Carlisle Companies Incorporated Q2 FY2026 earnings call

• Overall Q2 2026 Performance

  • Total company revenue hit a record $1.6 billion, up 8% year-over-year; adjusted EPS grew 12% year-over-year to a record $7.03
  • Adjusted EBITDA increased 6% year-over-year to $412 million, with an adjusted EBITDA margin of 26.2% (down 70 basis points year-over-year, as raw material and freight costs rose faster than pricing realization during the quarter)
  • Productivity gains from the Carlisle Operating System (COS), disciplined cost management, and acquisition synergies partially offset inflationary cost pressures

• Financial Position & Capital Return

  • As of June 30, 2026, the company held $665 million in cash and cash equivalents, with $1 billion available under its revolving credit facility; net debt to EBITDA was 1.7x, comfortably within the 1-2x target range
  • Q2 2026 operating cash flow from continuing operations was $244 million, and free cash flow was $203 million; capital expenditures totaled $42 million
  • The company repurchased $250 million of shares in Q2, bringing year-to-date repurchases to $500 million; including $90 million in dividends, total shareholder return reached $590 million in H1 2026
  • The company will announce its 50th consecutive annual dividend increase in August 2026, earning Dividend King status, an elite milestone held by fewer than 60 U.S. public companies

• Innovation & New Product Launches

  • The company shipped the first orders of its award-winning ThermaThin 7 polyiso insulation in June 2026, slightly ahead of schedule; the product delivers ~23% higher R-value per inch than standard polyiso, helping contractors meet strict energy code requirements in constrained roof assemblies
  • 12 new products are planned for launch in 2026, with 6 already launched; remaining launches (including high-yield closed cell spray foam) are scheduled for August 2026
  • Henry's ultra touch denim insulation is now stocked in nearly half of all U.S. Home Depot locations, with improving same-store sales; new product contributions are expected to ramp meaningfully into 2027
  • The company remains on track to hit its Vision 2030 target of 25% of total sales coming from products introduced in the prior five years

• M&A & Capital Allocation

  • Management remains focused on disciplined M&A targeting building envelope companies that align with four core criteria: existing organic growth, tangible hard cost synergies, a strong incumbent management team, and compatibility with Carlisle's integration playbook
  • The Henry acquisition has outperformed expectations: EBITDA margins are in line with underwriting, while synergies have exceeded the initial target by 65% despite challenging end markets
  • Capital allocation is rooted in a longstanding focus on return on invested capital (ROIC), with consistent redeployment of free cash flow to drive sustained shareholder value creation

Carlisle has two operating segments: CCM (Carlisle Construction Materials) and CWT (Carlisle Wide Thermal). For Q2 2026:

• CCM delivered record revenue of $1.2 billion, an 8% year-over-year increase, contributing 75% of total company revenue. Adjusted EBITDA increased 5% year-over-year to $363 million, with an adjusted EBITDA margin of 30.7% (down 90 basis points year-over-year, in line with management expectations). Reroofing demand grew ~3% year-over-year, while commercial new construction declined mid-single digits.
• CWT delivered revenue of $389 million, a 10% year-over-year increase, contributing 24.3% of total company revenue. Adjusted EBITDA increased 5% year-over-year to $74 million, with an adjusted EBITDA margin of 19% (down 90 basis points year-over-year, but up 380 basis points sequentially from Q1 2026). Successful share gain initiatives offset continued softness in both residential and non-residential new construction markets.

