CHARLOTTE, N.C. -- Jul 26 -- Carlisle Companies Incorporated reported net sales from continuing operations of $870.8 million for the quarter ended June 30, 2011, a 27% increase from net sales of $687.6 million in the second quarter of 2010. The Company's organic sales increase of 14% from the prior year period was primarily driven by strong sales growth in the Company's off-highway brake and friction, commercial re-roofing and aerospace businesses. The Carlisle Brake & Friction ("CBF") segment's acquisition of Hawk contributed $83.5 million in sales, or 12%, in the second quarter of 2011. The impact of foreign currency exchange rates on net sales was an increase of less than 1% in the second quarter of 2011.
Income from continuing operations increased 43% to $55.3 million, or $0.87 per diluted share, in the second quarter 2011 compared with $38.8 million, or $0.62 per diluted share, in the second quarter of 2010. The increase in income was due to the earnings contribution from the Hawk acquisition, a lower effective tax rate, organic sales growth and efficiencies gained through the Carlisle Operating System. Partially offsetting this increase were higher raw material costs experienced in all segments in the second quarter of 2011 as compared to the second quarter of 2010.
Comment
David A. Roberts, Chairman, President and Chief Executive Officer, said, "Our results demonstrated continued strong sales and overall earnings growth. Carlisle Brake & Friction achieved another record sales quarter. The performance of CBF's Hawk operation acquired in December 2010 was outstanding, with sales contribution of $83.5 million and EBIT of $15.6 million. Organic sales growth in the Brake & Friction segment was 33% on strong demand for global agriculture, construction and mining applications. Our Construction Materials and Interconnect Technologies segments also had impressive sales results with growth of 19% and 15%, respectively, during the second quarter 2011."
Roberts continued, "During the second quarter 2011, our EBIT (Earnings before interest and income taxes) margin grew from 9.3% during the second quarter 2010 to 9.8%. This improvement was largely attributable to Brake & Friction and Interconnect Technologies, with both segments achieving EBIT margins above 16%. EBIT increased by 6% in the Construction Materials segment. Construction Materials was able to achieve EBIT margin of 13.2% despite a significant increase in raw material costs. While EBIT in the Transportation Products segment increased by 8%, margin was negatively impacted by production inefficiencies related to the start-up of the Jackson, TN, tire facility. All of our businesses have responded to significant raw material price increases this year by enacting pricing actions and pursuing savings through the Carlisle Operating System. However, increased raw material costs will continue to be a challenge through the remainder of 2011."
Roberts added, "We continue to actively pursue acquisition opportunities that are consistent with our long-term goals of achieving 30% global sales and 15% operating margins. We are excited about our recently announced agreement to acquire PDT in Germany, a leading manufacturer serving the growing single-ply roofing market in Europe. This transaction should close in the third quarter."
Roberts concluded by stating, "For the full year 2011, we are planning for sales growth in the mid-twenty percent range. Despite increasing raw material expense, we expect that EBIT margins will continue to trend upwards versus last year. Our efforts to improve cash flow year-to-date have been impacted by significant sales demand, particularly in our overseas markets. However, we remain committed to improving our cash flow and increasing inventory turns through the Carlisle Operating System. Our balance sheet remains strong and we are well-positioned to continue to pursue growth opportunities both organically and through bolt-on acquisitions."
Segment Results (Excerpts)
Carlisle Construction Materials ("CCM"): Second quarter 2011 net sales of $412.0 million increased by 19% from net sales of $345.8 million in 2010. EBIT increased 6% to $54.2 million from $51.3 million for the same period in the prior year. The increase in sales reflected continued strong demand for the Company's reroofing applications as well as expansion of global sales initiatives. EBIT margin decreased from 14.8% in the second quarter 2010 to 13.2% for the second quarter 2011 due to higher raw material costs. The Company implemented price increases during the second quarter and further price increases are planned through the third quarter.
Carlisle Transportation Products ("CTP"): Second quarter 2011 net sales of $204.3 million increased by 6.4% compared to net sales of $192.0 million over the prior year period. The increase in sales primarily reflected higher selling prices offset by lower volume within the outdoor power equipment market. EBIT increased 8% to $6.8 million from $6.3 million for the same period in 2010. EBIT margin of 3.3% in the second quarter of 2011 was hampered by production inefficiencies from the ramp up of manufacturing at the Jackson, TN, tire plant. While higher selling prices at CTP offset the cost of raw material increases during the second quarter of 2011, higher raw material costs that are capitalized into inventory may negatively impact margin in future quarters.
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