CARLISLE COMPANIES INCORPORATED Carlisle Companies Incorporated ("Carlisle", the "Company", "we", "us" or "our") is a leading manufacturer and supplier of innovative building envelope products and solutions for more energy efficient buildings. Through our building products businesses,Carlisle Construction Materials ("CCM") and Carlisle Weatherproofing Technologies ("CWT"), and family of leading brands, we deliver innovative, labor-reducing and environmentally responsible products and solutions to customers through the Carlisle Experience. Carlisle is committed to generating superior stockholder returns and maintaining a balanced capital deployment approach, including investments in our businesses, strategic acquisitions, share repurchases and continued dividend increases. We are also a leading provider of products to the aerospace, medical technologies and general industrial markets through ourCarlisle 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 Consolidated Financial Statements in this Annual Report on Form 10-K. For more information regarding our consolidated results, segment results, with the exception of CCM and CWT as a result of the reportable segment change during 2022, and liquidity and capital resources for the year endedDecember 31, 2021 as compared to the year endedDecember 31, 2020 , refer to "Part II-Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 2021 Annual Report on Form 10-K (the "2021 Annual Report on Form 10-K").
Executive Overview
The entire Carlisle team delivered excellent results throughout 2022, especially given the difficult macroeconomic environment. Leveraging our continuous improvement culture and the Carlisle Experience, the Carlisle team delivered on our commitments, supported by continued strong underlyingU.S. non-residential construction demand, ongoing recovery in commercial aerospace markets, and disciplined pricing to deliver a record sales and earnings performance. In 2018, we launched Vision 2025, our plan to deliver$15 of GAAP earnings per share ("EPS") by 2025. Vision 2025 has provided Carlisle with clarity of mission to keep us on course during the difficult operating conditions of the past few years. At its core, Vision 2025 consists of five fundamental pillars; driving organic revenue growth, leveraging that growth with COS, transforming the portfolio through synergistic acquisitions and strategic divestitures, deploying capital in a disciplined and return on investment-focused manner, and investing in and developing exceptional talent. We are extremely pleased to confirm we have met our objective to deliver$15 of GAAP EPS three years in advance of our target date. As we exited 2022, we saw material supply conditions continuing to improve and our channel partners settling into a more normal purchasing cadence. Inflationary pressures continue to abate, and greater availability of materials are leading us toward a more normalized operating environment, continuing the trends we started to experience in the third quarter of 2022. Seasonal buying patterns, which were disrupted in 2020 and 2021, are approaching normalization with our customers working down inventory in the fourth quarter and into early 2023. As strong underlying fundamentals in our core businesses persist, we expect to build inventory, as we typically do, in anticipation of seasonally strong demand in the second and third quarters of 2023. Non-discretionary commercial re-roofing demand continues, including significant interest and activity in Carlisle's sustainable building solutions driven by rising energy costs, sustainability trends and projected investment from the Inflation Reduction Act. We remain balanced and disciplined in our approach to capital deployment. We are maintaining an elevated level of capital expenditures to drive future growth, particularly in our building products businesses. We continue to manage an active merger and acquisition pipeline focused on synergistic businesses with attractive growth characteristics that complement our high-margin product lines. We expect to remain active in returning capital to stockholders, after raising our dividend in 2022 for the 46th consecutive year and returning$534.4 million to stockholders in the form of share repurchases and cash dividends. 18
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Summary Financial Results
(in millions, except per share amounts and percentages) 2022 2021 Revenues$ 6,591.9 $ 4,810.3 Operating income$ 1,275.7 $ 567.5 Operating margin 19.4 % 11.8 % Income from continuing operations$ 925.2 $ 387.0 (Loss) income from discontinued operations$ (1.2)
$ 17.58 $ 7.26 (Loss) income from discontinued operations$ (0.02) $ 0.65 Adjusted EBITDA(1)$ 1,563.0 $ 833.5 Adjusted EBITDA margin(2) 23.7 % 17.3 % (1)Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure 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 more information about, and a detailed reconciliation of, these items.
Revenues increased in 2022 primarily reflecting positive pricing across all
segments, contributions from the acquisition of
Operating income and operating income margin increased in 2022 primarily reflecting positive pricing, higher volumes and favorable product mix, partially offset by raw material and wage inflation across all segments.
Diluted earnings per share from continuing operations increased primarily from the above operating income performance ($10.03 per share) and reduced average shares outstanding ($0.21 per share) resulting from our share repurchase program.
Consolidated Results of Operations
Revenues
Price /
(in millions, except Acquisition Volume Exchange
percentages) 2022 2021 Change % Effect Effect Rate Effect
Revenues $ 6,591.9 $ 4,810.3 $ 1,781.6 37.0 % 9.2 % 28.7 % (0.9) %
The increase in revenues in 2022 primarily reflected positive pricing across all
segments, contributions from the acquisition of Henry in the CWT segment and
higher sales volumes in the CCM, CIT and CFT segments, partially offset by
unfavorable foreign currency impacts.
Revenues by Geographic Area
(in millions, except percentages) 2022 2021
United States $ 5,663.8 86 % $ 4,039.5 84 %
International:
Europe 374.9 359.8
Asia and Middle East 201.9 198.5
North America (excluding U.S.) 284.3 170.0
Africa 19.0 13.0
Other 48.0 29.5
Total International 928.1 14 % 770.8 16 %
Revenues $ 6,591.9 $ 4,810.3
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Gross Margin (in millions, except percentages) 2022 2021 Change % Gross margin$ 2,157.4 $ 1,314.7 $ 842.7 64.1 % Gross margin percentage 32.7 % 27.3 %
Depreciation and amortization
Gross margin percentage (gross margin expressed as a percentage of revenues) increased in 2022, driven by positive pricing and COS savings, partially offset by raw material and wage inflation. Also included in cost of goods sold were exit and disposal costs totaling$5.7 million in 2022, primarily at CIT, attributable to our restructuring initiatives, compared with$9.7 million in 2021. Refer to Note 8 for further information on exit and disposal activities. In 2021, cost of goods sold included$2.2 million of inventory step-up amortization associated with the Henry acquisition. Selling and Administrative Expenses (in millions, except percentages) 2022 2021 Change % Selling and administrative expenses$ 811.5 $ 698.2 $ 113.3 16.2 % As a percentage of revenues 12.3 % 14.5 % Depreciation and amortization$ 146.0 $ 113.7 Selling and administrative expenses increased in 2022 primarily reflecting incremental costs in the CWT segment from the acquisition of Henry, higher commissions, travel, incentive compensation costs and wage inflation. Also included in selling and administrative expenses were exit and disposal costs totaling$0.6 million in 2022, primarily at CIT, attributable to our restructuring initiatives, compared with$4.5 million in 2021. Refer to Note 8 for further information on exit and disposal activities. Research and Development Expenses (in millions, except percentages) 2022 2021 Change
%
Research and development expenses
1.8 % As a percentage of revenues 0.8 % 1.0 % Depreciation and amortization$ 2.2 $ 1.8
Research and development expenses were higher in 2022 primarily reflecting higher new product development expenses at our CIT, CCM and CWT segments.