• Full year 2026 revenue guidance was raised from low single-digit growth to mid-single-digit growth, driven by stronger than expected H1 performance and completed pricing actions
• Full year 2026 adjusted EBITDA margin guidance was lowered by 50 basis points to flat year-over-year, to account for extended raw material and freight inflation stemming from the Middle East conflict and associated supply chain disruptions; pricing benefits are expected to lag cost increases, with price-cost turning positive in Q4 2026
• CCM is expected to deliver mid-single-digit full year revenue growth, with reroofing growing 3-4% and new construction declining low single digits; full year CCM adjusted EBITDA margin is projected to hit ~29%, with Q3 2026 at ~29% and Q4 2026 at ~28%
• CWT is expected to deliver mid-single-digit full year revenue growth, with 100 basis points of full year adjusted EBITDA margin expansion and 250 basis points of margin improvement in both Q3 and Q4 2026; self-help initiatives are projected to deliver $20 million of total full year margin expansion
• The company reaffirmed prior full year guidance of ~25% ROIC, ~15% free cash flow margin, and double-digit adjusted EPS growth
• Long-term Vision 2030 financial goals remain unchanged, with adjusted EPS CAGR since the strategy's launch projected to exceed 11% through the end of 2026

• The ongoing Middle East conflict has driven significant increases in petroleum-based raw material costs and freight costs, with related supply chain disruptions and multiple supplier force majeure events on key inputs for roofing and insulation product lines
• Pricing actions to offset inflation take time to be realized, leading to a temporary negative price-cost impact in the first half of 2026 that pressured full year margin guidance
• MDI supply has tightened due to industry-wide issues including supply chain disruptions and chlorine production constraints, creating potential supply risk for market participants, though Carlisle has secured its required supply to date
• CWT continues to face headwinds from soft new construction end markets; volume growth from market recovery is required to drive more substantial margin improvement to 2023 levels, with the timing of a market recovery uncertain

Q: How do new products and Carlisle Operating System (COS) efficiencies position Carlisle to hit long-term Vision 2030 targets organically and drive margin improvement? / A: Management added innovation as a core pillar of Vision 2030 in 2025 and continues increasing R&D investment toward 3% of annual sales. New premium products like ThermaThin 7 deliver tangible value to contractors, building owners, and distributors, driving end-user demand while supporting higher revenue and margins. COS consistently delivers 1-2% of annual sales in cost savings, with ongoing investments in automation, robotics, and upcoming AI applications that improve productivity, reduce scrap, and enhance safety, supporting sustained margin expansion.

Q: What is the timing of pricing pass-through after three recent price increases, and have you faced any MDI supply constraints? / A: Pricing was low single-digit in Q2 as the company works through previously committed bids and customer notification periods. Pricing is expected to ramp to mid-single-digit in Q3 and high single-digit in Q4. While industry-wide MDI supply has tightened, Carlisle has secured all required supply to meet demand, though some other market participants may face constraints. For modeling, management projected Q3 CCM EBITDA margin of ~29%, Q4 of ~28%, and full year CCM EBITDA margin of ~29%; CWT is expected to deliver 100 basis points of full year EBITDA margin expansion, with 250 basis points of improvement in both Q3 and Q4.

Q: How much of CWT's 380 basis point sequential Q2 margin improvement came from completed structural initiatives (Kingman Automation, EPS insourcing), and what has driven COS success at the Henry acquisition? / A: CWT's full year 2026 structural margin expansion target is $20 million, with all investments now complete and contributions ramping. In Q2, automation contributed ~$3 million, footprint consolidation contributed ~$1 million, and in-house expanded polystyrene capacity contributed $2-$3 million. The biggest driver of COS success at Henry is cultural integration: Carlisle's two-in-the-box integration framework pairs existing Henry leadership with Carlisle operators, bringing a consistent framework focused on safety, efficiency, and disciplined capital allocation that Henry's team has embraced.

Q: Is the 50 basis point downward revision to full year 2026 margin guidance entirely driven by price-cost timing, or are there other factors? / A: The entire downward revision is due to temporary price-cost timing from faster-than-expected raw material and freight inflation, with no other headwinds. Q2 saw a ~$40 million negative price-cost impact at CCM, with a smaller ~$2 million impact at CWT. Management expects price-cost to reach neutral in Q3 and turn positive in Q4. The upward revision to full year revenue guidance (from low to mid-single-digit growth) implies high single-digit revenue growth for both segments in both Q3 and Q4 2026.