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Carlisle (CSL) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Apr 23, 2026

Source: earnings call transcript

Executive summary

Carlisle Q1 FY26 — Margin Expansion Despite Revenue Decline

Carlisle navigated a challenging Q1 FY26, achieving adjusted EBITDA margin expansion and EPS growth despite a revenue decline driven by weather and prior-year timing factors. The company reaffirmed its full-year outlook, banking on strong operational execution, recent price increases to offset rising raw material costs, and continued strength in its resilient reroofing segment, while remaining cautious on new construction and geopolitical risks.

Highlights

5

  • Adjusted EBITDA margin expanded by 50 basis points to 22.3% despite a 4% revenue decline.

  • Adjusted EPS rose to $3.63, up 1% year-over-year, driven by share repurchases.

  • Orders improved as the quarter progressed, with April activity encouraging and reroofing work in line with seasonal norms.

  • Reaffirmed full year 2026 outlook for revenue growth at the higher end of low single-digit range and ~50 basis points adjusted EBITDA margin expansion.

  • Strong financial position with $771 million in cash and a net debt-to-EBITDA ratio of 1.7x, within target.

Concerns

5

  • Q1 revenue was $1.1 billion, down 4% year-over-year, primarily due to winter weather delays and a $15 million tariff-related pull-forward in Q1 2025 not repeating.

  • CWT adjusted EBITDA margin decreased 40 basis points to 15.2% due to lower volumes and an unfavorable mix.

  • Rising oil prices impacted petrochemical-linked raw materials and freight, necessitating two rounds of price increases.

  • Continued uncertainty in new construction related to higher interest rates and geopolitical volatility.

  • Net cash used in operating activities was $45 million, and free cash flow used was $73 million, reflecting a $125 million post year-end tax settlement.

Guidance & targets

CategoryTargetConfidence
Full-year consolidated revenue growth
low single-digit range, at the higher end (~3%)
high materiality
High
Full-year consolidated adjusted EBITDA margin expansion
approximately 50 basis points
high materiality
High
Full-year consolidated EPS growth
double-digit growth
high materiality
High
CCM revenue growth
low single digits
medium materiality
High
CWT revenue growth
low single digits
medium materiality
High
CWT EBITDA margin improvement
at least 100 basis points
medium materiality
High
CWT EBITDA margin
around 19%
medium materiality
High
CWT EBITDA margin
improving to 22%
medium materiality
High
CCM EBITDA margin
approaching that 31%
medium materiality
High
CCM EBITDA margin
slightly exceed that 31%
medium materiality
High
CCM EBITDA margin
right around 28%
medium materiality
High
Full-year CCM EBITDA margin improvement
about 50 basis points
medium materiality
High
Annual share repurchase target
$1 billion
high materiality
High
Vision 2030 adjusted EPS
$40
high materiality
High
Vision 2030 ROIC
25% plus
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
CCM
Reflecting lower volumes due to winter weather and last year's tariff-related pull forward, along with continued softness in commercial new construction, partially offset by solid reroofing growth. COS productivity, disciplined procurement, and S&A cost controls contributed to margin improvement.
Adjusted EBITDA: $208 millionAdjusted EBITDA down 4% YoY
$758 milliondown 5%—27.4%
CWT
Reflects contributions from recent acquisitions mostly offsetting volume pressure from continued softness in residential and nonresidential new construction. Margin decrease due to lower volumes, partially offset by internal initiatives like footprint consolidation and in-house production expansion.
Adjusted EBITDA: $45 millionAdjusted EBITDA down 3% YoY
$294 milliondown 1%—15.2%

Product announcements

ProductTypeDetails
ThermaThin R7 insulationlaunch
New foam adhesives gunlaunch

Risks & headwinds

Winter weather delays Q1 FY26

Delayed projects and shipments across many regions in North America, impacting Q1 revenue by ~$30 million-$35 million.

Mitigation:Orders improved as the quarter progressed, and the company exited March with better momentum as weather disruptions subsided.

Absence of prior-year tariff-related order pull-forward Q1 FY26

Q1 2025 benefited from approximately $15 million of tariff-related order pull forward from Canadian customers, which did not repeat this year.

Continued uncertainty in new construction FY26

New construction remains soft across both residential and nonresidential markets. Higher for longer interest rate environment continues to weigh on activity.

Mitigation:Full year outlook does not assume a near-term recovery; plans appropriately reflect this reality.

