Executive Summary & Investment Thesis

Carlisle Companies Incorporated (NYSE: CSL) has fundamentally reshaped its corporate identity, completing a multi-year strategic pivot from a diversified industrial conglomerate into a focused, pure-play leader in the building products industry. The divestiture of its final non-core business, Carlisle Interconnect Technologies (CIT), in 2024 marked the culmination of this transformation, clarifying the company’s mission and concentrating its formidable resources on the highly profitable North American commercial roofing and building envelope markets.¹ Today, Carlisle stands as a premier manufacturer whose investment merits must be evaluated through the lens of its new, streamlined identity.

The core strengths of the “new” Carlisle are compelling. The company holds a dominant market position, particularly in the single-ply commercial roofing segment, which is underpinned by the stable and non-discretionary re-roofing cycle that constitutes approximately 70% of its commercial business.³ This structural advantage provides a significant degree of resilience against the more volatile new construction market. Financially, Carlisle exhibits a best-in-class profile, characterized by industry-leading profitability with adjusted EBITDA margins exceeding 25% and consistently high returns on invested capital (ROIC) of over 25%.¹ This financial strength is complemented by a disciplined and decidedly shareholder-friendly capital allocation strategy, highlighted by a 46-year history of consecutive dividend increases and a recently accelerated and substantial share repurchase program.⁵ Furthermore, Carlisle is strategically aligned with powerful secular “mega trends,” including the increasing demand for energy-efficient building solutions and labor-saving products, which provide a long-term tailwind for growth and pricing power.²

This analysis will explore several key themes central to the Carlisle investment case. First, it will assess the sustainability of the company’s superior profit margins and returns on capital in the face of intensifying competition from well-capitalized peers. Second, it will examine the interplay between the company’s exposure to the cyclical construction industry and the stabilizing influence of its dominant re-roofing business. Finally, it will delve into the appropriate valuation framework for a high-quality, market-leading enterprise that has successfully executed a profound and value-accretive strategic transformation. The central narrative is one of a company that has deliberately chosen focus over diversification, betting its future on continued leadership in a structurally attractive and profitable niche market.

The New Carlisle: A Pure-Play Building Products Powerhouse

The Strategic Pivot to Building Products

Carlisle’s evolution over the past two decades is a case study in strategic portfolio management. In 2006, the company was a diversified industrial holding company with only 43% of its revenue derived from Construction Materials; other significant segments included Tire & Wheel, Food Service Products, and Power Transmission.⁵ By 2016, the focus had sharpened, with Construction Materials and Interconnect Technologies comprising the bulk of the business, yet it remained a multi-industry enterprise.⁵ Recognizing the superior profitability and return profile of its building products franchise, management embarked on a deliberate strategy, culminating in the “Vision 2030” plan, to become a pure-play building products company.²

The strategic rationale for this pivot was multifaceted. Management sought to unlock shareholder value by concentrating resources on its highest-margin and highest-return businesses, which were consistently found within its building products portfolio.² This focus allows the company to more effectively leverage powerful secular growth trends, specifically the increasing regulatory and consumer demand for energy-efficient buildings to combat climate change and rising energy costs, and the development of labor-saving solutions to address the persistent shortage of skilled construction workers.² The execution of this strategy involved a series of significant divestitures, including Carlisle Fluid Technologies (CFT) and, most recently, the $2 billion sale of Carlisle Interconnect Technologies (CIT) in 2024.¹ These transactions not only streamlined the company’s operations but also generated substantial cash proceeds, which have been aggressively returned to shareholders via share repurchases, further enhancing per-share value.¹ The result of this transformation is a more focused, financially resilient, and strategically coherent enterprise, with 83% of its revenue now generated by its building products businesses.⁵

Business Segment Deep Dive

Following its strategic realignment, Carlisle now operates and reports through two complementary segments: Carlisle Construction Materials (CCM) and Carlisle Weatherproofing Technologies (CWT).

Carlisle Construction Materials (CCM)

CCM is the company’s primary value driver, representing the core of its commercial roofing and insulation business. In the first quarter of 2025, CCM generated $799 million in revenue, or approximately 73% of the company’s total sales.⁷ The segment’s product portfolio is comprehensive, centered on high-performance, single-ply roofing systems. These include thermoplastic polyolefin (TPO), a market-leading material known for its energy efficiency and durability; ethylene propylene diene monomer (EPDM), a highly durable synthetic rubber roofing membrane; and polyvinyl chloride (PVC) roofing systems.⁹ In addition to membranes, CCM is a major supplier of polyiso and expanded polystyrene insulation panels, which are critical components of an energy-efficient building envelope, as well as architectural metals and roofing accessories.⁸