Other Operating Expense (Income), net (in millions, except percentages) 2022 2021 Change
%
Other operating expense (income), net
NM
Other operating expense, net in 2022 reflected intangible asset impairments of$18.6 million and fixed asset impairments of$6.2 million at our CWT segment, partially offset by rebates of$4.2 million and royalty income of$1.8 million . Other operating income, net in 2021 primarily reflected$3.5 million of rebates,$1.6 million of royalty income and$0.4 million from rental income, partially offset by$5.0 million of impairment charges. Operating Income (in millions, except percentages) 2022 2021 Change % Operating income$ 1,275.7 $ 567.5 $ 708.2 124.8 % Operating margin percentage 19.4 % 11.8 %
Refer to Segment Results of Operations within this MD&A for further information related to segment operating income results.
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Interest Expense, net (in millions, except percentages) 2022 2021 Change % Interest expense, net$ 85.9 $ 80.3 $ 5.6 7.0 % Interest expense, net of capitalized interest, increased during 2022 primarily reflecting higher long-term debt balances associated with our public offering of$550.0 million of 2.20% unsecured senior notes and$300.0 million of 0.55% unsecured senior notes completed inSeptember 2021 , partially offset by the redemption of$350.0 million of 3.75% unsecured senior notes (the "2022 Notes") inOctober 2022 . Refer to Note 14 for further information on our long-term debt. Interest Income (in millions, except percentages) 2022 2021 Change % Interest income$ (7.1) $ (1.2) $ (5.9) 491.7 %
Interest income increased during 2022 primarily relating higher yields and a higher invested cash balance.
Other Non-operating Expense, net (in millions, except percentages) 2022 2021 Change
%
Other non-operating expense, net
Other non-operating expense, net in 2022 primarily reflected changes in foreign
currencies against the
Other non-operating expense, net in 2021 primarily reflected the release of the remaining indemnification assets related to the acquisitions ofPetersen Aluminum Corporation ("Petersen") andAccella Holdings LLC ("Accella") resulting from escrow expirations, and changes in foreign currencies against theU.S. Dollar. Income Taxes (in millions, except percentages) 2022 2021 Change % Provision for income taxes$ 270.4 $ 95.5 $ 174.9 183.1 % Effective tax rate 22.6 % 19.8 % The provision for income taxes on continuing operations for 2022 is higher than 2021 primarily reflecting higher pre-tax income in theU.S. , and to a lesser extent in foreign jurisdictions which equated to higher taxes of$174.7 million .
Refer to Note 9 for further information related to income taxes.
(Loss) Income from Discontinued Operations (in millions, except percentages) 2022 2021 Change % (Loss) income from discontinued operations before taxes$ (5.4) $ 9.9 $ (15.3) NM Benefit from income taxes (4.2)
(24.8)
(Loss) income from discontinued operations$ (1.2)
Loss from discontinued operations in 2022 primarily reflects legal settlement accruals associated with a previously disposed business, partially offset by a gain on the sale of real estate associated with the 2021 sale of the equity interests and assets comprising theCarlisle Brake & Friction ("CBF") segment. Income from discontinued operations in 2021 primarily reflects operating results of CBF prior to the disposition and a pre-tax loss on sale, offset by an income tax benefit from the sale of the equity interests and assets comprising the CBF segment inAugust 2021 .
Refer to Note 4 for additional information related to discontinued operations.
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Segment Results of Operations
This segment produces a complete line of premium energy-efficient single-ply
roofing products and warranted roof systems and accessories for the commercial
building industry, including ethylene propylene diene monomer ("EPDM"),
thermoplastic polyolefin ("TPO") and polyvinyl chloride ("PVC") membrane,
polyisocyanurate ("polyiso") insulation, and engineered metal roofing and wall
panel systems for commercial and residential buildings.
Price /
(in millions, except Acquisition Volume Exchange
percentages) 2022 2021 Change % Effect Effect Rate Effect
Revenues $ 3,885.2 $ 2,846.2 $ 1,039.0 36.5 % - % 37.3 % (0.8) %
Operating income $ 1,175.0 $ 619.9 $ 555.1 89.5 %
Operating margin 30.2 % 21.8 %
Adjusted EBITDA(1) $ 1,228.7 $ 672.7
Adjusted EBITDA margin(1) 31.6 % 23.6 %
(1)Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors
and others with information about Carlisle's and our segments' performance
without the effect of items that, by their nature, tend to obscure 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 more information about, and a detailed reconciliation
of, these items.
CCM's revenue increased in 2022 primarily reflecting positive pricing across all
product lines and the strength of
CCM's operating margin and adjusted EBITDA margin increase in 2022 primarily reflected positive pricing, higher volumes and savings from COS, partially offset by raw material, freight and wage inflation.
Price /
(in millions, except Acquisition Volume Exchange
percentages) 2021 2020 Change % Effect Effect Rate Effect
Revenues $ 2,846.2 $ 2,335.4 $ 510.8 21.9 % - % 21.5 % 0.4 %
Operating income $ 619.9 $ 524.2 $ 95.7 18.3 %
Operating margin 21.8 % 22.4 %
Adjusted EBITDA(1) $ 672.7 $ 576.4
Adjusted EBITDA margin(1) 23.6 % 24.7 %
(1)Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors
and others with information about Carlisle's and our segments' performance
without the effect of items that, by their nature, tend to obscure 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 more information about, and a detailed reconciliation
of, these items.
