CARLISLE COMPANIES INCORPORATED Carlisle Companies Incorporated ("Carlisle", the "Company", "we", "us" or "our") is a leading supplier of innovative building envelope products and energy-efficient solutions for customers creating sustainable buildings of the future. Through itsCarlisle Construction Materials ("CCM") business and family of leading brands, Carlisle delivers innovative, labor-reducing and environmentally responsible products and solutions to customers across the planet through the Carlisle Experience. Over the life of a building, Carlisle's products help drive lower greenhouse gas emissions, improve energy savings for building owners and operators, and increase a building's resiliency to the elements. Driven by our strategic plan, Vision 2025, Carlisle is committed to generating superior shareholder returns and maintaining a balanced capital deployment approach, including investments in our businesses, strategic acquisitions, share repurchases and continued dividend increases. Carlisle also is a leading provider of products to the aerospace, medical technologies and general industrial markets through itsCarlisle Interconnect Technologies ("CIT") andCarlisle Fluid Technologies ("CFT") business segments. Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is designed to provide a reader of our financial statements with a narrative from the perspective of Company management. All references to "Notes" refer to our Notes to Condensed Consolidated Financial Statements in Item 1 of this Quarterly Report on Form 10-Q. Executive Overview As we exited the third quarter, the impact of the COVID-19 pandemic appears to be past its summer and early autumn peak. This trend, combined with improvements in our supply chain and positive movement towards a resumption of passenger air travel approaching pre-pandemic levels, is driving increased optimism about our ability to deliver continued strong results. We have also seen strong demand in our building products markets. Along with steadily growing backlog across all three of Carlisle's segments, we are increasingly positive entering the fourth quarter and 2022. Nonetheless, within the third quarter of 2021, our teams faced a very challenging operating environment given difficult supply chain and labor conditions, as well as the impact of Hurricane Ida. Despite these challenges, we believe Carlisle's employees again displayed their resilience in delivering record results, all the while doing so with strict adherence to the same health and safety protocols and precautions that have been in place throughout the pandemic, extending Carlisle's excellent safety record. Vision 2025 continues to provide clarity of mission and a consistent direction for our entire organization. We have stayed the course and maintain confidence in our ability to execute on our strategies, despite the challenges throughout the COVID-19 pandemic. Vision 2025 focuses our continuous improvement culture on providing our customers with innovative products of the best quality at the right place, at the right time. Ensuring the highest level of communication, transparency and service is embodied in what we call the Carlisle Experience, which we are committed to delivering to all our channel partners. As introduced in Vision 2025, we committed to a leaner, more focused portfolio and a pivot towards investing in our highest-returning businesses, particularly CCM. This commitment was further evidenced in the third quarter by our divestiture ofCarlisle Brake & Friction ("CBF"), which CCM's outstanding performance affirmed that our conviction is correct. CCM's best-in-class team delivered record third quarter revenues in an extremely difficult operating environment. Our increasing focus on building products is exemplified by our recent acquisition ofASP Henry Holdings, Inc. ("Henry"), which delivered excellent results in its first month with Carlisle, and where integration thus far has been smooth. While we're pleased with CCM's performance, CIT and CFT both contributed to our results and exhibited continued progress. As we expected, CIT returned to growth in the third quarter. CIT's commercial aerospace backlog has consistently grown in 2021, and has now surpassed second quarter of 2020 levels, a significant milestone. Coupling this with the improving backlog in our medical technologies business, we expect recovery to continue at CIT, with solid leverage on this growth over the coming quarters and years. Driven by accelerating industrial capital expenditures as companies expand capacity in response to supply constraints, CFT delivered strong revenue growth, despite the many documented supply chain issues challenging the automotive industry. We remain balanced in our approach to capital deployment. We increased our dividend for the 45th consecutive year, returning$84.2 million during the first nine months in the form of dividends. While closing on the acquisition of Henry, the largest acquisition in Carlisle's history, we also repurchased$290.6 million of shares during the first nine months. Finally, we had a successful debt issuance of$850 million of senior notes at a weighted average rate of 1.6%, which lowered Carlisle's cost of debt and extended its weighted-average maturity. With all of our businesses trending positively, and leveraging the clarity of mission that Vision 2025 provides us, Carlisle is well positioned for continued acceleration through the recovery and beyond. 24 --------------------------------------------------------------------------------
Summary of Financial Results
Three Months Ended Nine Months Ended
September 30, September 30,
(in millions, except per share amounts) 2021 2020 2021 2020
Revenues $ 1,315.6 $ 1,057.0 $ 3,434.3 $ 2,981.6
Operating income $ 166.5
12.7 % 14.6 % 11.2 % 12.6 %
Income from continuing operations $ 113.0 $ 29.1
$ 2.12
$ 0.55 $ (0.01) $ 0.70 $ (0.07) Non-comparable items(1)$ 27.1 $ 5.7 $ 44.0 $ 33.1 (1)Non-comparable items include items that, by their nature, tend to obscure the Company's core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items. Refer to Non-GAAP Financial Measures in this MD&A for a detailed reconciliation of these items. Revenues increased in the third quarter and first nine months of 2021 primarily reflecting higher volumes and price realization in our CCM and CFT segments, contributions from the acquisition of Henry in the CCM segment and favorable foreign currency impacts, partially offset by lower volumes in our CIT segment in the nine-month period, which has been impacted by the prolonged aerospace decline. The decrease in operating margin percentage in the third quarter and first nine months of 2021 primarily reflected raw material and wage inflation across all segments. The decrease in operating income was partially offset by price realization, higher volumes and savings from the Carlisle Operating System ("COS"). Diluted earnings per share from continuing operations increased primarily due to improved operating income performance ($0.16 per share in the third quarter of 2021 and$0.12 per share in the first nine months of 2021), a lower effective tax rate ($0.03 per share in the third quarter of 2021 and$0.15 per share in the first nine months of 2021), and reduced average shares outstanding ($0.06 per share in the third quarter of 2021 and$0.19 per share in the first nine months of 2021) resulting from purchases under our share repurchase program. We generated$283.9 million in operating cash flow in the first nine months of 2021, and utilized cash on hand and cash provided by operations to return capital to shareholders through dividends and share repurchases, and to fund capital expenditures. Consolidated Results of Operations
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