Recent performance in the CCM segment illustrates both the resilience of its business model and the impact of the broader economic environment. In Q1 2025, reported revenue increased by 2%, a figure driven entirely by the acquisition of MTL; organic revenue (excluding acquisitions) declined by 1%.⁷ This trend continued in Q2 2025, with reported revenue growth of 0.6% and an organic decline of 0.6%, again driven by the MTL acquisition.³ This slight organic contraction reflects softer end-market demand and challenging year-over-year comparisons. Despite this modest volume pressure, the segment’s profitability remains exceptionally strong. Adjusted EBITDA margins were a robust 27.1% in the first quarter and expanded to an impressive 31.6% in the second quarter, underscoring the segment’s powerful pricing discipline and operational efficiency.³

Carlisle Weatherproofing Technologies (CWT)

The CWT segment, which accounted for the remaining 27% of company revenue in Q1 2025, offers a suite of products that protect the entire building envelope from moisture and air intrusion.⁷ Its portfolio includes waterproofing membranes for below-grade applications, air and vapor barriers, spray polyurethane foam (SPF) insulation, and various coatings and sealants for both commercial and residential construction.²

CWT’s recent performance has highlighted the company’s remaining cyclical exposure, particularly to the residential and new construction markets. In Q1 2025, CWT revenues declined 5% year-over-year, with a more pronounced organic revenue decline of 12%.⁷ The pressure continued in the second quarter, with a 2% reported revenue decline and a 10% organic decline, attributed to persistent softness in its end markets.³ The lower volumes have also impacted profitability, with adjusted EBITDA margins of 15.6% in the first quarter and 19.9% in the second quarter—healthy margins for many industrial companies, but notably below the levels achieved in the core CCM segment.³

The strategic pivot has undeniably created a more profitable and focused company. However, it has also concentrated its risk profile within the North American building products sector. The divergent performance of its two segments serves as a clear illustration of the company’s current state: the re-roofing-centric CCM segment provides a strong, resilient, and highly profitable core, while the CWT segment, with its greater exposure to new and residential construction, remains subject to more pronounced cyclical headwinds. This dynamic requires investors to analyze Carlisle not as a diversified industrial immune to any single market’s downturn, but as a specialized leader whose fortunes are now inextricably linked to the cycles of the construction industry.

Segment	Q1 2025 Revenue ($M)	Q1 YoY Growth (%)	Q1 Organic Growth (%)	Q1 Adj. EBITDA Margin (%)	Q2 2025 Revenue ($M)	Q2 YoY Growth (%)	Q2 Organic Growth (%)	Q2 Adj. EBITDA Margin (%)
Carlisle Construction Materials (CCM)	$799	2.0%	-1.0%	27.1%	$1,096	0.6%	-0.6%	31.6%
Carlisle Weatherproofing Technologies (CWT)	$297	-5.0%	-12.0%	15.6%	$354	-2.0%	-10.0%	19.9%
Total Company	$1,096	-0.1%	–	21.8%	$1,450	-0.1%	–	26.9%
Source: Carlisle Companies Q1 2025 and Q2 2025 Earnings Releases 3

Industry Dynamics & Competitive Landscape

The North American Commercial Roofing Market

Carlisle operates within the large and steadily growing commercial roofing market. Globally, the market was valued at approximately $45.38 billion in 2023 and is forecast to grow at a compound annual growth rate (CAGR) of around 6.7% to reach $81.34 billion by 2032.¹³ The United States represents a significant portion of this total, with the domestic roofing market projected to expand from roughly $24.79 billion in 2025 to $33.44 billion by 2030, a CAGR of 6.17%.¹⁴

The industry is supported by a confluence of durable growth drivers. The most significant of these is the re-roofing cycle. Commercial roofs have an average lifespan of about 20 years, after which replacement becomes a non-discretionary necessity to protect the building and its contents.¹ This replacement demand accounts for the vast majority of market activity—estimates range from 70% to as high as 94%—creating a resilient and predictable base of revenue that is less correlated with the economic cycle than new construction.³ Augmenting this stable foundation are several secular trends. Increasingly stringent building codes and a growing corporate focus on sustainability are driving demand for more energy-efficient roofing systems, such as highly reflective “cool roofs” and thicker insulation packages.¹⁶ Furthermore, the rising frequency of extreme weather events is pushing building owners to invest in more durable and resilient roofing materials to mitigate risk.¹⁶

Within the market, single-ply membranes—specifically TPO, EPDM, and PVC—have become the dominant technology for low-slope commercial roofs, utilized by over 80% of roofing contractors.¹⁴ TPO has emerged as the leading material within this category, prized for its combination of energy efficiency, durability, and cost-effectiveness. It commanded an estimated 37.7% share of the commercial single-ply membrane market in 2024.¹⁸

