Carlisle Posts Record Adjusted EPS of $5.92 Despite Margin Decline
Key Facts
Carlisle said on October 28 that adjusted earnings per share reached a record $5.92 in the third quarter of 2026, up 6% from $5.61 a year earlier. Revenue rose 9% to $1.4634 billion, from $1.3469 billion in the year-earlier period. But sales growth did not prevent margins from falling, as adjusted EBITDA margin declined to 23.8% from 25.9%, a drop of 210 basis points. The company attributed the decline to raw-material and freight costs rising faster than pricing gains realized during the quarter. The results showed revenue expansion alongside pressure on returns from each dollar of sales.
The divergence extended to operating income, which was $293.2 million compared with $293.9 million a year earlier, while operating margin fell to 20.0% from 21.8%, a decline of 180 basis points. In the building products segment, revenue rose 8% to $1.1 billion, and adjusted EBITDA increased 1% to $306 million. The segment’s margin, however, fell 200 basis points to 28.2%. Management said the escalation of conflict in the Middle East pushed costs for oil-derived raw materials, diesel and freight to levels higher than it had expected in its July estimates. It added that inflation outpaced pricing realization, weighing on the margin during the period.
By contrast, the insulation and weatherproofing technologies segment recorded faster earnings growth than revenue growth. Its revenue rose 9% to $379 million, while adjusted EBITDA increased 13% to $68 million. The segment’s margin was 18.0%, up 60 basis points year over year. CEO Chris Koch said revenue in the building products segment benefited from data centers and demand for reroofing. He added that reroofing activity had grown steadily since the launch of Vision 2030, supported by the aging building stock and the non-discretionary need to replace roofs. Koch said: "Reroofing has grown steadily since we launched Vision 2030, supported by the aging building stock and the non-discretionary nature of roof replacement."
For the first nine months of 2026, revenue rose 5% to $4.0858 billion from $3.8922 billion in the year-earlier period. Adjusted earnings per share also increased 7% to $16.55 from $15.47. The CFO said the lag between pricing and costs drove the year-over-year decline in adjusted EBITDA margin, describing it as a timing issue rather than a structural problem. He added that demand had not changed materially as the company implemented price increases. He said: "As in prior inflationary cycles, pricing lags costs, which led to the year-over-year decline in adjusted margin. We view this as a timing issue, not a structural one."
Management said unexpected cost increases delayed pricing and cost break-even by one quarter. On its second-quarter call, the company had expected pricing to approach break-even with costs in the third quarter, then turn into a slight positive contribution in the fourth quarter; it now expects to reach break-even at the end of 2026. It said the impact of pricing actions would continue to build in the fourth quarter and extend into 2027, and that margin expansion depended on raw-material costs returning to normal levels. For the fourth quarter, the company expects high-single-digit revenue growth and adjusted EBITDA margin to be stable year over year. These expectations do not assume a near-term recovery in new construction markets.
Margin pressure coincided with a decline in the stock after the results were announced. Carlisle shares closed the regular session on October 28 at $345.21, down 0.96%, then fell 2.17% in after-hours trading to $337.70, according to Investing.com. The stock had closed at $348.57 on October 27, according to EL7 data. On shareholder returns, the company repurchased $350 million of shares during the quarter and said it was on track to meet its $1.2 billion share repurchase target in 2026. It also raised its quarterly dividend by 14%, marking its 50th consecutive annual increase.