Carlisle Companies Incorporated (CSL)

CSL 
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Carlisle Companies Incorporated (CSL)

Q4 2009 Earnings Call Transcript

February 3, 2010 10:00 am ET

Executives

David Roberts – Chairman, President and CEO

Steve Ford – VP and CFO

Kevin Forster – President, Asia-Pacific

Fred Sutter – President, Engineered Transportation Solutions

Analysts

Saul Ludwig – KeyBanc Capital Markets

Peter Lisnic – Robert W. Baird

Deane Dray – FBR Capital Markets

Alan Metroney – Sylvan Lake

Presentation

Operator

Good morning. My name is Marci and I will be your conference operator today. At this time, I would like to welcome everyone to the Carlisle Companies Incorporated Fourth 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.

I would now like to turn the call over to Mr. David Roberts, Chairman, President and CEO of Carlisle Companies. Thank you, Mr. Roberts. You may begin your conference.

David Roberts

Thank you, Marci. Good morning and welcome to our year-end 2009 conference call. In the room with me is Steve Ford, Kevin Forster and Fred Sutter, the President of Engineered Transportation Solutions. In a few minutes Steve will give you a detailed summary of our performance in the fourth quarter and the full year.

Before I turn the floor over to Steve, let me brief you on some of the changes we announced a few days ago. Keeping with our strategic direction to divest of non-core businesses, yesterday we completed the sale of Johnson Truck Bodies. Our Refrigerated Truck Body business is located in Rice Lake, Wisconsin. This may be seen odd as it was the business that grew organically in 2009. But JTB, while it is a good business, it added to the complexity of Carlisle and was not a strategic growth platform.

A few days ago, we also announced the sale of our EcoStar roofing business. EcoStar utilized recycled rubber to manufacture a line of synthetic tile and shake roofing products for the residential construction market. As with JTB, EcoStar was a small and non strategic business. Both businesses are better suited with another parent.

Also contained in the press release is a realignment of our business segments. We're combining our tire and wheel, power transmission and industrial brake and friction business into a segment called Engineered Transportation Solutions. In many instances, these businesses share a common customer base and common manufacturing technologies.

Looking at each individually and then as a combined group, it was obvious that we could create value for our customers by having one sales force, a dedicated engineering organizations supporting our customers' need and one back office billing the customers.

With an increased emphasis on product development, strategic selling, we will become a more important supplier to these customers. While we made this change to better serve our customer, we also feel that there are cost synergies in combining the businesses as well.

Another change is the elimination of the Applied Technologies segment. Both FoodService and Interconnect Technologies have grown to a size to where they're large enough to be their own segment. Going forward, both will be reported independently.

With the sale of Johnson Truck Bodies, the specialty products segment is Trail King. To make it easier for everyone to run comparisons to previous years, we are reporting 2009 results in this new segmentation alignment.

In keeping with the productivity improvements that have been in process over the last 12 months, or 18 months, we've also announced the closing of our Interconnect Technologies plant in Vancouver, Washington and the CIBF plant in Logansport, Indiana in the fourth quarter. We are in the process of closing these facilities and both should be closed by the end of the first quarter. A detailed expense summary describing this plus other restructuring charges in the quarter and the year were included in the press release. As you can see from our fourth quarter and yearly results, progress continues to be made in achieving our strategic objectives.

Now let me turn the call over to Steve to explain in detail our performance during the quarter. Steve?

Steve Ford

Thanks, Dave and good morning. We have included a supplemental schedule to our financials highlighting significant items included in our fourth quarter and full-year results. Carlisle reported a year-over-year decline in sales of 15% for the fourth quarter 2009. Organic sales were down 17%, offset by 2% sales growth from the Jerrik, ECS and Japan Power Brake acquisitions.

EBIT decreased 4% for the fourth quarter 2009 compared with 2008. Lower sales volume as well as $17.3 million of asset impairment and restructuring expenses were substantially offset by favorable raw material pricing and efficiencies gained through the Carlisle operating system allowing us to increase EBIT margins from 4.3% in the fourth quarter 2008 to 4.8% for the current quarter. For the full year, EBIT margins improved to 8.7% as compared to 6% for 2008 which now includes a $69 million impairment charge at our power transmission belt business.

For the quarter, we reported net income from continuing operations of $35.6 million or $0.57 per diluted share compared with 15.4 million or $0.25 per diluted share in the fourth quarter 2008. Fourth quarter results were positively impacted by reduced interest expense and the release of a $19.6 million tax accrual provided with respect to foreign earnings.

We continue to be very pleased by the impact the Carlisle Operating system is having on our cash flows. For the year, we generated 447 million of net cash from operations as compared to 274 million for the same period 2008. The improvement in year-over-year cash flow was driven by improvements in inventory management, a primary focus of COS.

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