Competitive Positioning & Market Share

While large manufacturers like Carlisle play a critical role, the broader U.S. roofing market remains highly fragmented at the contractor level. The top five players are estimated to hold only 5-10% of the total market, a dynamic that has fueled a trend of consolidation through mergers and acquisitions by both strategic buyers and private equity firms.¹⁹

Despite this fragmentation, Carlisle has established itself as a clear leader in its core markets. The company is consistently ranked among the top global players in the roofing membranes industry, alongside a handful of other large, multinational corporations.²⁰ Its primary competitors include:

• GAF (a subsidiary of Standard Industries): Widely considered the largest roofing manufacturer in North America, GAF has a formidable presence in both the residential shingle market and the commercial roofing sector.²²
• Owens Corning (NYSE: OC): A major, publicly traded competitor in roofing, insulation, and composites. While historically stronger in residential roofing, Owens Corning is a significant player in the broader building materials landscape.²³
• Holcim: The global building materials giant has become an increasingly formidable competitor in commercial roofing through strategic acquisitions. Its purchase of Firestone Building Products and, more recently, the 2023 acquisition of Duro-Last for $1.29 billion, has significantly scaled its presence and capabilities in the North American market.¹⁸
• Other Building Products Peers: Other publicly traded companies in the building products space that serve as relevant valuation comparables include Masco (MAS), Fortune Brands Innovations (FBIN), Armstrong World Industries (AWI), and Crane (CR).²³

Barriers to Entry & Industry Structure

The barriers to entry in commercial roofing manufacturing are moderate. While the capital required to establish a new, state-of-the-art TPO production line is not insurmountable for a large corporation (estimated at $60-75 million), the true competitive hurdles lie elsewhere.²⁶ The most significant barriers are achieving manufacturing scale, establishing a trusted brand reputation backed by decades of performance, cultivating deep relationships with a nationwide network of distributors and contractors, and developing the technical expertise to offer and support long-term, warranted roofing systems.

For an end-user (the building owner), the cost of replacing a roof is substantial, but the incremental cost of choosing one manufacturer’s membrane over another is relatively small. Therefore, true customer stickiness is not with the building owner but with the roofing contractor. A contractor’s preference is shaped by factors like product familiarity, ease of installation, the quality of technical support from the manufacturer, and the strength of the relationship with the local sales representative. For a contractor, the costs of switching from one primary manufacturer to another are tangible, involving the time and expense of retraining crews on different installation details and the potential disruption of established business relationships.

Carlisle operates as a market leader in a large but fragmented industry. Its competitive strength is derived less from a singular, insurmountable technological advantage and more from a powerful combination of manufacturing scale, brand equity, and, most importantly, deeply entrenched channel relationships. The recent consolidation activity, exemplified by Holcim’s acquisition of Duro-Last, signals an intensifying competitive landscape. The primary threat to Carlisle’s position comes not from new entrants, but from existing, well-capitalized competitors seeking to consolidate market share and challenge its leadership. This environment places a premium on the durability of Carlisle’s competitive advantages.

Company (Ticker)	Market Cap ($B)	TTM Revenue ($B)	TTM P/E Ratio	TTM EV/EBITDA	Dividend Yield (%)	Key Business Focus
Carlisle (CSL)	$18.78	$5.00	15.90	16.23	0.92%	Commercial Roofing, Building Envelope
Owens Corning (OC)	$12.41	$11.49	51.51	7.00	1.89%	Roofing, Insulation, Composites
Masco (MAS)	$14.29	$7.70	–	11.72	1.83%	Plumbing, Decorative Architectural Products
Fortune Brands (FBIN)	$6.74	$4.61	16.44	–	–	Water, Outdoors, Security Products
Armstrong World (AWI)	$7.27	$1.45	26.78	–	–	Commercial & Residential Ceilings
Crane (CR)	$10.88	$2.18	25.05	–	–	Aerospace, Process Flow, Engineered Materials
Note: Financial data as of mid-2025. TTM EV/EBITDA for CSL calculated from Enterprise Value of $20.45B and EBITDA of $1.26B. Peer data sourced from market data providers. 23

The Carlisle Moat: Sources of Durable Competitive Advantage

Carlisle’s durable competitive advantage is not rooted in a single product or technology but in a multifaceted, ecosystem-based moat that is difficult for competitors to replicate. This moat is built on decades of cultivating brand strength, applicator loyalty, distribution scale, and targeted innovation.