CCM's revenue increase in 2021 primarily reflected higher volumes from strength
in
CCM's operating margin and adjusted EBITDA margin decline in 2021 primarily reflected raw material, wage and freight inflation, offset by pricing actions that served to substantially offset inflation on a dollar basis during the year.
Carlisle Weatherproofing Technologies ("CWT")
This segment produces building envelope solutions that drive energy efficiency
and sustainability in commercial and residential applications. Products include
high-performance waterproofing and moisture protection products, protective
roofing underlayments, fully integrated liquid and sheet applied air/vapor
barriers, sealants/primers and flashing systems, roof coatings and mastics,
spray polyurethane foam and coating systems for a wide variety of thermal
protection applications and other premium polyurethane products, block-molded
expanded polystyrene insulation, engineered products for HVAC applications, and
premium rubber products for a variety of industrial and surfacing applications.
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Price /
(in millions, except Acquisition Volume Exchange
percentages) 2022 2021 Change % Effect Effect Rate Effect
Revenues $ 1,564.2 $ 990.5 $ 573.7 57.9 % 44.8 % 13.6 % (0.5) %
Operating income $ 128.6 $ 64.4 $ 64.2 99.7 %
Operating margin 8.2 % 6.5 %
Adjusted EBITDA(1) $ 250.6 $ 151.3
Adjusted EBITDA margin(1) 16.0 % 15.3 %
(1)Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors
and others with information about Carlisle's and our segments' performance
without the effect of items that, by their nature, tend to obscure 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 more information about, and a detailed reconciliation
of, these items.
CWT's revenue increased in 2022 primarily reflecting contributions from the Henry acquisition and positive pricing.
CWT's operating margin increase in 2022 primarily reflected positive pricing and contributions from the Henry acquisition, partially offset by raw material, freight and wage inflation and lower volumes. Operating margin also included definite-lived intangible asset impairments of$18.6 million and plant, property and equipment impairments of$6.2 million in 2022 and transaction related expenses of$24.4 million from the acquisition of Henry in 2021.
CWT's adjusted EBITDA margin increase in 2022 primarily reflected favorable pricing and contributions from the Henry acquisition, partially offset by higher raw material, freight and labor costs, and lower volumes.
Price /
(in millions, except Acquisition Volume Exchange
percentages) 2021 2020 Change % Effect Effect Rate Effect
Revenues $ 990.5 $ 660.2 $ 330.3 50.0 % 26.9 % 23.1 % - %
Operating income $ 64.4 $ 57.4 $ 7.0 12.2 %
Operating margin 6.5 % 8.7 %
Adjusted EBITDA(1) $ 151.3 $ 106.8
Adjusted EBITDA margin(1) 15.3 % 16.2 %
(1)Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors
and others with information about Carlisle's and our segments' performance
without the effect of items that, by their nature, tend to obscure 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 more information about, and a detailed reconciliation
of, these items.
CWT's revenue increase in 2021 primarily reflected contributions from the Henry acquisition, positive pricing and increased volumes across all end markets.
CWT's operating margin and adjusted EBITDA margin decline in 2021 primarily reflected raw material, freight and wage inflation, partially offset by pricing actions served to substantially offset inflation and improved operating efficiencies from COS.
This segment produces high-performance wire and cable, including optical fiber,
for the commercial aerospace, military and defense electronics, medical device,
industrial, and test and measurement markets. CIT's product portfolio also
includes sensors, connectors, contacts, cable assemblies, complex harnesses,
racks, trays and installation kits, in addition to engineering and certification
services. CIT also provides medical device products and solutions for several
medical technology applications.
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During the third quarter of 2021, we announced plans to exit our manufacturing operations inCarlsbad, California , and relocate the majority of those operations to existing facilities inNorth America . The project is expected to be completed in the first quarter of 2023. Total projected costs are expected to approximate$6.9 million , with approximately$1.5 million of costs remaining to be incurred. Price / (in millions, except Acquisition Volume Exchange percentages) 2022 2021 Change % Effect Effect Rate Effect Revenues$ 845.4 $ 687.8 $ 157.6 22.9 % - % 23.1 % (0.2) % Operating income (loss)$ 37.2 $ (17.5) $ 54.7 312.6 % Operating margin 4.4 % (2.5) % Adjusted EBITDA(1)$ 118.1 $ 75.8 Adjusted EBITDA margin(1) 14.0 % 11.0 % (1)Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure 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 more information about, and a detailed reconciliation of, these items.
CIT's revenue increase in 2022 primarily reflected continued strengthening of aerospace and medical end markets and favorable pricing.
CIT's operating margin and adjusted EBITDA margin increase in 2022 primarily reflected higher volumes, positive pricing and savings from COS, partially offset by wage inflation and unfavorable product mix.
This segment produces highly engineered liquid, powder, sealants and adhesives finishing equipment and integrated system solutions for spraying, pumping, mixing, metering and curing of a variety of coatings used in the automotive manufacture, general industrial, protective coating, wood, specialty and automotive refinishing markets.
Price /
(in millions, except Acquisition Volume Exchange
percentages) 2022 2021 Change % Effect Effect Rate Effect
Revenues $ 297.1 $ 285.8 $ 11.3 4.0 % - % 9.3 % (5.3) %
Operating income $ 36.5 $ 24.0 $ 12.5 52.1 %
Operating margin 12.3 % 8.4 %
Adjusted EBITDA(1) $ 56.3 $ 46.4
Adjusted EBITDA margin(1) 18.9 % 16.2 %
(1)Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors
and others with information about Carlisle's and our segments' performance
without the effect of items that, by their nature, tend to obscure 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 more information about, and a detailed reconciliation
of, these items.
CFT's revenue increase in 2022 primarily reflected positive pricing and increased volumes in the transportation end market, partially offset by unfavorable changes in foreign currency rates.
CFT's operating margin and adjusted EBITDA margin increase in 2022 primarily reflected positive pricing, savings from COS and higher volumes, partially offset by raw material, freight and wage inflation.
