Carlisle Companies (CSL)

Vineet Apte, Shaan Phagura, Charles Li, Rahul Iyer, Joonha Lee, Michael Lin, Neel Sibal

1

Table of Contents

I. Investment Thesis II. Industry Overview III. Company OverviewIV. Industry Outlook V. Investment Strategy VI. Valuation

2

I. Investment Thesis

3

Catalysts

● Revenue growth is 3 times industry average

● Net income and earnings +30% over YTD

● Acquisitions in strong dollar environment

● Construction spending rises from Feb->Dec

● Healthcare expansion -> cabling demand

Risks

● Low profit margin○ but EBIT margin up 150 bps in 2015

● Brake/friction business revenue is down○ Delayed commodity reversal

Carlisle will benefit from commercial building trends, the strong dollar, and its healthcare data/cabling vertical.

Recommendation: BUYCSL Price: $83.89CSL Target: $112

4

Investment Thesis

II. Industry Overview

5

Industrial Conglomerates

6

● Large organization engaged in multiple industrial business lines ○ Usually focuses on two main line

● Examples:

Business Lines

7

● Construction Materials○ Focus on materials used for building structures, roads, etc.

● Interconnect○ Tools such as cables, microwave projectors used to built connectivity

● Fluids○ Paint coatings, wood finishings and variety of other materials

● Food Services○ Transportation of raw food, catering, delivery services, etc.

● Brake/Friction

○ Used to control movement of cranes, cars, and ships

Construction Materials in Focus● Biggest line of business

○ Dominates rubber and thermoplastic production

● US rubber prices set to increase○ Increase in usage of rubber from 70,000 tons to 75,000 tons in 2016

○ Will increase revenue

56.38 cents per lb

8

III. Company Overviews

9

Company Overviews

10

● Has numerous divisions - each specializing in a certain area○ Construction Materials○ Food Service products○ Brake and Friction○ Fluid Tech○ Aerospace/Medical/Defense Electronics- Part of Carlisle Interconnect Technologies

● Continued diversification through acquisitions

● 25% of sales international (Mostly Europe/China/Canada)

Fundamentals

11

Carlisle Companies (CSL)

Market Cap $5.39 Billion

Beta 0.86

P/E 17.4

P/B 2.35

EPS 4.82

Dividend Yield 1.43%

Net Margin 10.65%

ROA 10.25%

ROE 17.75%

Revenue $876.2 million (Q4), $3.5 Billion (2015)

Improving Fundamentals

● 10.6% Net Sales growth

● R&D spending up 26.6% last year

● Dividend growth rate 23%

● Lowered long term debt

12

Sales Breakdown by Stream

13

● CCM - Carlisle Construction Materials○ $2002.6 Million in sales○ 56.5% of sales○ 3.5% growth last year

● CIT - Carlisle Interconnect Technologies○ $784.6 Million in sales○ 22.1% of sales○ 17.2% growth last year

● CFT - Carlisle Fluid Technologies○ $203.2 Million in sales○ 5.7% of sales○ New stream

● CBF - Carlisle Brake and Friction○ 310.2 Million in sales○ 8.8% of sales○ -12.7% growth last year

● CFP - Carlisle Food Service Products○ 242.6 Million in sales○ 6.9% of sales○ -0.7% growth last year

Sales Breakdown by Area

14

● NA - $2659 Million○ 8.9% increase

● EU - $384 Million○ 7.6% increase

● Asia - $226 Million○ 65.8% increase

● Canada - $115 Million○ 1.8% decrease

● Mex/LA - $82 Million○ No change

● ME/Africa - $56 Million○ 14.4% increase

● Other - $22 Million○ 2.8% increase

IV. Industry Outlook

15

● Falls under Industrial Conglomerates Industry a. Market size $161.9 Billion (Carlisle Companies size $5.39 Billion)

b. Market leaders are Asia Equity Exchange Group Inc. and Icahn Enterprises LP.

● Very fragmented industry with companies making very similar products a. Emphasis on quality, cost and branding

● Broad range of products, but focus on rubber and plastica. Nearly 35% of rubbers market

● Connection with businesses include: Bridgestone Corp, Michelin.

Current State

16

Future Outlook ● Industry has a broad geographic reach with diversified products; buffering against

macroeconomic impacts

● Are able to pick and choose profitable projectsA. Increase in demand and productivity leading to firms being able to choose amongst the most

profitable projects● Increasing market demand despite China’s economic slowdown and low commodity

pricesA. Revenue within the industrials sector grew by nearly 4% and margins on income grew close to

7% higher than the previous year.

17

V. Investment Strategy

18

19

Value of Private Nonresidential Construction Put in Place (USD, millions)

Source: US Census Bureau

19

Strong Dollar, acquisitions?● Carlisle has $350 million in cash● Only $750 million in debt● Weak European markets

○ USD/EUR bottomed out○ low FX risk

● Already acquired LHi Technology○ Medical Interconnect

20

Healthcare Data/Cabling

21

● Healthcare firms need reliable data transmission

● Carlisle announced LHi Technology acquisition to expand into medical data in October 2014○ Carlisle Medical Technologies, the combination of CarlisleIT and LHi Technology

designs and manufactures high-performance interconnect solutions for medical device OEMs.

● “We are excited about the acquisition of LHi, which helps us further penetrate the targeted healthcare market by adding scale and technological capabilities while broadening service ranges to our customers in this very attractive market sector.”

● Led to Carlisle Interconnect Technologies exceptional 2015 performance, contributing more than $100m in sales

VI. Valuation

22

Discounted Cash Flow Analysis

23

Implied Share Price: $112.11

WACC: 7.11%

Perpetuity Growth Rate: 2.00%

Comparables Companies Analysis

24

Comparables Companies Analysis

25

Comparables Companies Analysis

26

27

28

Questions and Answers

29