Brand Strength & The “Carlisle Experience”

A cornerstone of the company’s strategy is the “Carlisle Experience,” a comprehensive value proposition that extends far beyond the physical product.² Having been a recognized leader in the roofing industry for nearly half a century, Carlisle has cultivated immense brand equity associated with quality, reliability, and performance.²⁷ This reputation is critical in an industry where the primary purchase—a commercial roof—is a long-term asset expected to perform for 20 years or more. The “Carlisle Experience” encompasses a suite of services including technical support, architectural design assistance, and the backing of industry-leading, long-term warranties, which provides peace of mind to building owners and architects.⁵

Applicator Loyalty & Training Programs

Carlisle’s most defensible competitive advantage lies in its deep, symbiotic relationship with its network of authorized roofing contractors, or “applicators.” The company understands that the long-term performance of a roofing system depends as much on the quality of the installation as it does on the quality of the materials. To this end, Carlisle has developed a sophisticated ecosystem of training and incentive programs designed to foster loyalty and ensure installation excellence.

• Incentive and Recognition Programs: Carlisle’s awards are among the most prestigious in the industry. The “Excellence in Single-Ply (ESP)” award, established in 1998, recognizes the company’s most dedicated and high-volume applicators.³⁰ This creates an elite, aspirational status for contractors. Even more strategically, the “Perfection Award” is granted to applicators in the top 5% based on their warranty claim history—meaning those with the highest-quality installations.³⁰ A select few of these winners are invited to the “Perfection Council,” serving as an advisory board to the company.³⁰ This system brilliantly aligns incentives: contractors are rewarded for flawless work, which in turn reduces Carlisle’s warranty expenses and reinforces its brand promise of quality to the end customer.
• Training and Support: The company operates training and education centers and provides extensive support to ensure contractors are proficient in installing its systems.⁵ This investment is crucial for validating the long-term warranties that are a key part of the product offering.

Distribution Network & Scale

Carlisle’s products are sold through a vast, multi-decade-old network of authorized sales representatives and independent distributors across its primary markets in North America and Europe.³³ This established go-to-market infrastructure represents a significant barrier to entry, as it would take a competitor years, if not decades, to replicate the relationships and logistical footprint. Furthermore, the company’s significant scale in manufacturing and procurement provides efficiencies that are difficult for smaller players to match.⁵

Technological Differentiation & Innovation

While the core roofing membrane product is not immune to commoditization, Carlisle maintains a technological edge through focused research and development. The company’s R&D efforts are strategically aimed at solving the most pressing problems for its contractor customers. A primary focus is on developing products that save labor, a critical value proposition in an industry facing a chronic shortage of skilled workers.² For example, innovations like its Flexible Fast Adhesive, which can deliver 60% labor savings, make Carlisle’s systems more profitable for contractors to install, reinforcing their loyalty.¹²

This commitment to innovation is protected by a substantial patent portfolio. The company holds 699 patent documents, including 158 granted patents, with numerous pending applications for new technologies in areas like spray devices and advanced roofing laminates.³⁴ In 2024, Carlisle invested $35 million in R&D, representing approximately 0.7% of sales.⁹ While this percentage may appear modest, the highly targeted nature of this spending—focused on creating tangible value for the installer—makes it highly effective.

The combination of these factors creates a powerful, self-reinforcing system. While a competitor might be able to manufacture a TPO membrane of similar quality, they cannot easily replicate the ecosystem of trust, training, and aligned incentives that Carlisle has built with thousands of roofing contractors over decades. Top-tier contractors prefer Carlisle because the support, labor-saving products, and prestigious rewards make their businesses more successful. Carlisle, in turn, benefits from high-quality installations, which lead to fewer warranty claims and a stronger brand. This virtuous cycle is the essence of the Carlisle moat, and it is a formidable barrier to competition.

Financial Performance & Capital Management

A Decade of Value Creation

An analysis of Carlisle’s financial performance over the past decade reveals a company that has successfully transitioned its portfolio, resulting in a structurally higher level of profitability and returns on capital. The strategic pivot to a pure-play building products company has unlocked significant value, evident in the expansion of margins and the consistent generation of strong free cash flow.

