Dividend Growth Stock Overview: Carlisle Companies

Among the items that Carlisle Companies produce is rigid foam insulation
for roofing systems.
Photo courtesy Ryo Chijiiwa/flickr.com.

About Carlisle Companies

Carlisle Companies, Inc. is a holding company for Carlisle Corporation, a diversified multi-national manufacturing company. Carlisle Companies is headquartered in Charlotte, NC and has over 11,000 employees. While Carlisle does have some organic growth, the company has an active program in place to find and acquire companies that can be quickly integrated into their four existing business segments: Carlisle Construction Materials, Carlisle Interconnect Technologies, Carlisle Brake & Friction, and Carlisle FoodService Products.

Carlisle Construction Materials manufactures and sells rubber and PVC roofing systems, and energy-efficient rigid foam insulation panels for roofs. The segment serves both commercial and residential construction markets and has 27 manufacturing facilities worldwide. The Construction Materials segment provides about 60% of the company’s total revenues and earnings before interest and taxes.

Carlisle Interconnect Technologies designs and manufactures wire, cable, connectors, and cable assemblies for power and data transfer purposes. The products are used in a variety of applications, including aerospace, defense electronics and medical technologies. The segment sells its products in the United States, Europe and China, and produces its products in 14 manufacturing facilities across North America, Europe and China. 29% of company sales are derived from the Interconnect Technologies segment.

Carlisle Brake & Friction produces braking systems and friction products for use in the construction, agricultural, mining, aircraft, heavy truck and performance racing markets. The segment’s 10 manufacturing facilities are distributed across the U.S., Europe and Asia, including a small presence in India. The segment provides 6% of total company sales.

Finally, the Carlisle FoodService Products segment manufactures commercial foodservice and janitorial products, with a focus on three areas: tabletop dining supplies; food preparation, storage and handling supplies and tools; and cleaning and sanitation tools. Markets served by the FoodService Products segment include hospitals, nursing homes, restaurants, hotels, and industry work sites. This segment’s sales (6.5% of total company sales) are mainly in the United States and are conducted through a network of wholesalers and distributors. The segment’s 8 manufacturing facilities are exclusively in the United States and Mexico.

As mentioned above, Carlisle seeks to expand through acquisitions of related companies.

Carlisle just completed the acquisition of Graco Inc.’s liquid finishing brands business, which supplies liquid finishing equipment and systems for the automotive, aerospace, agriculture, construction, and transportation industries. The business will become Carlisle’s fifth segment and will be called Carlisle Fluid Technologies. The business operates in seven countries and derives 57% of its approximately $275 million annual sales outside the United States.

In October 2014, Carlisle purchased LHi Technology, which manufactures cable and interconnect components for the medical equipment and device industry. Prior to the acquisition, LHi had annual sales of about $100 million; the mid-year acquisition contributed $26.1 million to the 2014 sales of the Interconnect Technologies segment. Carlisle paid $194 million in cash for LHi.

Full year net sales in 2014 were $3.2 billion, which was up nearly 9% from the prior year; organic sales (excluding businesses that were acquired within the last 12 months) were up nearly 8%. Net income was $251.3 million, up 20% and earnings per share (EPS) were up 19% to $3.82. Income and EPS from continuing operations were up 7% and 6.1%, respectively.

Carlisle is expecting mid-to-high single digit percentage organic growth in 2015, driven by higher demand for commercial roofing. With 24% of the company’s revenues coming from outside the United States and growing from the recent acquisitions, the company will be increasingly exposed to risks from currency fluctuations.

The company is a member of the S&P Mid Cap 400 index and S&P’s High Yield Dividend Aristocrats index, and trades under the ticker symbol CSL.

Carlisle Companies’ Dividend and Stock Split History

Carlisle Companies' Dividend Growth

Through acquisitions, Carlisle Companies has raised its dividend an average of 8.3% over the last two decades.

Carlisle Companies began increasing dividends annually in 1977. The company has traditionally increased dividends in the third quarter of the calendar year, with the announcement coming at the beginning of August and the stock going ex-dividend in mid-August. The company’s most recent increase was in August of 2014 when Carlisle announced a 13.6% increase in the quarterly payout to an annual rate of $1.00. I expect Carlisle to announce its 39th annual dividend increase in August 2015.

Carlisle’s dividend growth rate has ebbed and flowed over the years, based on the board’s confidence in its businesses. The company is very conservative from a dividend perspective – over the last 5 years, the payout ratio has not exceeded 30%. Over that time, the dividend growth rate has increased from percentages in the mid-single digits to double digits since 2013. Carlisle’s 5-year compounded annual dividend growth rate (CADGR) since 2009 is 8.33%. Longer term, the dividend growth rate has remained consistent as well, with 10-year and 20-year CADGRs of 7.64% and 8.32%.

Since beginning its record of dividend growth, Carlisle has split its stock 5 times – each time 2-for-1. These splits occurred in May 1979, May 1981, June 1993, January 1997, and March 2007. Prior to that, the company split its stock 2-for-1 in May 1960 and October 1967. Had you owned shares of Carlisle in early 1960, the splits would have increased your share holdings by a multiple of 128. Had you invested in Carlisle when the company began increasing its dividends, you’d have increased your number of shares by a factor of 32.

Over the 5 years ending on December 31, 2014, Carlisle stock appreciated at an annualized rate of 23.18%, from a split-adjusted $31.73 to $90.00. This significantly outperformed the 13.0% annualized return of the S&P 500 and the 14.9% annualized return of the S&P Mid Cap 400 index during this time.

Carlisle Companies’ Direct Purchase and Dividend Reinvestment Plans

Carlisle Companies has both direct purchase and dividend reinvestment plans. These plans, which are open to non-U.S. investors, have very favorable fee structures. There is no setup fee and Carlisle covers all the costs to purchase shares. When investing directly, the minimum purchase is $10. You do not need to own shares to enroll in the plans, as long as you purchase at least 1 share at the time of enrollment.

When selling shares, you’ll pay a transaction fee of $10 plus a processing fee of 10 cents per share. The fees are deducted from the proceeds of the sale.

Helpful Links

Carlisle Companies’ Investor Relations Website

Current quote and financial summary for Carlisle Companies (finviz.com)

Information on the direct purchase and dividend reinvestment plans for Carlisle Companies

 

 

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