Carlisle (CSL) Prices Notes Offering, To Use Funds to Lower Debt

Carlisle Companies Incorporated (CSL Free Report) , on Sep 14, announced the pricing of $850 million worth of senior notes offering. The public offering of notes is expected to be complete on Sep 28 following the fulfilment of customary conditions.

Shares of the company decreased 1.1% in the last two trading days, ending the session at $197.06 yesterday.

Inside the Headlines

The notes offering comprise $300 million of 0.550% senior notes due Sep 1, 2023 and $550 million of 2.200% senior notes maturing on Mar 1, 2032. Interest on the two categories of notes will be paid semi-annually, each on Mar 1 and Sep 1. The first interest payment will be made on Mar 1, 2022.

The 2023 notes were offered at 99.945% of the principal amount while the 2032 notes were priced at 99.520% of the total principal. In both cases, the price of notes for the public will include any accrued interest.

The issuer has the option to redeem wholly or in parts the 2023 senior notes, prior to Sep 1, 2022 and the 2032 senior notes prior to Dec 1, 2031. The redemption price for both categories of the notes will be greater than 100% of the principal amount and the summation of present values of the principal and interest payments due.

The 2023 as well as 2032 notes can also be redeemed on or after Sep 1, 2022 and Dec 1, 2031, respectively. In both cases, the redemption amount will be the sum of 100% of the principal amount and interest (accrued and unpaid).

Carlisle plans to use the funds generated from the notes offering to pay for its debt under credit facility (related to the Henry Company buyout on Sep 1). Acquisition-related fees and expenses as well as general corporate purposes will also be funded through raised proceeds.

We believe that the offerings of senior notes will increase the company’s debt load and in turn, might inflate its financial obligations and hurt profitability. However, measures related to redeeming the notes will be a relief. Exiting second-quarter 2021, the company’s long-term debt was $2,081.6 million. Its interest expense (net) in the quarter was $19.2 million.

Zacks Rank, Price Performance and Estimate Trend

With a market capitalization of $10.2 billion, Carlisle currently carries a Zacks Rank #2 (Buy). Strength in the reroofing market in the United States, growth in the company’s medical business as well as product innovation and synergistic gains from its buyouts bode well.

In the past three months, the stock has gained 8.2% compared with the industry’s growth of 6.4%.

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In the past 60 days, the Zacks Consensus Estimate for earnings has been revised 5.1% upward to $9.13 for 2021 and raised 6.7% to $11.56 for 2022. Estimates for the third quarter of 2021 at $2.85 indicate a 2.2% increase from the 60-day ago figures.

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