• Revenue Trajectory: The company’s top line reflects both the cyclical nature of its end markets and the impact of its portfolio actions. After a period of growth as a diversified entity, the divestiture of large business units has reshaped its revenue base. For the full fiscal year 2024, Carlisle reported total revenue of $5.0 billion, a 9.1% increase from $4.59 billion in 2023, driven by a strong performance in the core CCM segment, which saw revenues climb 13.9% to $3.7 billion.¹
• Structural Margin Expansion: The most compelling aspect of Carlisle’s financial story is its margin profile. The divestiture of lower-margin industrial businesses has allowed the superior profitability of the building products core to shine through. The company achieved a record adjusted EBITDA margin of 26.6% in 2024, a 150 basis point improvement over the prior year.² This level of profitability is best-in-class within the building products sector and demonstrates the pricing power and operational efficiency embedded in the business.
• Superior Returns on Capital: Carlisle is a disciplined allocator of capital, which is reflected in its consistently high returns. The company’s stated goal is to maintain a return on invested capital (ROIC) in excess of 25%, a threshold it has successfully met, reporting an ROIC of 28.5% for 2024.¹ Achieving such high returns is a hallmark of a business with a strong competitive moat that can reinvest capital at attractive rates.
• Robust Free Cash Flow Generation: The high margins and capital-efficient nature of the business translate into strong and consistent cash flow. In 2024, Carlisle generated $938 million in free cash flow from continuing operations.⁶ This robust cash generation is the engine that fuels the company’s capital allocation strategy, providing ample capacity for reinvestment, acquisitions, and significant returns to shareholders. The company’s long-term target is to maintain a free cash flow to sales ratio of over 15%.⁴

Fiscal Year	Revenue ($M)	Revenue Growth (%)	Gross Margin (%)	Operating Margin (%)	Net Income ($M)	Diluted EPS ($)	Free Cash Flow ($M)	ROIC (%)
2024	$5,003.6	9.1%	37.7%	22.8%	$1,311.8	$26.86	$938.0	28.5%
2023	$4,586.9	-15.8%	35.6%	21.4%	$767.4	$15.54	$926.0	23.0%
2022	$5,449.4	18.2%	32.5%	22.1%	$924.0	$18.15	$530.0	22.0%
2021	$4,611.1	18.8%	26.8%	13.7%	$425.4	$8.07	$420.0	14.0%
2020	$3,880.8	-13.1%	26.1%	12.0%	$328.6	$6.02	$550.0	11.0%
2019	$4,466.9	1.9%	25.5%	11.9%	$428.1	$7.55	$410.0	12.0%
2018	$4,384.6	10.3%	24.6%	10.5%	$269.5	$4.40	$380.0	10.0%
2017	$3,975.3	8.0%	27.6%	13.0%	$335.5	$5.26	$360.0	12.0%
2016	$3,680.1	4.1%	30.1%	14.1%	$365.1	$5.59	$430.0	14.0%
2015	$3,535.1	-0.6%	27.2%	12.1%	$285.4	$4.29	$310.0	11.0%
Note: Financial data is from continuing operations where applicable. ROIC and FCF are analyst estimates based on company filings. Data sourced from annual 10-K filings and earnings reports. 6

Capital Allocation Strategy

Carlisle’s management team has demonstrated a clear, consistent, and shareholder-centric approach to capital allocation. The strategy is balanced, prioritizing organic reinvestment and synergistic acquisitions while aggressively returning excess capital to shareholders through dividends and buybacks.²

• Share Repurchases: This has become a primary tool for returning capital. In 2024, the company deployed a record $1.6 billion to repurchase its own shares, utilizing a portion of the proceeds from the CIT divestiture.¹ This aggressive posture has continued into 2025, with $400 million in repurchases in the first quarter and another $300 million in the second, against a full-year target of $1 billion.³
• Dividends: Carlisle has an exceptional track record of dividend growth, having increased its dividend for 46 consecutive years, a testament to its long-term commitment to shareholder returns.⁵ While the current dividend yield is modest at around 0.9%, the history of consistent growth is highly valued by income-oriented investors.²⁵
• Mergers & Acquisitions (M&A): The company’s M&A strategy has shifted from large, diversifying deals to smaller, bolt-on acquisitions that strengthen its core building products portfolio. Recent examples include the acquisitions of MTL (architectural metals), Plasti-Fab and ThermaFoam (insulation), and Bonded Logic (sustainable insulation), all of which are synergistic with the existing CCM and CWT platforms.⁶

($ in millions)	2022	2023	2024
Capital Expenditures	$160	$150	$140
Acquisitions	$1,500	$100	$500
Share Repurchases	$400	$500	$1,600
Dividends Paid	$160	$170	$180
Total Deployed	$2,220	$920	$2,420
Note: Figures are approximate based on company presentations and press releases. 3

The scale and timing of management’s capital allocation decisions provide a strong signal about their confidence in the business’s future prospects. By dedicating the majority of the proceeds from a major divestiture to an accelerated share repurchase program, the board and executive team are making an unambiguous statement: they believe that investing in their own stock at current prices is one of the most attractive, high-return opportunities available to them. This is a powerful endorsement of their view on the intrinsic value of the newly focused Carlisle.

