Carlisle Companies Q3 Earnings Call Highlights

Key Points

• Third-quarter results exceeded expectations on revenue and EPS: Revenue rose 9% to $1.5 billion and adjusted EPS reached a record $5.92, supported by reroofing demand, pricing and market-share gains despite weak construction markets.
• Higher input costs pressured margins and delayed recovery: Adjusted EBITDA margin fell 210 basis points to 23.8% as petroleum, diesel and freight costs outpaced pricing; management now expects price-cost parity by the end of 2026.
• Shareholder returns remain a priority: Carlisle repurchased $350 million of stock in the quarter, is on track for $1.2 billion in full-year buybacks, and raised its quarterly dividend 14% to $1.25 per share.

Carlisle Companies NYSE: CSL reported third-quarter revenue growth of 9% to $1.5 billion and record adjusted earnings per share of $5.92, up 6% from a year earlier, as resilient reroofing demand, pricing and share gains offset continued weakness in construction end markets.

Adjusted EBITDA was essentially flat at $348 million, while adjusted EBITDA margin declined 210 basis points year over year to 23.8%. Management said rising petroleum-based raw material, diesel and freight costs outpaced the company’s price realization during the quarter, creating margin pressure.

Chair, President and CEO Chris Koch said the company expects to achieve price-cost parity as it exits 2026, one quarter later than previously forecast. Carlisle had expected parity in the third quarter and a modest benefit in the fourth quarter, but further increases in oil, diesel and related costs delayed that recovery.

“Pricing has not had a detrimental impact on demand,” Koch said, adding that the company did not see additional customer pre-buying during the quarter.

Input Costs Delayed Margin Recovery

Carlisle said its July outlook had assumed raw material and freight costs would stabilize. Instead, the renewed escalation of conflict in the Middle East contributed to higher petroleum-based material, diesel and freight costs. Koch said U.S. diesel prices reached about $6.50 per gallon in late September and stood at approximately $6.35 per gallon as of the day before the call, about 75% above the prior-year level.

Chief Financial Officer Kevin Zdimal said Carlisle’s price realization continued to build during the quarter. At Carlisle Construction Materials, or CCM, third-quarter price realization was about 4%, and the company expects approximately 7% year-over-year price realization in the fourth quarter.

The company expects its existing pricing and freight surcharges to produce a margin tailwind in 2027 if costs remain stable. Management also said it expects some input relief as force majeure declarations affecting MDI and polyols begin to lift. Koch said MDI costs could decline by a couple of percentage points, or somewhat more, through the fourth quarter and into the first quarter, while supply conditions for polyols have improved.

However, Carlisle said it would consider further pricing actions if costs remain elevated or rise further.

CCM Growth Led by Reroofing and Data Centers

CCM revenue increased 8% to $1.1 billion. Healthy reroofing demand, higher volumes and price realization offset softness in new construction. Reroofing grew at a mid-single-digit rate, while new construction declined at a mid-single-digit rate, according to the company.

CCM adjusted EBITDA increased 1% to $306 million, though its adjusted EBITDA margin declined 200 basis points to 28.2% as inflation outpaced pricing. Operating leverage, productivity initiatives under the Carlisle Operating System and cost controls partially offset the higher costs.

Management said channel inventories remained at normal seasonal levels, despite some pre-buying ahead of earlier price increases. Zdimal said October bookings remained strong and that the company has not seen a meaningful increase in project delays or cancellations.

Koch said data-center-related business rose about 200% in the third quarter, though he did not disclose its dollar contribution. He attributed the growth to a dedicated data center team, constrained PVC supply, Carlisle’s TPO capacity and broader customer awareness of the company’s offerings. Management expects premium TPO systems to gain further adoption in data center roofing applications.

Reroofing remains a central driver for the company. Koch said more than 70% of North American non-residential building stock is more than 25 years old, supporting recurring replacement demand. Carlisle does not assume a near-term recovery in new construction in its outlook.

CWT Margin Improved Despite Construction Weakness

Carlisle Weatherproofing Technologies, or CWT, posted 9% revenue growth to $379 million. Share gains and weather-related demand for roof coatings more than offset softness in residential and non-residential construction.

CWT adjusted EBITDA rose 13% to $68 million, and its adjusted EBITDA margin expanded 60 basis points to 18%. Structural cost savings and higher volume more than offset inflation, according to the company.

Management said CWT’s efficiency initiatives, including automation, footprint consolidation and in-house expanded polystyrene resin production, are substantially complete. Synergies from recent insulation acquisitions also began contributing to results. Carlisle expects $20 million to $30 million of benefits from those investments in 2026, with some carryover into the first quarter of 2027.

For the fourth quarter, management expects CCM EBITDA margin to be flat year over year and CWT margin to improve by about 100 basis points. Consolidated adjusted EBITDA margin is expected to be flat, including corporate costs.

Capital Returns and Vision 2030

As of Sept. 30, Carlisle had $547 million of cash and cash equivalents, $1 billion available under its revolving credit facility and net debt to EBITDA of 1.8 times. Third-quarter operating cash flow from continuing operations was $314 million, while free cash flow was $277 million after $37 million in capital expenditures.

The company repurchased $350 million of shares during the quarter, bringing year-to-date repurchases to $850 million. Including $140 million in dividends, Carlisle returned $990 million to shareholders during the first nine months of 2026. It remains on track to repurchase $1.2 billion of stock for the full year.

Carlisle also raised its quarterly dividend 14% to $1.25 per share, marking its 50th consecutive annual dividend increase.

For the fourth quarter, the company expects consolidated revenue and revenue in both CCM and CWT to rise at a high-single-digit rate year over year. Carlisle reaffirmed its full-year expectations for return on invested capital of about 25% and free-cash-flow margin of about 15%.

Management also maintained its Vision 2030 objectives, including adjusted EPS of $40 and return on invested capital above 25%, supported by organic growth, productivity, share repurchases and targeted acquisitions.

About Carlisle Companies (NYSE:CSL)

Carlisle Companies Incorporated is a diversified manufacturer focused primarily on products and solutions for the building envelope. Through its construction materials businesses, the company supplies commercial and residential roofing systems, insulation, waterproofing products, air and vapor barriers, and related components designed to improve the energy efficiency, durability, and performance of buildings.

Carlisle's product portfolio includes single-ply roofing membranes, roof coatings, metal roofing systems, polyisocyanurate and expanded polystyrene insulation, sealants, and other building-envelope products.

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