Carlisle Companies Incorporated: A Leader in Building Envelope Solutions

Published on March 15, 2025 | Ticker: CSL

Business Overview and History

Carlisle Companies Incorporated (NYSE:CSL) is a leading manufacturer and supplier of innovative building envelope products and solutions for more energy-efficient buildings. Through its two core business segments - Carlisle Construction Materials (CCM) and Carlisle Weatherproofing Technologies (CWT) - the company has solidified its position as a premier provider of premium roofing, weatherproofing, and insulation solutions to the commercial and residential construction markets.

Carlisle Companies Incorporated was originally founded in 1917 as the Carlisle Tire and Rubber Company, producing inner tubes and rubber products. Over the decades, the company evolved from a tire manufacturer into a diversified industrial conglomerate, expanding into various markets such as construction materials, industrial products, and interconnect technologies.

In the early 1960s, Carlisle made a strategic pivot and began manufacturing single-ply ethylene propylene diene monomer (EPDM) roofing membranes, marking the beginnings of its construction materials business. This business segment, now known as Carlisle Construction Materials (CCM), would go on to become a leading provider of premium roofing products and related technologies primarily for the commercial construction market.

Over the years, Carlisle faced a number of challenges common to industrial conglomerates, including managing diverse business lines and weathering cyclical market conditions. In the early 2000s, the company divested some of its non-core industrial businesses to focus more on its construction materials and interconnect technologies segments. This strategic realignment was intended to streamline operations and improve profitability.

In 2021, Carlisle made another pivotal move by acquiring Henry Company LLC, a leading provider of building envelope solutions. This acquisition significantly strengthened Carlisle's position in the weatherproofing and moisture protection product markets, expanding its reach within the building envelope space. The company continued to grow through other strategic acquisitions in the following years.

Through these transformations, Carlisle has demonstrated its ability to adapt to changing market conditions and evolve its business model. The company's focus on innovative building products and solutions has been a key driver of its success over its more than 100-year history.

In 2024, Carlisle completed the $2 billion divestiture of its Carlisle Interconnect Technologies (CIT) segment, marking a decisive pivot towards its core building products operations. This transformative move has allowed the company to sharpen its focus, streamline its operations, and capitalize on the robust growth opportunities within the building envelope market.

Carlisle's CCM segment is a leading manufacturer and supplier of premium roofing products and related technologies, primarily for the commercial construction market. The segment's diverse product portfolio includes EPDM, TPO, and PVC roofing membranes, polyiso insulation, and engineered metal roofing and wall panel systems. CCM's strong market position and customer relationships have enabled it to consistently deliver industry-leading margins, with a 2024 adjusted EBITDA margin of 31.4%.

The CWT segment, formed in 2022 through the acquisition of Henry Company, is a provider of high-performance weatherproofing and moisture protection products, protective roofing underlayments, integrated air and vapor barriers, spray polyurethane foam, and expanded polystyrene insulation. This segment serves both commercial and residential construction markets, offering a comprehensive suite of building envelope solutions.

Segment Analysis

Carlisle Construction Materials (CCM)

CCM is a manufacturer and supplier of premium roofing products and related technologies primarily for the commercial construction market. The segment offers high-performance, single-ply roofing solutions including EPDM, TPO, PVC, architectural metal, and roof garden systems. These products are sold under brands such as Carlisle SynTec, Versico, Weatherbond, and Hunter Panels in the United States and globally, with EPDM membranes sold under the Resitrix and Hertalan brands primarily in Europe.

CCM operates manufacturing facilities throughout the United States, its primary market, as well as in Germany, the Netherlands, the United Kingdom, and Romania. The majority of CCM's products are sold through a network of authorized sales representatives and distributors in North America and Europe.

In 2024, CCM's revenues increased by 13.9% on an organic basis, driven by higher sales in the non-residential end market. This growth was attributed to continued inventory normalization and growing re-roof activity, which led to increased construction activity. CCM's operating margin and adjusted EBITDA margin also improved in 2024, primarily reflecting the volume leverage on higher sales.

Key raw materials for the CCM segment include methylene diphenyl diisocyanate (MDI), polyol, EPDM polymer, TPO polymer, carbon black, and coated steel.

Carlisle Weatherproofing Technologies (CWT)

CWT is a leading provider of high-performance weatherproofing and moisture protection products, protective roofing underlayments, integrated air and vapor barriers, spray polyurethane foam and coating systems, and block-molded expanded polystyrene insulation for the building envelope. The segment offers an enhanced set of solutions and systems to aid in the design of efficient building envelope construction projects, with a focus on environmentally responsible principles.

CWT operates manufacturing facilities and distribution locations throughout the United States and Canada, its primary markets. The majority of CWT's products are sold through distribution and retail outlets throughout North America.

In 2024, CWT's revenues decreased by 2.6% on an organic basis, primarily reflecting lower sales in the residential end market, partially offset by higher sales in the non-residential end market. CWT's operating margin and adjusted EBITDA margin decreased in 2024, primarily due to higher operating costs to support longer-term growth initiatives.

Key raw materials for the CWT segment include MDI, silicone polymer, asphalt, glass mat, and expanded polystyrene insulation bead.

