Carlisle Companies Q3 2025: Contradictions Emerge on Destocking, Pricing Strategies, and R&D Investments

Date of Call: October 29, 2025

Financials Results

• Revenue: $1.3B, up 1% year-over-year
• EPS: $5.61 adjusted EPS, down 3% year-over-year

Guidance:

• Full-year 2025 consolidated revenue expected to be flat year-over-year.
• Full-year adjusted EBITDA margin expected to decline ~250 basis points vs. 2024.
• Q4: CCM revenue expected down low-single-digits; CWT revenue expected up low-single-digits (organic down mid-single-digits).
• Q4 consolidated adjusted EBITDA margin expected to be ~21%; CCM Q4 EBITDA margin ~26%; CWT margins down ~250-300 bps YOY.
• Share buyback target raised to $1.3B for 2025.

Business Commentary:

* Revenue and EBITDA Performance: - Carlisle Companies reported revenue of $1.3 billion for Q3 2025, up 1% year-over-year. - The adjusted EBITDA margin was 25.9%, although it decreased by 170 basis points from the prior year. - The revenue increase was offset by softness in new construction and distribution channel volatility. The EBITDA margin decline was due to lower volumes at CWT and strategic investments in innovation.

• Segment Performance (CCM vs. CWT):
• CCM reported third quarter revenue of $1 billion, essentially flat year-over-year, while CWT reported third quarter revenue of $346 million, up 3% year-over-year.
• CCM's performance was stable due to strong reroofing demand, while CWT's growth was due to recent acquisitions despite softer organic revenue.

• CCM's adjusted EBITDA margin decreased by 260 basis points primarily due to materials inflation and innovation investments, while CWT saw a 13% year-over-year decline in adjusted EBITDA.

• M&A and Strategic Acquisitions:

• Carlisle completed multiple acquisitions, including Bonded Logic, ThermaFoam, and Plasti-Fab, contributing $39 million to Q3 revenue.
• These acquisitions expanded capabilities and addressable markets, with ThermaFoam and Bonded Logic showing potential in insulation and sustainability sectors.

• The strategic focus on M&A aims to create long-term value and expand market share.

• Capital Allocation and Financial Position:

• The company raised its dividend by 10% and repurchased 800,000 shares worth $300 million.
• Carlisle issued $1 billion in debt to enhance liquidity and maintain a net debt-to-EBITDA ratio within its target range of 1 to 2x.
• The strong financial position allows for continued innovation, strategic M&A, and capital returns to shareholders.

Sentiment Analysis:

Overall Tone: Neutral

• Management revised 2025 guidance to flat revenue and ~250 bps lower adjusted EBITDA margin while highlighting resilience in CCM, $1B+ share repurchases YTD and a 10% dividend increase; CEO reiterated confidence in Vision 2030 and M&A/investment plans despite near-term market and distribution headwinds.

Q&A:

• Question from Timothy Wojs (Robert W. Baird & Co. Incorporated): I'll stick to one question as you asked. But I guess on destocking, could you just kind of frame the impact in the third quarter and what's included in the fourth quarter? And I guess, as you've had like discussions with your channel partners, I guess, what's driving the destocking? And as we think about next year, do we kind of enter 2026 with kind of a clean slate from a channel inventory perspective?
  Response: Seasonal destocking (about 1.5–2 months) drove most of the change; some incremental impact from distributor M&A/integration caused limited near-term disruption but not expected to be structural into 2026.

• Question from Susan Maklari (Goldman Sachs Group, Inc., Research Division): My first question is talking a bit about the Carlisle Experience and how you can leverage that in this kind of an environment to gain share? And with that, can you talk a bit about what you're seeing in terms of the competitive backdrop and how you're leveraging the Carlisle Experience to respond to that?
  Response: The Carlisle Experience—faster service, shipment visibility, and superior Net Promoter Scores—differentiates Carlisle, helping contractors deploy labor more efficiently and enabling share gains via service-led differentiation.