Liquidity and Capital Resources
A summary of our cash and cash equivalents by region follows: (in millions)
December 31, 2022 December 31, 2021
Europe $ 20.1 $ 12.3
North America (excludingU.S. ) 28.5
40.8
China 4.5
17.8
Asia Pacific (excludingChina ) 19.2
12.9
International cash and cash equivalents 72.3
83.8
U.S. cash and cash equivalents 327.7
240.6
Total cash and cash equivalents $ 400.0 $
324.4
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We maintain liquidity sources primarily consisting of cash and cash equivalents as well as availability under the Company's Fourth Amended and Restated Credit Agreement (as amended, the "Facility"). In the near term, cash on hand is our primary source of liquidity. The increase in cash and cash equivalents compared toDecember 31, 2021 , is primarily related to cash generated from operations and the receipt of the$125 million earn out payment from the sale of CBF, partially offset by share repurchases, the redemption of the 2022 Notes, capital expenditures and payment of dividends to stockholders. In certain countries, primarilyChina , our cash is subject to local laws and regulations that require government approval for conversion of such cash toU.S. Dollars, as well as for transfer of such cash, both temporarily and permanently outside of that jurisdiction. In addition, upon permanent transfer of cash outside of certain jurisdictions, primarily inCanada andChina , we may be subject to withholding taxes, and as such we have accrued$6.9 million in anticipation of those taxes as ofDecember 31, 2022 . We believe we have sufficient cash on hand, availability under the Facility and operating cash flows to meet our anticipated business requirements for at least the next 12 months. At the discretion of management, the Company may use available cash on capital expenditures, dividends, common stock repurchases, acquisitions and strategic investments. We also anticipate we will have sufficient cash on hand, availability under the Facility and operating cash flows to meet our anticipated long-term business requirements and to pay outstanding principal balances of our existing notes by the respective maturity dates. Another potential source of liquidity is access to public capital markets, subject to market conditions. We may access the capital markets for a variety of reasons, including to repay the outstanding balances of our outstanding debt and fund acquisitions. Refer to Note 14 for further information on long-term debt.
Sources and Uses of Cash and Cash Equivalents
(in millions) 2022
2021
Net cash provided by operating activities$ 1,000.9 $ 421.7 Net cash used in investing activities (61.1)
(1,486.4)
Net cash (used in) provided by financing activities (862.0)
488.1
Effect of foreign currency exchange rate changes on cash (2.2)
(1.2)
Change in cash and cash equivalents$ 75.6 $ (577.8) Operating Activities We generated operating cash flows totaling$1,000.9 million for 2022 (including working capital uses of$222.0 million ), compared with$421.7 million for 2021 (including working capital uses of$275.2 million ). Higher operating cash flows in 2022 primarily reflected higher net income and a reduction in working capital uses related to collection of accounts receivable, partially offset by a reduction in accounts payable.
Investing Activities
Cash used in investing activities of$61.1 million for 2022 primarily reflected capital expenditures of$183.5 million and the acquisition of MBTechnology for$24.7 million , partially offset by the proceeds of the contingent consideration from the earn out payment and sale of real estate associated with the 2021 sale of CBF for$132.0 million and proceeds from investment in securities of$10.3 million . Cash used in investing activities of$1,486.4 million for 2021 primarily reflected the acquisition of Henry for$1,571.3 million , net of cash acquired, capital expenditures of$134.8 million and investment in securities of$30.2 million , partially offset by proceeds of$247.7 million from the sale of CBF. Financing Activities Cash used in financing activities of$862.0 million for 2022 primarily reflected share repurchases of$400.0 million , the redemption of the 2022 Notes of$350.0 million and cash dividend payments of$134.4 million , reflecting the increased annual dividend rate of$3.00 per share. Cash provided by financing activities of$488.1 million for 2021 primarily reflected net proceeds from our September public offering of$850.0 million in aggregate principal amount of unsecured senior notes and proceeds from the exercise of stock options, net of withholding tax, of$77.4 million , partially offset by share repurchases of$315.6 million and cash dividend payments of$112.5 million . 25
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Share Repurchases
OnFebruary 2, 2021 , the Board approved a 5 million share increase in the Company's stock repurchase program. We repurchased approximately 1.6 million shares in 2022 as part of our plan to return capital to stockholders, utilizing$400.0 million of our cash on hand. As ofDecember 31, 2022 , we had authority to repurchase 3.4 million shares. Purchases may occur from time to time over an indefinite period of time in the open market, in privately negotiated transactions and through block trades, and no maximum purchase price has been set. The decision to repurchase shares depends on price, availability and other corporate developments and is subject to the discretion of the Board. The Company plans to continue to repurchase shares in 2023 on an opportunistic basis. We intend to pay dividends to our stockholders and have increased our dividend rate annually for the past 46 years. OnJanuary 31, 2023 , the Board declared a regular quarterly dividend of$0.75 per share, payable onMarch 1, 2023 , to stockholders of record at the close of business onFebruary 17, 2022 .
Debt Instruments
Senior Notes
On
We also have unsecured senior unsecured notes outstanding of$300.0 million dueSeptember 1, 2023 (at a stated interest rate of 0.55%),$400.0 million dueDecember 1, 2024 (at a stated interest rate of 3.5%),$600.0 million dueDecember 1, 2027 (at a stated interest rate of 3.75%),$750 million dueMarch 1, 2030 (at a stated interest rate of 2.75%) and$550.0 million dueMarch 1, 2032 (at a stated interest rate of 2.20% that are rated BBB byStandard & Poor's and Baa2 by Moody's. Revolving Credit Facility During 2022, we had no borrowings or repayments under the Facility. During 2021, borrowings and repayments under the Facility totaled$650.0 million with a weighted average interest rate of 1.1%. As ofDecember 31, 2022 andDecember 31, 2021 , there were no borrowings under the Facility and$1.0 billion of availability.
Debt Covenants
We are required to meet various covenants and limitations under our senior notes and Facility, including certain leverage ratios, interest coverage ratios and limits on outstanding debt balances held by certain subsidiaries. We were in compliance with all covenants and limitations as ofDecember 31, 2022 and 2021.
Refer to Note 14 for further information on our debt instruments.