Geopolitical escalation and rising input costs FY26

Rising oil prices impacted petrochemical-linked raw materials (MDI, TPO resins up double digits; polyols up high single digits) and freight. Full-year raw material inflation expected to be high single-digit as % of raws.

Mitigation:Acted quickly with two rounds of price increases (5-8%) across CCM and CWT in mid-March and mid-April, and implemented real-time freight surcharges. Expect price/cost dynamics to improve sequentially, aiming for neutral full-year impact.

Middle East conflict volatility Ongoing

Heightened risk surrounding the Iran conflict and sustained disruption through the Straits of Hormuz introduces uncertainty.

Mitigation:Monitoring very closely. Prepared to take additional pricing actions if volatility persists and structural cost levels reset higher.

What to watch in Q2 FY26

CWT EBITDA Margin Trajectory

next quarter
Current 15.2% in Q1 FY26
Target around 19% in Q2 FY26

Why it matters

CWT margin expansion is a key focus for the year, with specific quarterly targets provided, indicating the effectiveness of internal initiatives.

As we see it play out during the year, we think we'll see improvement from quarter-to-quarter. So Q2 might be around 19% and then improving to 22% in Q3.

Find out whether CSL delivers this. Inve re-checks your case every morning.

Q&A highlights

How are new products and service offerings impacting price elasticity and market share, especially with recent price increases?

New products like ThermaThin R7 insulation and a new foam adhesives gun, which improve energy efficiency and reduce labor, differentiate Carlisle. This, combined with reliable service (Carlisle Experience), creates customer stickiness, allowing the company to price to value and potentially gain market share.

“when you deliver on new products and you deliver on service, obviously, you get stickier with your customer, you get stickier with your architects, people depend on you. And hopefully, that allows you to grow share as well as, and we've been talking about this, increase the profitability and sales dollars per square foot because people -- as we said, we're going to price the value.”

asked by Susan Maklari · answered by D. Koch

2 min read 7 chapters

Detailed narrative

Q1 Performance & Margin Resilience

Despite a 4% year-over-year revenue decline to $1.1 billion, Carlisle demonstrated strong operational execution, expanding adjusted EBITDA margin by 50 basis points to 22.3% and increasing adjusted EPS by 1% to $3.63. This margin expansion was attributed to COS-driven productivity gains, procurement discipline, and efficient management of selling and administrative costs, showcasing the company's ability to perform through cycles.

Demand Trends & Reroofing Strength

Underlying demand trends were consistent with expectations, though Q1 was impacted by winter weather and the absence of a prior-year tariff-related pull-forward. Commercial reroofing, accounting for approximately 70% of CCM's commercial roofing business, continued to provide stable, recurring demand with low single-digit growth, supported by an aging installed base and increasing content per square foot.

New Construction Headwinds

New construction remained soft across both residential and nonresidential markets, as anticipated. The company's full-year outlook does not assume a near-term recovery, reflecting the ongoing impact of a "higher for longer" interest rate environment and broader economic and geopolitical uncertainties on construction activity.

Pricing Actions & Raw Material Volatility

Geopolitical escalation led to rising oil prices and petrochemical-linked raw material costs. Carlisle responded with two rounds of price increases in mid-March and mid-April across CCM and CWT, along with real-time freight surcharges. Management expects price/cost dynamics to improve sequentially through the remainder of 2026, aiming for a neutral price/cost impact for the full year.

CWT Margin Improvement Initiatives

CWT's Q1 revenue declined 1% and adjusted EBITDA margin decreased 40 basis points to 15.2%. However, the company sees a clear path to meaningful margin expansion, targeting at least 100 basis points improvement for the full year, driven by automation, footprint consolidation, and expansion of in-house production of expanded polystyrene resin. Q2 CWT EBITDA margin is expected around 19%, improving to 22% in Q3.

Capital Allocation & Financial Strength

Carlisle maintains a strong financial position with $771 million in cash and a net debt-to-EBITDA ratio of 1.7x, within its target range. The company returned $296 million to shareholders in Q1 through $250 million in share repurchases and $46 million in dividends, reaffirming its commitment to a $1 billion annual share repurchase target.

New Product Introductions

Carlisle is forecasting the release of 10-12 new products this year, with the most significant being ThermaThin R7 insulation. This product, designed to increase energy efficiency and reduce labor costs, won two awards at IRE and is expected to start impacting deliveries around July. Other new products, like a new foam adhesives gun, will contribute to growth in the second half.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.