Carlisle Companies (NYSE:CSL) reported record second-quarter revenue and adjusted earnings per share as reroofing demand, commercial execution and strategic growth initiatives offset continued weakness in new construction markets and rising input costs.
Revenue rose 8% year over year to a record $1.6 billion, while adjusted EPS increased 12% to a record $7.03, according to Chief Financial Officer Kevin Philip. Adjusted EBITDA increased 6% to $412 million, though the adjusted EBITDA margin declined 70 basis points to 26.2% as raw-material and freight costs rose faster than pricing realization.
Pricing Actions Expected to Gain Traction
Philip said Carlisle implemented three broad-based price increases and freight surcharges in response to higher costs affecting its roofing and insulation product lines. The company expects price realization to build during the second half, reaching mid-single-digit growth in the third quarter and high-single-digit growth in the fourth quarter.
“Price realization typically lags rising costs,” Philip said, noting that committed quotes and customer notification periods contributed to negative price-cost effects in the second quarter. He said pricing is expected to turn positive in the fourth quarter.
In response to an analyst question, Philip said the second-quarter price-cost impact at Carlisle Construction Materials, or CCM, was approximately negative $40 million. He expects the business to return to roughly neutral price-cost performance in the third quarter and become modestly positive in the fourth quarter.
CCM Delivers Record Sales Despite New Construction Weakness
CCM, Carlisle’s largest segment, posted record revenue of $1.2 billion, up 8% from a year earlier. Reroofing demand grew approximately 3%, while commercial new construction declined by the mid-single digits. Customer purchases ahead of announced price increases contributed a couple of percentage points to growth, management said.
CCM adjusted EBITDA rose 5% to $363 million, while its adjusted EBITDA margin fell 90 basis points to 30.7%. Philip said higher volumes helped offset elevated inflation, allowing the segment to maintain a margin above 30%.
Christian David, Carlisle’s board chair, president and CEO, said the overall market was “pretty much flat,” with data centers representing a relatively stronger area. He said some data-center specifications are opening to premium TPO roofing products as an alternative to PVC, which has faced supply constraints.
David also said Carlisle has been able to secure supplies of MDI, an input used in insulation products, despite tightening availability. He said other market participants could face greater constraints, though Carlisle did not provide details on competitors’ supply positions.
CWT Gains Share and Builds Efficiency Benefits
Carlisle Weatherproofing Technologies, or CWT, increased revenue 10% to $389 million, as share-gain initiatives more than offset softness in residential and non-residential construction. Adjusted EBITDA increased 5% to $74 million, and adjusted EBITDA margin was 19%, down 90 basis points from the prior year but up 380 basis points sequentially from the first quarter.
Management attributed the sequential margin improvement to investments in automation, footprint consolidation and in-house expanded polystyrene resin capacity. Mehul Patel, vice president of investor relations, said those initiatives are expected to produce about $20 million of full-year margin expansion.
- Automation contributed approximately $3 million during the second quarter.
- Footprint consolidation added about $1 million.
- In-house expanded polystyrene capability contributed roughly $2 million to $3 million.
Patel said CWT’s share gains are being supported by waterproofing, spray foam and insulation initiatives. Advanced waterproofing products are expected to contribute approximately $15 million this year, while a direct-to-contractor spray foam strategy is expected to add about $10 million. UltraTouch Denim insulation, sold through Home Depot stores, is expected to contribute $4 million to $5 million this year.
For the second half, Carlisle assumes CWT end markets will remain weak, with overall markets down about 2%. Management expects residential new construction to be down low single digits and commercial new construction to decline by the mid-single digits. CWT revenue is still projected to increase by the mid-single digits for the full year, aided by share gains and pricing.
Innovation, Capital Returns and Vision 2030
David said innovation remains central to Carlisle’s goal of delivering more than 5% organic growth. The company shipped its first orders of ThermaThin 7 polyiso insulation in June, ahead of schedule. Carlisle said the product provides approximately 23% higher R-value per inch than standard polyiso insulation in many conditions.
The company plans to launch about a dozen new products in 2026, with half already introduced. Additional launches include a high-yield closed-cell spray foam product scheduled for August. Carlisle remains on track toward its Vision 2030 goal of generating 25% of total sales from products introduced during the prior five years.
At June 30, Carlisle had $665 million in cash and cash equivalents, $1 billion available under its revolving credit facility, and net debt to EBITDA of 1.7 times. Second-quarter operating cash flow from continuing operations was $244 million, while free cash flow was $203 million.
The company repurchased $250 million of shares in the quarter, bringing year-to-date repurchases to $500 million. Carlisle increased its full-year repurchase target to $1.2 billion from $1 billion and returned $590 million to shareholders in the first half, including $90 million in dividends.
Management continues to expect full-year return on invested capital of approximately 25%, free-cash-flow margin of approximately 15% and double-digit adjusted EPS growth. Carlisle reiterated its Vision 2030 targets of $40 in adjusted EPS and return on invested capital above 25%.
About Carlisle Companies (NYSE:CSL)
Carlisle Companies Inc is a diversified global manufacturer serving a broad array of markets with engineered products, systems and solutions. The company’s operations span several core business segments, including construction materials, fluid technologies, interconnect technologies, brake and friction systems, and engineered products. Carlisle is known for its expertise in developing high-performance building envelope solutions, precision-engineered hoses and fluid-handling components, lightweight interconnect systems for aerospace and defense, and heavy-duty brake and friction products.
Within its construction materials segment, Carlisle offers single-ply roofing membranes, polyiso insulation, and waterproofing systems designed for commercial and industrial buildings.