Critical Accounting Estimates
Our significant accounting policies are more fully described in Note 1. In preparing the Consolidated Financial Statements in conformity withU.S. Generally Accepted Accounting Principles ("GAAP"), the Company's management must make informed decisions which impact the reported amounts and related disclosures. Such decisions include the selection of the appropriate accounting principles to be applied and assumptions on which to base estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates, including those related to goodwill and indefinite-lived intangible assets, valuation of long-lived assets, revenue recognition, income taxes and extended product warranties on an ongoing basis. The Company bases its estimates on historical experience, terms of existing contracts, our observation of trends in the industry, information provided by our customers and information available from other outside sources, that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.
Business Combinations
As noted in Item 1. Business. Business Strategy, we have a history and a strategy of acquiring businesses. We account for these business combinations as required by GAAP under the acquisition method of accounting, which
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requires us to recognize the assets acquired and the liabilities assumed at their acquisition date fair values. Deferred taxes are recorded for any differences between fair value and tax basis of assets acquired and liabilities assumed and can vary based on the structure of the acquisition as to whether it is a taxable or non-taxable transaction. To the extent the purchase price of the acquired business exceeds the fair values of the assets acquired and liabilities assumed, including deferred income taxes recorded in connection with the transaction, such excess is recognized as goodwill (see further below for our critical accounting estimate regarding post-acquisition accounting for goodwill). The most critical areas of judgment in applying the acquisition method include selecting the appropriate valuation techniques and assumptions that are used to measure the acquired assets and assumed liabilities at fair value, particularly for intangible assets, contingent consideration, acquired tangible assets such as property, plant and equipment, and inventory.
The key techniques and assumptions utilized by type of major acquired asset or liability generally include:
Asset/Liability Typical Valuation Technique Key Assumptions
Technology-based intangible Relief from royalty method •Estimated future revenues from acquired
assets technology
•Royalty rates that would be paid if
licensed from a third-party
•Discount rates
Customer-based intangible Multiple-period excess earnings method •Estimated future revenues from existing
assets customers
•Rates of customer attrition
•Earnings before interest, taxes,
depreciation and amortization ("EBITDA")
margins
•Discount rates
•Contributory asset charges
Trademark/trade name Relief from royalty method •Estimated future revenues from acquired
intangible assets trademark/trade name
•Economic useful lives (definite vs.
indefinite)
•Royalty rates that would be paid if
licensed from a third-party
•Discount rates
Property, plant & equipment Market comparable transactions (real •Similarity of subject property to
property) and replacement cost, new less market comparable transactions
economic deprecation (personal property) •Costs of like equipment in new
condition
•Economic obsolescence rates
Inventory Net realizable value less (i) estimated •Estimated percentage complete (WIP
costs of completion and disposal, and inventory)
(ii) a reasonable profit allowance for •Estimated selling prices
the seller •Estimated completion and disposal costs
•Estimated profit allowance for the
seller
Contingent consideration Discounted future cash flows •Future revenues and/or net earnings
•Discount rates
In selecting techniques and assumptions noted above, we generally engage
third-party, independent valuation professionals to assist us in developing the
assumptions and applying the valuation techniques to a particular business
combination transaction. In particular, the discount rates selected are compared
to and evaluated with (i) the industry weighted-average cost of capital, (ii)
the inherent risks associated with each type of asset and (iii) the level and
timing of future cash flows appropriately reflecting market participant
assumptions.
As noted above, goodwill represents a residual amount of purchase price.
However, the primary items that generate goodwill include the value of the
synergies between the acquired company and our existing businesses and the value
of the acquired assembled workforce, neither of which qualifies for recognition
as an intangible asset. Refer to Note 3 for more information regarding business
combinations, specifically the items that generated goodwill in our recent
acquisitions.
Subsequent Measurement of
Goodwill is not amortized but is tested annually, or more often if impairment indicators are present, for impairment at a reporting unit level.Goodwill is tested for impairment via a one-step process by comparing the fair value of goodwill with its carrying value. We recognize an impairment for the amount by which the carrying amount exceeds the fair value. We estimate the fair value of our reporting units based on the income approach utilizing the 27
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discounted cash flow method and the market approach utilizing the public company
market multiple method. The key techniques and assumptions generally include:
Valuation Technique Key Assumptions
Discounted future cash flows •Estimated future revenues
•EBITDA margins
•Discount rates
Market multiple method •Peer public company group
•Financial performance of reporting units relative to peer
public company group
In 2022, the CCM reporting unit was divided into four reporting units, CCM
Commercial Roofing, CCM Architectural Metals, CCM Europe and CWT, in conjunction
with our re-segmentation in early 2022 and to align with the segment managers'
review of the business. The goodwill previously assigned to the CCM reporting
unit was allocated to the new reporting units based on their relative fair
values. Accordingly, we have determined that we have seven reporting units as of
December 31, 2022 and four reporting units as of December 31, 2021 . Goodwill has
been allocated to the reporting units as follows:
December 31, December 31,
(in millions) 2022 2021
Carlisle Construction Materials N/A $ 1,172.6
Carlisle Construction Materials - Commercial Roofing $ 848.9 N/A
Carlisle Construction Materials - Architectural Metals 59.5 N/A
Carlisle Construction Materials - Europe 24.4 N/A
Carlisle Weatherproofing Technologies 244.8 N/A
601.0 601.5
Carlisle Interconnect Technologies - Medical 234.6 233.7
Carlisle Fluid Technologies 187.5 191.2
Total $ 2,200.7 $ 2,199.0
Annual Impairment Test
We test our goodwill for impairment annually as of November 1 . For the November
1, 2022 impairment test, all reporting units were tested for impairment using
the quantitative approach described above, resulting in fair values that
substantially exceeded the carrying values, with the exception of CIT Medical,
which exceeded its carrying value by approximately 10%.
We will continue to closely monitor actual results versus expectations as well
as whether and to what extent any significant changes in current events or
conditions result in corresponding changes to our expectations about estimated
future cash flows, discount rates and market multiples. If our adjusted
expectations of the operating results, both in size and timing, of CIT Medical
do not materialize, if the discount rate increases (based on increases in
interest rates, market rates of return or market volatility) or if market
multiples decline, we may be required to record goodwill impairment charges,
which may be material.
