Carlisle earnings up despite tyre/wheel unit issues

ERJ staff report (TB)

Cnarlotte, North Carolina -  Carlisle Cos. Inc. reported a 40.3-pecent jump in pre-tax operating income for fiscal 2011, although earnings at the company's transportation products business - which includes Carlisle Tire & Wheel - plunged 58 percent during the year.

Carlisle reported pre-tax earnings of $275.1 million for the year on record sales of $3.22 billion, a 28-percent increase over 2010. The operating margin increased slightly to to 8.5 percent.

Carlisle attributed about half the sales increase to organic growth and half to acquisitions. Net income rose 23.8 percent to $180.3 million.

Carlisle expects sales growth in 2012 of about 10 percent, including contributions from recent acquisitions, and an improvement in the pre-tax earnings margin. Carlisle also said it anticipates “significant” earnings improvements from its tyre and wheel business after resolving start-up issues at the unit's tyre plant in Jackson, Tenn.

Operating income at Carlisle Transportation Products dropped to $9.1 million on higher operating costs, especially for raw materials and the sale of higher-priced inventory during the fourth quarter. Sales rose 6.9 percent to $732.1 million.

The transportation unit, which also includes the power transmission business, reported an operating loss in the fourth quarter of $3.8 million on sales of $154.1 million.

Carlisle declined to comment in detail on the start-up issues at the Jackson plant-which contributed to unit operating loss of $8.9 million in the third quarter-but Carlisle Chairman, President and CEO David Roberts said scrap rates at the plant have dropped to less than 1 percent from more than 6 percent in the second quarter and plant efficiency has risen to 74 percent from about 50 percent.

The company budgeted $65 million in 2010/2011 to convert a former Whirlpool Corp. plant in Jackson to tyre production and relocate capacities from plants in Carlisle, Pa., Bowdon, Ga., and Buji, China, to the facility.

Carlisle also revamped the unit's management during fiscal 2011, promoting Kevin Forster, who was president of Carlisle's Asia-Pacific region, to president, replacing Fred Sutter, president of the business unit since 2008, and relocating the unit's headquarters to offices in Franklin, Tenn.

Carlisle said it expects capital expenditures of about $120 million to $150 million this year to meet organic growth needs, but management did not offer details.

From Tire Business (A Crain publication)

Press release from Carlisle

Transcript of analyst conference from Seeking Alpha