• Question from Susan Maklari (Goldman Sachs Group, Inc., Research Division): Okay. That's great color. And then following up on that, can you also talk a bit about your willingness to invest in the business given the current environment relative to the robust cash flows that you're seeing? I also noticed that it looks like you took the guide for CapEx down a bit this year. Can you just talk about the interplay between R&D, the investments long term and what you're seeing near term and how that fits in with the cash generation?
  Response: Company will continue targeted R&D and VOC investments (people/process/testing) and automation, with some CapEx timing shifted into 2026 while total CapEx remains up y/y to fund strategic initiatives.

• Question from Joseph Nolan (Longbow Research LLC): I just wanted to ask within CCM, if you could talk about price versus volume? And if you could just give any detail on price cost in the quarter?
  Response: CCM pricing and volumes were flat in Q3; raw-material headwinds (ATO/TCPP) reduced results by roughly $12M in the quarter.

• Question from Joseph Nolan (Longbow Research LLC): Okay. Great. And if you could just give an update on how to think about price cost into 4Q, if there's anything changing there?
  Response: Q4 outlook similar to Q3: CCM pricing expected flat; raw-material costs modestly lower on a volume basis as Q4 volumes are lower.

• Question from Garik Shmois (Loop Capital Markets LLC, Research Division): Just following up on that. I was wondering if you could provide the outlook for EBITDA margins in the fourth quarter by segment.
  Response: CCM Q4 EBITDA margin targeted around 26%; CWT margins expected to decline ~250–300 bps YoY; consolidated Q4 adjusted EBITDA margin about 21%.

• Question from Garik Shmois (Loop Capital Markets LLC, Research Division): That's helpful. And I just wanted to follow up on the destocking piece. Can you speak to your market share in CCM, how you're viewing that relative to the industry and what the outlook is just given the distributor dislocation that's happening right now?
  Response: Any share loss in Q3 was minor and tied to a distributor integration; management expects this turbulence to be temporary with no lasting market-share change.

• Question from Bryan Blair (Oppenheimer & Co. Inc., Research Division): If the combination of channel dynamics and competitive influence drives a bit more of a direct model -- direct sale model going forward in the industry. How do you see your teams positioning there? What are the positives and negatives if that occurs?
  Response: Carlisle has increased direct sales to mid-teens percent, already ships 70% direct to job sites, and can scale direct further while still preferring distribution partnerships.

• Question from Tomohiko Sano (JPMorgan Chase & Co, Research Division): I'd like to talk -- ask about the pricing. You mentioned that for Q4, CCM is expected to be flattish, while CWT may decline by about 1%. So looking ahead to 2026, would you expect new products, innovation products and high-end product launch or other factors to support price increases? It's of course, like depending on the demand and volume side, but could you touch about that outlook, please?
  Response: New products and enhanced services are intended to support price‑to‑value in 2026, but material upside depends on a volume recovery (notably new construction) to realize pricing momentum.

• Question from Keith Hughes (Truist Securities, Inc., Research Division): This disruption with distribution, was this something about inventory levels or price? Or what was the nature of it? And is it fully resolved that we won't feel it again in the first quarter in your results?
  Response: Disruption varied by location (integration and management changes) caused missed sales; management expects these issues to be resolved quickly and not to be structural into 2026.

• Question from Keith Hughes (Truist Securities, Inc., Research Division): Okay. And just one question on pricing in [ CWT ] specifically. There's a lot of stuff going on with MDI and tariffs and antidumping and all that kind of stuff. Are you seeing pricing go up there or expected to go up near term with some of these cost pressures?
  Response: Raw-material trends are mixed: MDI up Y/Y but flat Q/Q, polyol down, EPDM up; CWT pricing down <1% with modest pressure in underlayments and insulation—overall raw-material basket slightly biased up into Q4.

Contradiction Point 1

Destocking and Market Conditions

It involves differing perspectives on the extent and impact of destocking, which directly affects revenue projections and market expectations.