While we believe our conclusions regarding the estimates of fair value of our
reporting units are appropriate, these estimates are subject to uncertainty and
by nature include judgments and estimates regarding various factors. These
factors include the rate and extent of growth in the markets that our reporting
units serve, the realization of future sales price and volume increases,
fluctuations in exchange rates, fluctuations in price and availability of key
raw materials, future operating efficiencies and, as it pertains to discount
rates, the volatility in interest rates and costs of equity.
Refer to Note 12 for more information regarding goodwill.
Subsequent Measurement of Indefinite-Lived Intangible Assets
As discussed above, indefinite-lived intangible assets are recognized and
recorded at their acquisition-date fair value. Intangible assets with indefinite
useful lives are not amortized but are tested annually at the appropriate unit
of account, which generally equals the individual asset, or more often if
impairment indicators are present. Indefinite-lived intangible assets are tested
for impairment via a one-step process by comparing the fair value of the
intangible asset with its carrying value. We recognize an impairment charge for
the amount by which the carrying amount exceeds the intangible asset's fair
value. We generally estimate the fair value of our indefinite-lived intangible
assets consistent with the techniques noted above using our expectations about
future cash flows, discount rates and royalty rates for purposes of the annual
test. We monitor for significant changes in those
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assumptions during interim reporting periods. We also periodically re-assess indefinite-lived intangible assets as to whether its useful lives can be determined, and if so, we would begin amortizing any applicable intangible asset.
Annual Impairment Test
We test our indefinite-lived intangible assets for impairment annually as ofNovember 1 . For theNovember 1, 2022 impairment test, all indefinite-lived intangible assets were tested for impairment using the quantitative approach described above, resulting in fair values that substantially exceeded the carrying values, with the exception of five trade names with an aggregate carrying value of$331.3 million that exceeded their carrying amounts by less than 10%. We will continue to closely monitor actual results versus expectations as well as whether and to what extent any significant changes in current events or conditions result in corresponding changes to our expectations about future estimated revenues and discount rates. If our adjusted expectations of the revenues of these five trade names do not materialize or if the discount rate increases (based on increases in interest rates, market rates of return or market volatility), we may be required to record intangible asset impairment charges, which may be material.
Refer to Note 12 for more information regarding intangible assets.
Valuation of Long-Lived Assets
Long-lived assets or asset groups, including amortizable intangible assets, are tested for recoverability whenever events or circumstances indicate that the undiscounted future cash flows do not exceed the carrying amount of the asset or asset group. For purposes of testing for impairment, we group our long-lived assets classified as held and used at the lowest level for which identifiable cash flows are largely independent of the cash flows from other assets and liabilities, which means that in many cases multiple assets are tested for recovery as a group. Our asset groupings vary based on the related business in which the long-lived assets are employed and the interrelationship between those long-lived assets in producing net cash flows; for example, multiple manufacturing facilities may work in concert with one another or may work on a stand-alone basis to produce net cash flows. We utilize our long-lived assets in multiple industries and economic environments and our asset groupings reflect these various factors. We monitor the operating and cash flow results of our long-lived assets or asset groups classified as held and used to identify whether events and circumstances indicate the remaining useful lives of those assets should be adjusted, or if the carrying value of those assets or asset groups may not be recoverable. Undiscounted estimated future cash flows are compared to the carrying value of the long-lived asset or asset group in the event indicators of impairment are identified. In developing our estimates of future undiscounted cash flows, we utilize our internal estimates of future revenues, costs and other net cash flows from operating the long-lived asset or asset group over the life of the asset or primary asset, if an asset group. This requires us to make judgments about future levels of sales volume, pricing, raw material costs and other operating expenses. If the undiscounted estimated future cash flows are less than the carrying amount, we determine the fair value of the asset or asset group and record an impairment charge in current earnings to the extent carrying value exceeds fair value. Fair values may be determined based on estimated discounted cash flows, by prices for like or similar assets in similar markets or a combination of both. In the third quarter of 2022, the current and projected operating and cash flow losses at our rubber asset group within the CWT segment resulted in the determination that an indicator of impairment existed. Accordingly, we performed a quantitative impairment analysis to determine whether the carrying value of the asset group was recoverable, and if not, determine the fair value of the asset group using the methods described above. Based on the analysis, we determined that the undiscounted cash flows for the asset group did not exceed its carrying value. In determining the asset group's fair value, we utilized a market approach of assessing the exit prices for like or similar assets in similar markets and potential exit prices willing to be paid for the asset group by a market participant in an open market. Based on this assessment, we determined that the asset group's carrying value exceeded its fair value as ofSeptember 30, 2022 , resulting in an impairment of definite-lived intangible assets and property, plant, and equipment of$18.6 million and$6.2 million , respectively. After recording the impairment in the third quarter of 2022, all of our asset groups were recoverable as ofDecember 31, 2022 . We will continue to closely monitor whether and to what extent any significant changes in current events or conditions may result in corresponding changes to our expectation on the market value of the collective asset group. If our expectation of a market exit price willing to be paid by a market participant for the collective asset 29
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group does not materialize or changes due to known market conditions, we may be required to record additional impairments to the asset group, which may be material.
Long-lived assets or asset groups that are part of a disposal group that meets the criteria to be classified as held for sale are not assessed for impairment, but rather a loss on sale is recorded against the disposal group if fair value, less cost to sell, of the disposal group is less than its carrying value. If the disposal group's fair value exceeds its carrying value, we record a gain, assuming all other criteria for a sale are met, when the transaction closes.
