Carlisle Companies Reports a 30% Increase in Third Quarter Income from Continuing Operations

Business Wire, Oct 20, 2004

CHARLOTTE, N.C. -- Carlisle Companies Incorporated (NYSE:CSL) reported income from continuing operations of $32.1 million, or $1.02 per diluted share in the third quarter 2004, compared to $24.8 million or $0.81 per diluted share from continuing operations in the third quarter 2003.

Net sales of $631.3 million in the third quarter 2004 were 17% over third quarter 2003 net sales of $541.5 million. Carlisle net sales and income from continuing operations set records for the third quarter and the first nine months of the year. Organic net sales growth of $87.0 million, or 16% in the third quarter 2004, accounted for substantially all the increase over the third quarter 2003 and included $3.4 million of favorable changes in foreign currency rates. The impact of foreign currency rates on income was negligible. The growth in net sales was primarily attributable to the Construction Materials and Industrial Components segments. Acquisitions contributed $5.5 million of the growth in the third quarter 2004 net sales, partially offset by $2.7 million in divestitures.

Net sales of $1.83 billion for the nine month period ended September 30, 2004 were 17% above the first nine months 2003 net sales of $1.55 billion. Income of $96.3 million, or $3.06 per diluted share from continuing operations in the first nine months 2004, compared to $70.7 million or $2.30 per diluted share from continuing operations in the first nine months 2003.

Income from continuing operations in the third quarter 2004 included a $0.03 per diluted share charge related to exit and disposal activities, compared to a $0.10 per diluted share charge in the third quarter 2003. Income from continuing operations for the first nine months of 2004 included a $0.06 per diluted share charge for exit and disposal activities, compared to a $0.14 per diluted share charge in the first nine months of 2003.

The Company lowered its estimated tax rate from 32.50% to 32.25% for the nine months and full year 2004. This adjustment to record the change in estimated tax rate resulted in a favorable impact on income from continuing operations of $0.3 million or $0.01 per diluted share in the third quarter 2004.

Richmond McKinnish, Carlisle's President and CEO said, "We were pleased with our organic sales growth in the third quarter, but were unable to realize the full benefit of this increase in our earnings. We have been successful in obtaining selling price increases in many of the markets we serve; however, we have not kept pace with the steep rise in raw material costs. Additional selling price increases are planned. We are increasing guidance for income from continuing operations to $3.60 to $3.70 per diluted share."

Third Quarter Segment Results

The following segment discussion excludes the impact of discontinued operations.

Industrial Components net sales in the third quarter 2004 of $178.1 million were 19% above $149.1 million in the third quarter 2003. Third quarter 2004 net sales at Carlisle Tire & Wheel Company were 25% above third quarter 2003 as a result of increased sales across all product lines, with most of the increase attributable to sales of commercial and consumer power equipment lawn care products and ATV tires and wheels. Carlisle Power Transmission net sales were 4% above the third quarter 2003 with most of the sales improvement in the lawn and garden and agricultural markets. Third quarter 2004 segment earnings before interest and income taxes ("EBIT") of $11.2 million were slightly above $11.0 million in the third quarter 2003. The disappointing earnings results in this segment were primarily caused by the continuing rise in raw material prices for steel in the wheel business and oil-based commodities used in the tire manufacturing process. Selling price increases were implemented in the third quarter at Carlisle Tire & Wheel, but the financial impact of the increases was not sufficient to fully offset the continuing rise in raw material costs.

Construction Materials net sales of $215.5 million in the third quarter were 23% above the third quarter 2003 net sales of $174.7 million with strong demand across most product lines. Third quarter 2004 EBIT of $33.7 million was 17% above the third quarter 2003 EBIT of $28.8 million and included a 20% increase in earnings at Carlisle SynTec. The improvement in EBIT at Carlisle SynTec was due primarily to the increase in net sales volume, partially offset by product mix and increasing raw material costs. Earnings at Carlisle's European roofing joint venture, Icopal, were 3% below the third quarter 2003 primarily due to currency fluctuations.

Automotive Components net sales of $46.3 million in the third quarter 2004 were 10% above the third quarter 2003 of $42.1 million. New programs at Carlisle Engineered Products' major automotive customers offset the slightly lower North American vehicle production in the third quarter 2004 versus the third quarter 2003. The $(0.9) million EBIT loss in the third quarter 2004 included $1.0 million of exit and disposal costs at Carlisle Engineered Products' Bundy Park plant in Erie, PA. The third quarter also included approximately $2.0 million of losses as a result of excess manufacturing and inspection costs caused by the transfer of defective tooling provided by a customer as part of their supply program. This was partially offset by a $1.1 million settlement with the customer in the third quarter. The $(2.5) million EBIT loss in the third quarter 2003 primarily related to $2.7 million of exit and disposal costs at the Bundy Park plant in Erie, PA.