Can you outline the impact of destocking in Q3 and what's expected in Q4? What's driving the destocking, and how should we approach next year? - Timothy Wojs (Robert W. Baird & Co. Incorporated)

2025Q3: For Q4, we expect normal seasonal patterns, around 1.5 to 2 months of destocking. There might be a bit more as certain distributors work through some things, possibly due to M&A integrations. - D. Koch(CEO)

How does the One Big Beautiful Bill affect your investment planning for construction markets and tax incentives? - Bryan Blair (Oppenheimer & Co. Inc., Research Division)

2025Q2: We had double-digit growth in Q1, and we're expecting our growth in Q2 to be in the low double digits on a year-over-year basis. - D. Christian Koch(CEO)

Contradiction Point 2

Pricing Traction and Market Demand

It highlights differing views on the ability to maintain pricing power and the impact of market conditions on pricing, which are crucial for revenue and profit projections.

How is the Carlisle Experience used to gain market share, and how are you addressing the competitive landscape? - Susan Maklari (Goldman Sachs Group, Inc., Research Division)

2025Q3: The Carlisle Experience provides value by offering the right product at the right place at the right time, enhancing contractor efficiency. - D. Koch(CEO)

What are the causes of pricing traction issues, and are they linked to lower sales volume or raw material costs? - Timothy Ronald Wojs (Baird)

2025Q2: While the pricing environment has been stable, we haven't seen much degradation despite no traction on recent price increases. - D. Christian Koch(CEO)

Contradiction Point 3

Pricing Strategy and Expectations

It highlights differing expectations regarding pricing strategy and the impact of new products on pricing power, which are critical for financial forecasts and investor expectations.

Will new products and innovations support next year's price increases? How do demand and volume affect the pricing outlook? - Tomohiko Sano (JPMorgan Chase & Co, Research Division)

2025Q3: New products and customer services can enhance pricing power. A positive new construction market is crucial for higher pricing. Rational capacity utilization and labor shortages also play a role. If new construction returns to positive growth, we expect upward momentum on pricing. - D. Koch(CEO)

How do customers perceive the value of new products in the current macroeconomic environment? Is this driving a shift toward repairs instead of full replacements? - Susan Maklari (Goldman Sachs)

2025Q1: Chris Koch explained that labor constraints are the main constraint, so customers are not delaying replacements; innovation is focused on labor efficiency and product improvements. New products are resonating with customers, enhancing Carlisle's share. - Chris Koch(CEO)

Contradiction Point 4

Pricing and Market Conditions in 2025

It involves differing expectations of pricing and market conditions, which are crucial for investor projections and strategic decision-making.

What was the impact of destocking in Q3 and what's included in Q4? What's driving the destocking, and what's the 2024 outlook? - Timothy Wojs (Robert W. Baird & Co. Incorporated)

2025Q3: We expect normal seasonal patterns, around 1.5 to 2 months of destocking. There might be a bit more as certain distributors work through some things, possibly due to M&A integrations. - D. Koch(CEO)

Did pricing improve in Q4? What gives you confidence in positive pricing this year? - Timothy Wojs (Baird)

2024Q4: We anticipate traction on price hikes as demand recovers in Q2 with light inventories aiding pricing. The first quarter might show carryover pricing down 1%. - D. Koch(CEO)

Contradiction Point 5

Investment in R&D and Innovation

It highlights differing emphasis on R&D investments and innovation, crucial for long-term growth and competitiveness.

How willing are you to invest in the business given robust cash flows? How do R&D, investments, and cash generation interact? - Susan Maklari (Goldman Sachs Group, Inc., Research Division)

2025Q3: We are investing in R&D, particularly in the voice of the customer, with a focus on generating high-ROI innovations. This involves mechanical investments in testing capabilities, enhancing our R&D campus. - D. Koch(CEO)

What is the margin improvement excluding acquisition headwinds? - Saree Boroditsky (Jefferies)

2024Q4: We're targeting around $800 million in buybacks for 2025 and plan to do similar-sized acquisitions like in 2024. We're thinking about CapEx around $150 million, which could increase depending on R&D acceleration. - D. Koch(CEO)