Revenue Recognition
Revenue is recognized when obligations under the terms of a contract with a customer are satisfied; generally, this occurs with the transfer of control of our products or services. Revenue is measured as the amount of total consideration expected to be received in exchange for transferring goods or providing services. Total expected consideration, in certain cases, is estimated at each reporting period, including interim periods, and is subject to change with variability dependent on future events, such as customer behavior related to future purchase volumes, returns, early payment discounts and other customer allowances. Estimates for rights of return, discounts and rebates to customers, and other adjustments for variable consideration are provided for at the time of sale as a deduction to revenue, based on an analysis of historical experience and actual sales data. Changes in these estimates are reflected as an adjustment to revenue in the period identified. Sales, value added and other taxes collected concurrently with revenue-producing activities are excluded from revenue. We receive payment at the inception of the contract for separately priced extended service warranties, and revenue is deferred and recognized on a straight-line basis over the life of the contracts. The term of these warranties ranges from five to 40 years. The weighted average life of the contracts as ofDecember 31, 2022 , is approximately 20 years. Additionally, critical judgments and estimates related to revenue recognition relative to certain customer contracts in our CIT and CFT segments, in which they are contract manufacturers or where they have entered into an agreement to provide both services (engineering and design) and products resulting from those services, include the following: •Determination of whether revenue is earned at a "point-in-time" or "over time": Where contracts provide for the manufacture of highly customized products with no alternative use and provide CIT or CFT the right to payment for work performed to date, including a normal margin for that effort, we have concluded those contracts require the recognition of revenue over time. •Measurement of revenue using the key inputs of expected gross margin and inventory in our possession. We utilize an estimate of expected gross margin based on historical margin patterns and management's experience, which vary based on the customers and end markets being evaluated. There are multiple unique customer contracts at CIT or CFT. Accordingly, the estimate of expected margin is done for each customer discretely. We review the margins for these categories as contracts, customers and product profiles change over time so that the margin expectations reflect the best available data for each category.
Income Taxes
Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management's best estimate of current and future taxes to be paid. We are subject to income taxes in theU.S. and numerous foreign jurisdictions. Significant judgments and estimates are required in the determination of the consolidated income tax expense. Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and its reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating our ability to recover our deferred tax assets in the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and results of recent operations. We believe that it is more likely than not that the benefit from certainU.S. federal, state and foreign net operating loss, and credit carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of$33.1 million on the deferred tax assets related to these carryforwards.
We (1) record unrecognized tax benefits as liabilities in accordance with Accounting Standards Codification 740, Income Taxes ("ASC 740") and (2) adjust these liabilities when our judgment changes as a result of the evaluation
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of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.
Extended Product Warranty Reserves
We offer extended warranty contracts on sales of certain products, the most significant being those offered on our installed roofing and weatherproofing systems within the CCM and CWT segments. Current costs of services performed under these contracts are expensed as incurred. We also record an additional loss and a corresponding reserve if the total expected costs of providing services under the contract exceed unamortized deferred revenues equal to such excess. We estimate total expected warranty costs using actuarially derived estimates of future costs of servicing the warranties. The key inputs that are utilized to develop these estimates include historical claims experience by type of product, location, and labor and material costs. The estimates of the volume and severity of these claims and associated costs are dependent upon the above assumptions and future results could differ from our current expectations. We currently do not have any material loss reserves recorded associated with our extended product warranties.
Non-GAAP Financial Measures
EBIT, Adjusted EBIT, Adjusted EBITDA and Adjusted EBITDA Margin
Earnings before interest and taxes ("EBIT"), adjusted EBIT, adjusted earnings
before interest, taxes, depreciation and amortization ("EBITDA") and adjusted
EBITDA margin are intended to provide investors and others with information
about our performance and our segments' performance without the effect of items
that, by their nature, tend to obscure core operating results due to potential
variability across periods based on the timing, frequency and magnitude of such
items. As a result, management believes that these measures enhance the ability
of investors to analyze trends in our business and evaluate our performance
relative to similarly-situated companies. This information differs from net
income, operating income, and operating margin determined in accordance with
GAAP and should not be considered in isolation or as a substitute for measures
of performance determined in accordance with GAAP. Our and our segments' EBIT,
adjusted EBIT, adjusted EBITDA and adjusted EBITDA margin follows. These
non-GAAP financial measures may not be comparable to similarly titled measures
reported by other companies.
December 31,
(in millions, except percentages) 2022 2021
Net income (GAAP) $ 924.0 $ 421.7
Less: (loss) income from discontinued operations (GAAP) (1.2) 34.7
Income from continuing operations (GAAP) 925.2 387.0
Provision for income taxes 270.4 95.5
Interest expense, net 85.9 80.3
Interest income (7.1) (1.2)
EBIT 1,274.4 561.6
Exit and disposal, and facility rationalization costs 5.8 17.1
Inventory step-up amortization and acquisition costs 4.4 26.4
Impairment charges 25.3 5.0
Losses from acquisitions and disposals 0.8 4.7
(Gains) losses from insurance (1.1) 0.4
Losses from litigation 2.1 0.4
Total non-comparable items 37.3 54.0
Adjusted EBIT 1,311.7 615.6
Depreciation 96.7 86.4
Amortization 154.6 131.5
Adjusted EBITDA $ 1,563.0 $ 833.5
Divided by:
Total revenues $ 6,591.9 $ 4,810.3
Adjusted EBITDA margin 23.7 % 17.3 %
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Year Ended December 31, 2022
Corporate and
(in millions, except percentages) CCM CWT CIT CFT unallocated
Operating income (loss) (GAAP) $ 1,175.0 $
128.6
2.0 0.8 (1.0) - (0.5)
EBIT 1,173.0 127.8 38.2 36.5 (101.1)
Exit and disposal, and facility
rationalization costs 0.1 0.1 5.4 0.2 -
Inventory step-up amortization and
acquisition costs - - - 0.1 4.3
Impairment charges - 25.0 - - 0.3
Losses (gains) from acquisitions and
disposals - 0.3 0.7 - (0.2)
Losses (gains) from insurance - 0.3 - (1.4) -
Losses from litigation - - 2.0 - 0.1
Total non-comparable items 0.1 25.7 8.1 (1.1) 4.5
Adjusted EBIT 1,173.1 153.5 46.3 35.4 (96.6)
Depreciation 38.7 24.1 24.5 5.7 3.7
Amortization 16.9 73.0 47.3 15.2 2.2
Adjusted EBITDA $ 1,228.7 $ 250.6 $ 118.1 $ 56.3 $ (90.7)
Divided by:
Total revenues $ 3,885.2 $ 1,564.2 $ 845.4 $ 297.1 $ -
Adjusted EBITDA margin 31.6 % 16.0 % 14.0 % 18.9 % NM
(1)Includes other non-operating (income) expense, net, which may be presented in
separate line items on the Consolidated Statements of Income and Comprehensive
Income.