Growth Trajectory & Vision 2030

Carlisle’s long-term growth strategy is anchored by its alignment with durable secular trends and is codified in its ambitious “Vision 2030” financial targets. This plan provides a clear roadmap for value creation over the remainder of the decade.

Secular Growth Drivers

Beyond the underlying construction cycle, Carlisle is poised to benefit from several powerful, long-term tailwinds that support above-market growth.

• Energy Efficiency & Sustainability: Buildings are a primary source of energy consumption and carbon emissions, accounting for over 30% of global greenhouse gases.⁵ This has led to a global push, through both government regulation and corporate ESG initiatives, for more energy-efficient construction. Carlisle is a direct beneficiary of this trend. Its core products, such as polyiso insulation and reflective TPO “cool roofs,” are essential for reducing a building’s energy usage for heating and cooling. This positions the company’s portfolio not just as a building material, but as a solution for sustainability and cost savings.⁴
• Labor-Saving Innovation: The construction industry continues to face a significant and structural shortage of skilled labor. This industry-wide challenge makes products that are faster, simpler, and safer to install highly valuable. Carlisle has made labor-saving innovation a central pillar of its R&D strategy.² Products that reduce installation time and complexity command premium pricing and engender strong loyalty from time-constrained contractors.
• The Resilient Re-Roofing Cycle: As previously noted, the predictable need to replace commercial roofs every 20-25 years creates a large, stable, and non-discretionary source of demand.¹ This recurring revenue stream provides a significant buffer against the volatility of the new construction market and is a key element of the company’s resilient performance.³

Assessing Vision 2030 Targets

In late 2023, Carlisle unveiled its Vision 2030 plan, which sets forth a series of ambitious financial goals to be achieved by the end of the decade, using 2023 as the baseline year.⁴ A critical analysis of these targets reveals the key levers management intends to pull to drive shareholder value.

The stated financial goals are:

• Adjusted EPS: Grow at a mid-teen CAGR to over $40.
• Return on Invested Capital (ROIC): Remain in excess of 25%.
• Organic Revenue CAGR: Grow at over 5%.
• Adjusted EBITDA Margin: Increase to over 25%.
• Free Cash Flow to Sales: Remain above 15%.

The feasibility of these targets hinges on several key assumptions. The organic revenue growth target of over 5% appears achievable, and perhaps even conservative, given that the broader commercial roofing market is projected to grow at a CAGR of 6-7%.¹³ This suggests the target can be met simply by maintaining market share, with potential upside from share gains. The targets for ROIC, margins, and free cash flow are largely a continuation of the company’s already excellent performance, indicating a commitment to maintaining its best-in-class financial profile.

The most ambitious target is the goal of reaching over $40 in adjusted EPS. Achieving a mid-teen CAGR in EPS from a revenue base growing at a mid-single-digit rate is a significant challenge that cannot be met through organic growth alone. The mathematical gap between the revenue growth rate and the EPS growth rate must be bridged by two primary factors: continued margin expansion and a significant reduction in the company’s share count. While Carlisle’s margins are already high, the primary driver to reach the EPS target will be the aggressive and sustained execution of its share repurchase program.

The credibility of the Vision 2030 plan, therefore, rests on the belief that the “new” Carlisle’s profitability is structurally and sustainably higher than its historical average as a conglomerate, and that management will continue to deploy its strong free cash flow toward systematically reducing the number of shares outstanding. This makes the company’s capital allocation strategy a critical driver of the long-term investment case, arguably as important as its operational performance.

Risk Assessment & Mitigating Factors

While Carlisle possesses a strong business model and attractive growth prospects, investors must consider a range of risks inherent to its operations and end markets.

End-Market Cyclicality

• Risk: As a pure-play building products company, Carlisle’s financial results are inherently tied to the health of the construction industry, particularly in North America. The non-residential construction market is cyclical and sensitive to macroeconomic factors such as interest rates, GDP growth, and corporate capital spending. A significant economic downturn would inevitably lead to project delays and cancellations, impacting demand for Carlisle’s products. The recent performance of the CWT segment, which saw double-digit organic revenue declines due to softness in residential and commercial markets, serves as a clear reminder of this vulnerability.³
• Mitigation: The company’s primary mitigating factor is its significant leverage to the re-roofing market. Because replacing a failing roof is a non-discretionary expense for a building owner, this segment of the market is far more resilient and less cyclical than new construction. With re-roofing accounting for approximately 70% of its commercial roofing business, Carlisle has a substantial buffer that helps to smooth earnings through economic cycles.³

Raw Material & Supply Chain

• Risk: Carlisle’s manufacturing processes rely on a variety of petroleum-based raw materials, including methylene diphenyl diisocyanate (MDI), polyol, EPDM polymer, and TPO polymer.⁹ The prices of these inputs can be volatile and are subject to fluctuations in global energy markets and chemical supply/demand dynamics. A sharp and sustained increase in raw material costs could compress gross margins if the company is unable to pass these costs on to customers through price increases in a timely manner.
• Mitigation: Carlisle mitigates this risk through several strategies. The company’s large scale provides significant purchasing power and allows it to maintain strong relationships with its suppliers. For most key raw materials, the company maintains relationships with at least two vendors to avoid single-source dependency.⁹ Furthermore, its strong brand and value proposition have historically provided it with significant pricing power, allowing it to protect margins during inflationary periods.

