFT: Revenue $285.8 million, up 17.8%; operating income $24.0 million versus $5.3 million. Higher volume, pricing and operating efficiencies contributed.
Material changes, liquidity and capital allocation
- Acquired ASP Henry Holdings in September 2021 for approximately $1.606 billion; it contributed $177.3 million of revenue and $6.3 million of operating income through year-end. Purchase-price allocation remained preliminary.
- Sold Carlisle Brake & Friction in August 2021 for $250 million at closing, subject to adjustments, plus potential performance-based consideration of up to $125 million. The company recorded a $125 million receivable and expected collection in the first half of 2022. CBF is reported as discontinued operations.
- Operating cash flow fell to $421.7 million, including a $275.2 million working-capital use, chiefly from higher receivables and inventory. Investing cash outflow was $1,486.4 million, principally due to Henry; financing provided $488.1 million.
- Year-end debt carrying value was $2,927.4 million, including $352.0 million current; cash was $324.4 million. The $1.0 billion revolving facility was undrawn, and the company reported covenant compliance. Management said available cash, facility capacity and operating cash flow should meet requirements for at least 12 months.
- Issued $850 million of notes in September: $300 million at 0.55% due 2023 and $550 million at 2.20% due 2032. Share repurchases were $315.6 million and dividends paid were $112.5 million in 2021.
Outlook, risks and unusual items
Management forecast 2022 revenue growth of approximately 30% for CCM, 10% for CIT and 10% for CFT, with total company growth of 25–30%. Drivers included pricing, re-roofing and energy-efficiency demand, Henry, CIT backlog, product introductions and strengthening markets. Planned 2022 capital expenditures were approximately $150 million, primarily for CCM. Management also indicated opportunistic share repurchases and continued investment in growth; the filing does not provide earnings or margin guidance.
- Principal operating pressures include persistent inflation, material and freight cost volatility, supply-chain constraints, labor shortages and COVID-19-related uncertainty. Construction demand is seasonal and cyclical; aerospace recovery remained uncertain.
- CCM accounted for approximately 80% of consolidated revenue; two CCM customers together represented 24.7% of company revenue, creating customer-concentration risk.
- CIT Medical goodwill fair value exceeded carrying value by approximately 10%, leaving sensitivity to future results, discount rates and market multiples. Two trade names with a combined $43.3 million carrying value had less than 10% headroom.
- Reported 2021 results included $54.0 million of non-comparable items, including restructuring, acquisition and inventory step-up costs, impairments and acquisition/disposal-related items. Discontinued operations included a $24.8 million tax benefit and an $8.0 million pretax loss on the CBF sale.
- Auditors issued unqualified opinions on the financial statements and internal control. Henry was excluded from management’s and the auditor’s internal-control assessment; it represented approximately 27% of year-end assets and 4% of 2021 revenue.
- Management identified no material environmental accruals and said ordinary-course litigation outcomes were not expected to have a material adverse effect; asbestos claims and insurance coverage remain subject to uncertainty.
Important facts for investors to verify
- Whether CCM’s unusually large $1.7 billion year-end backlog converts to revenue as expected in 2022, and whether price realization offsets inflation without further margin erosion.
- Henry’s integration, final purchase accounting, ongoing contribution and the assumptions supporting its acquired intangible assets and goodwill.
- The timing and amount of the CBF contingent proceeds, and the company’s treatment of any performance-based consideration.
- CIT’s aerospace recovery, backlog conversion and restructuring costs, alongside the limited goodwill headroom at CIT Medical.
- Working-capital normalization, cash generation, the 2022 maturity of $350 million of notes, and planned capital spending and shareholder returns.