Financials

In 2024, Carlisle delivered record financial results, with consolidated revenues of $5.0 billion, representing a 9.1% year-over-year increase. The CCM segment contributed $3.70 billion to total revenue, while the CWT segment contributed $1.30 billion. The company's adjusted earnings per share (EPS) reached $20.20, a 30.2% improvement from the prior year. This strong performance was driven by robust demand for the company's roofing and weatherproofing products, as well as the successful integration of strategic acquisitions.

Carlisle's operating income for 2024 was $1.14 billion, representing an operating margin of 22.8%. Adjusted EBITDA reached $1.33 billion, with an adjusted EBITDA margin of 26.6%, up 150 basis points from the prior year.

During 2024, Carlisle generated $938 million in free cash flow, representing a robust 18.8% free cash flow margin. This strong cash flow generation allowed the company to deploy nearly $700 million towards strategic acquisitions, while also returning $1.8 billion to shareholders through share repurchases and dividend payments.

For the fourth quarter of 2024, Carlisle reported revenue of $1.12 billion, which was flat year-over-year. Net income for the quarter grew 7% year-over-year to $162.80 million. The flat revenue was due to challenges in the residential and new commercial construction markets, offset by strength in the reroofing business.

In terms of geographic performance, the majority of Carlisle's revenues, over 90%, are generated in the United States. International revenues, primarily from Europe, account for the remaining amount.

Liquidity

Carlisle's financial position remains exceptionally strong, with $754 million in cash and cash equivalents and $1 billion of available liquidity under its revolving credit facility as of December 31, 2024. The company's net debt-to-EBITDA ratio stood at 0.8x, providing ample financial flexibility to fund growth initiatives and return capital to shareholders.

Other key financial metrics as of December 31, 2024 include:

Debt/Equity ratio: 0.81

Current ratio: 2.89
Quick ratio: 2.18

These ratios indicate a healthy balance sheet and strong liquidity position, allowing Carlisle to navigate market fluctuations and pursue growth opportunities.

Navigating Macro Headwinds and Outlook

In the fourth quarter of 2024, Carlisle faced a challenging operating environment, with macro headwinds weighing on both its CCM and CWT segments. Higher interest rates, restrictive lending conditions, and unfavorable weather patterns negatively impacted demand, particularly in the residential and commercial new construction markets.

Despite these near-term challenges, Carlisle remains confident in its ability to navigate the current landscape and continue its growth trajectory. The company's Vision 2030 strategy, centered around innovation, operational excellence, strategic M&A, and disciplined capital allocation, positions it well to capitalize on the long-term trends supporting the building products industry.

For 2025, Carlisle expects to deliver mid-single-digit revenue growth, driven by continued strength in the reroofing market, the full-year contribution from recent acquisitions, and the successful implementation of price increases. Specifically, the company anticipates:

Consolidated revenue growth in the mid-single digits, weighted towards the back half of the year.

CCM revenue growth in the mid-single digits, driven by continued strength in reroofing activity and the full year benefit from recent acquisitions.
CWT revenue growth in the high single-digits, driven by the full year impact of the Plasti-Fab and ThermaFoam acquisitions.
Approximately 50 basis points of adjusted EBITDA margin expansion, despite a 50% year-over-year increase in R&D expense.
Double-digit EPS growth compared to the record 2024 results.

Carlisle plans to deploy around $150 million in capital expenditures in 2025 and repurchase approximately $800 million in shares. The company also expects to see a similar level of M&A activity in 2025 as in 2024, with nearly $700 million deployed in acquisitions that year.

Key Risks and Considerations

While Carlisle's long-term prospects remain compelling, the company is not immune to the broader macroeconomic uncertainties and industry-specific risks that could impact its performance. These include:

1. Cyclicality of the construction industry: Carlisle's business is heavily dependent on the health of the commercial and residential construction markets, which can be subject to significant cyclical swings.

2. Raw material cost volatility: The company's profitability is vulnerable to fluctuations in the prices of key raw materials, such as polyiso, EPDM polymer, and expanded polystyrene.

3. Competitive landscape: Carlisle operates in a highly competitive industry, with numerous regional and global players vying for market share in the building envelope solutions space.

4. Regulatory and compliance risks: The company must navigate an evolving regulatory landscape, including environmental, health, and safety regulations, which could impact its operations and costs.

5. Successful integration of acquisitions: Carlisle's growth strategy relies heavily on its ability to identify, acquire, and seamlessly integrate complementary businesses. Failure to execute on this strategy could hinder the company's expansion plans.

Despite these risks, Carlisle's strong market position, diversified product portfolio, and robust financial profile position it well to navigate the current macroeconomic environment and continue delivering value to its shareholders.

Conclusion

Carlisle Companies has demonstrated its resilience and ability to adapt to changing market conditions, as evidenced by its record financial performance in 2024. The company's strategic pivot towards building products, coupled with its focus on innovation, operational excellence, and disciplined capital deployment, has positioned it as a formidable player in the increasingly important building envelope solutions market.

While near-term macroeconomic headwinds may present challenges, Carlisle's long-term growth prospects remain compelling. The company's strong balance sheet, diversified business model, and well-defined strategic roadmap suggest that it is well-equipped to navigate the current environment and capitalize on the robust demand trends shaping the building products industry. With a clear focus on delivering innovative, labor-reducing, and environmentally responsible products and solutions through its Carlisle Experience strategy, the company is poised for continued success in the years to come.