Competitive & Regulatory Pressures

• Risk: The commercial roofing industry is highly competitive, featuring several large, well-capitalized global players. Competitors like GAF and Holcim have the scale and resources to compete aggressively on price and innovation.²⁰ As demonstrated by Holcim’s recent acquisition of Duro-Last, the competitive landscape is dynamic, and rivals are actively seeking to consolidate market share, which could lead to increased pricing pressure over time.²⁰
• Mitigation: Carlisle’s primary defense against competitive threats is its powerful, ecosystem-based moat. Its deeply entrenched relationships with distributors and contractors, fostered through decades of training, support, and loyalty programs, are difficult for competitors to displace.³⁰ Continuous investment in labor-saving product innovations also helps to differentiate its offering and maintain its value proposition.

Regulatory Changes

• Risk: As a manufacturer of chemical-based products, Carlisle is subject to a wide range of environmental, health, and safety regulations. Changes to these regulations, or to local and national building codes, could necessitate costly product reformulations, investments in new manufacturing equipment, or changes to installation procedures.
• Mitigation: This risk is also a significant opportunity for Carlisle. The secular trend is overwhelmingly toward stricter building codes that mandate greater energy efficiency. As a leader in high-performance insulation and energy-efficient roofing membranes, Carlisle is exceptionally well-positioned to benefit from these regulatory changes. Stricter codes often render lower-performance products obsolete and increase the addressable market for Carlisle’s premium solutions.

Management Quality & Corporate Governance

The quality and strategic direction of a company’s leadership are critical determinants of long-term value creation. Carlisle’s management team, led by Chair, President, and Chief Executive Officer D. Christian Koch, has a strong track record of strategic execution and disciplined capital stewardship.

Leadership Team & Track Record

The most significant accomplishment of the current leadership team has been the successful conception and execution of the company’s portfolio transformation. The multi-year process of divesting numerous non-core industrial businesses and refocusing the company on its building products core was a complex undertaking that required both strategic foresight and operational discipline. The successful sale of CIT in 2024 for $2 billion represents the capstone of this effort, unlocking significant value and simplifying the corporate structure.¹

Management’s track record on capital allocation is also commendable. The decision to deploy the bulk of the CIT proceeds into an aggressive share repurchase program demonstrates a commitment to maximizing per-share value and a strong belief in the company’s intrinsic worth.¹ The company has also consistently delivered on its financial commitments, establishing credibility with the investment community. The establishment of the ambitious yet well-defined Vision 2030 targets provides a clear and measurable framework against which to judge management’s future performance.⁴

Corporate Governance

Carlisle maintains a commitment to strong corporate governance practices, overseen by its Board of Directors. The board is comprised of a diverse group of individuals with relevant experience in manufacturing, finance, and corporate strategy. Recent corporate governance actions include the election of James D. Frias as the new Lead Independent Director and the appointment of Sheryl D. Palmer to the Board, ensuring a continuous refreshment of perspectives and oversight.⁴¹

Executive compensation programs, as detailed in the company’s annual proxy statements (DEF 14A filings), are designed to align the interests of management with those of long-term shareholders.⁴³ A significant portion of executive pay is tied to performance-based metrics, including earnings growth and return on capital, which incentivizes profitable growth and disciplined capital management.

Valuation Framework

Determining the appropriate valuation for Carlisle requires a nuanced approach that considers its superior financial metrics, its transformed business profile, and its cyclical-yet-growing end markets. While this analysis does not provide a specific price target, it outlines a framework for assessing the company’s valuation.

Peer Group Multiple Analysis

A comparison of Carlisle’s valuation multiples to those of its publicly traded peers in the building products sector provides a useful starting point. As shown in the competitive landscape table, Carlisle trades at a trailing P/E ratio of approximately 15.9x.²³ This is broadly in line with some peers like Fortune Brands (16.4x) but represents a significant discount to others like Armstrong World Industries (26.8x) and Crane (25.1x).²³

An argument can be made that Carlisle deserves to trade at a premium to the broader peer group. Its operating margins and returns on invested capital are at the high end of the sector, justifying a higher multiple for its higher-quality earnings stream. Furthermore, its business model, with its heavy concentration in the resilient re-roofing market, arguably has a less volatile earnings profile than peers more exposed to discretionary remodeling or new home construction.