Year ended
Corporate and
(in millions, except percentages) CCM CWT CIT CFT unallocated
Operating income (loss) (GAAP) $ 619.9 $
64.4
2.5 (0.4) (0.2) 1.6 2.4
EBIT 617.4 64.8 (17.3) 22.4 (125.7)
Exit and disposal, and facility
rationalization costs 0.1 0.4 15.5 0.9 0.2
Inventory step-up amortization and
acquisition costs - 24.4 - 0.1 1.9
Impairment charges - - 1.8 - 3.2
Losses from acquisitions and
disposals 2.2 - 0.4 0.2 1.9
Losses (gains) from insurance 0.3 0.4 - (0.3) -
Losses from litigation - - 0.3 - 0.1
Total non-comparable items 2.6 25.2 18.0 0.9 7.3
Adjusted EBIT 620.0 90.0 0.7 23.3 (118.4)
Depreciation 36.6 15.7 24.9 5.5 3.7
Amortization 16.1 45.6 50.2 17.6 2.0
Adjusted EBITDA $ 672.7 $ 151.3 $ 75.8 $ 46.4 $ (112.7)
Divided by:
Total revenues $ 2,846.2 $ 990.5 $ 687.8 $ 285.8 $ -
Adjusted EBITDA margin 23.6 % 15.3 % 11.0 % 16.2 % NM
(1)Includes other non-operating (income) expense, net, which may be presented in
separate line items on the Consolidated Statements of Income and Comprehensive
Income.
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Year ended December 31, 2020
Corporate and
(in millions, except percentages) CCM CWT CIT CFT unallocated
Operating income (loss) (GAAP) $ 524.2 $
57.4
3.4 0.4 (0.2) (5.1) 13.2
EBIT 520.8 57.0 (1.9) 10.4 (110.2)
Exit and disposal, and facility
rationalization costs 0.4 0.6 16.4 3.7 -
Inventory step-up amortization and
acquisition costs 0.2 (0.1) 0.4 0.5 3.4
Impairment charges - - 6.0 - -
Losses (gains) from acquisitions and
disposals 3.1 3.9 - (2.9) (0.1)
Gains from insurance - (0.7) - - -
Losses on extinguishment of debt - - - - 8.8
Total non-comparable items 3.7 3.7 22.8 1.3 12.1
Adjusted EBIT 524.5 60.7 20.9 11.7 (98.1)
Depreciation 35.6 12.6 25.2 5.6 3.1
Amortization 16.3 33.5 52.3 17.8 0.7
Adjusted EBITDA $ 576.4 $ 106.8 $ 98.4 $ 35.1 $ (94.3)
Divided by:
Total revenues $ 2,335.4 $ 660.2 $ 731.6 $ 242.7 $ -
Adjusted EBITDA margin 24.7 % 16.2 % 13.4 % 14.5 % NM
(1)Includes other non-operating (income) expense, net, which may be presented in
separate line items on the Consolidated Statements of Income and Comprehensive
Income.
Outlook
Revenues
Our expectations for segment revenues in 2023 follows:
2023 Revenue Primary Drivers
Carlisle Construction Materials Low single-digit growth •Strong re-roofing activity
•Pricing to the value of the Carlisle Experience
•Increasing demand for energy-efficient building
products
Carlisle Weatherproofing Low double-digit decline •Headwinds in residential markets Technologies
•Partially offset by continued channel penetration
and more resilient commercial repair & remodel
demand
medical markets
•Backlog growing
Carlisle Fluid Technologies High single-digit growth •New product traction and positive pricing
•Backlog growing
Total Carlisle Low single-digit growth
Cash Flows
Our priorities for the use of cash are to invest in growth and performance
improvement opportunities for our existing businesses through capital
expenditures, pursue strategic acquisitions that meet our stockholder return
criteria, pay dividends to stockholders and return value to stockholders through
share repurchases.
Capital expenditures in 2023 are expected to be approximately $200 million to
$225 million , which primarily includes continued investments in CCM and CWT.
Planned capital expenditures for 2023 include new product and capacity
expansion, business sustaining projects and cost reduction efforts.
Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements generally use words such as "expect," "foresee,"
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"anticipate," "believe," "project," "should," "estimate," "will," "plans," "intends," "forecast," and similar expressions, and reflect our expectations concerning the future. Such statements are made based on known events and circumstances at the time of publication and, as such, are subject in the future to unforeseen risks and uncertainties. It is possible that our future performance may differ materially from current expectations expressed in these forward-looking statements, due to a variety of factors such as: increasing price and product/service competition by foreign and domestic competitors, including new entrants; technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; our mix of products/services; increases in raw material costs that cannot be recovered in product pricing; domestic and foreign governmental and public policy changes including environmental and industry regulations; the ability to meet our goals relating to our intended reduction of greenhouse gas emissions, including our net zero commitments; threats associated with and efforts to combat terrorism; protection and validity of patent and other intellectual property rights; the identification of strategic acquisition targets and our successful completion of any transaction and integration of our strategic acquisitions; our successful completion of strategic dispositions; the cyclical nature of our businesses; the impact of information technology, cybersecurity or data security breaches at our businesses or third parties; the outcome of pending and future litigation and governmental proceedings; risks from the global COVID-19 pandemic, including, for example, expectations regarding the impact of the COVID-19 pandemic on our businesses, including on customer demand, supply chains and distribution systems, production, our ability to maintain appropriate labor levels, our ability to ship products to our customers, our future results, or our full-year financial outlook; and the other factors discussed in the reports we file with or furnish to theSecurities and Exchange Commission from time to time. In addition, such statements could be affected by general industry and market conditions and growth rates, the condition of the financial and credit markets and general domestic and international economic conditions, including inflation and interest rate and currency exchange rate fluctuations. Further, any conflict in the international arena, including the Russian invasion ofUkraine , may adversely affect general market conditions and our future performance. Any forward-looking statement speaks only as of the date on which that statement is made, and we undertake no duty to update any forward-looking statement to reflect events or circumstances, including unanticipated events, after the date on which that statement is made, unless otherwise required by law. New factors emerge from time to time and it is not possible for management to predict all of those factors, nor can it assess the impact of each of those factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.
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