Historical Valuation Context

Analyzing Carlisle’s historical valuation range can provide insight into how the market has perceived the company over time. However, given the profound transformation of its business portfolio, historical multiples may be of limited utility. The central valuation question is whether the market has fully “re-rated” the stock to reflect its new identity as a higher-margin, higher-return, pure-play building products leader, rather than continuing to value it as a more complex and lower-margin industrial conglomerate. A sustained premium to its historical average multiple could be justified by this fundamental improvement in business quality.

Fundamental Valuation Drivers

A discounted cash flow (DCF) analysis, while not performed here, would be driven by several key assumptions that are central to the investment thesis.

• Normalized Earnings Power: The starting point for any fundamental valuation is an estimate of Carlisle’s earnings capacity through a full economic cycle. Given the recent portfolio changes, using the record earnings of 2024 as a baseline and adjusting for potential cyclical downturns would be a reasonable approach. The structurally higher margin profile of the new business mix suggests that trough earnings in a future downturn should be significantly higher than in past cycles.
• Long-Term Growth: The company’s Vision 2030 target of 5%+ annual organic revenue growth serves as a credible long-term growth assumption.⁴ This is supported by the projected 6-7% growth of the underlying commercial roofing market and the secular tailwinds of energy efficiency and labor-saving product demand.¹³
• Quality of Earnings: Carlisle’s high quality of earnings, evidenced by its strong free cash flow conversion and ROIC consistently above 25%, supports a lower discount rate and a higher terminal value in a DCF model.¹ High-quality, cash-generative businesses typically command higher valuations.

The core debate for investors centers on whether Carlisle should be valued as a “high-quality cyclical” company or a “cyclical growth” company. A traditional cyclical business typically sees its valuation multiple compress during periods of economic uncertainty. However, Carlisle’s exposure to non-cyclical re-roofing and powerful secular growth trends may allow it to continue growing revenue and earnings even during modest economic slowdowns. If an investor believes these secular drivers are potent enough to overcome typical cyclical pressures, it would justify a higher and more stable valuation multiple, more akin to that of a consistent growth company.

Concluding Summary: A Balanced Assessment

Recap of Investment Strengths

Carlisle Companies has successfully executed a strategic transformation into a focused, high-performing leader in the building products industry. The investment case is supported by a number of significant strengths:

• Dominant Market Position: The company holds a leading share in the North American commercial roofing market, a large and structurally attractive industry.
• Resilient Business Model: A high concentration in the non-discretionary and stable re-roofing market provides a significant buffer against economic cyclicality.
• Durable Competitive Moat: Carlisle’s advantage is built on an ecosystem of strong brand equity, deep distribution relationships, and unparalleled loyalty among roofing contractors, fostered by industry-leading training and incentive programs.
• Superior Financial Profile: The company consistently delivers best-in-class profitability, with adjusted EBITDA margins and returns on invested capital that are at the top of the building products sector.
• Shareholder-Focused Capital Allocation: Management has a proven track record of disciplined capital deployment, highlighted by a multi-decade history of dividend growth and a current, aggressive share repurchase program.
• Alignment with Secular Tailwinds: The company is strategically positioned to benefit from the long-term trends of increasing energy efficiency standards and the demand for labor-saving construction solutions.

Summary of Key Risks

Investors must weigh these strengths against several key risks:

• Inherent Cyclicality: Despite its re-roofing focus, the business remains fundamentally tied to the health of the non-residential construction market and is not immune to economic downturns.
• Raw Material Volatility: As a manufacturer, the company is exposed to fluctuations in the price of petroleum-based raw materials, which could pressure margins.
• Intensifying Competition: The commercial roofing market features large, well-capitalized competitors who are actively seeking to gain market share through both organic growth and strategic acquisitions.

Final Synthesis

In conclusion, Carlisle Companies represents a high-quality, market-leading business that has successfully sharpened its strategic focus and enhanced its financial profile. The management team has demonstrated its ability to create significant shareholder value through astute portfolio management and disciplined capital allocation. The core investment debate is not about the quality of the business, which is demonstrably high, but about the appropriate valuation to assign to it. An investor must weigh the company’s inherent exposure to the cyclical construction industry against its powerful and durable competitive advantages, its resilient re-roofing business, and its alignment with secular growth trends. The successful execution of its Vision 2030 strategy, particularly its ability to drive significant EPS growth through a combination of modest organic expansion and substantial share repurchases, will be the ultimate determinant of long-term shareholder returns.

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