10q10k10q10k.net

What changed in CARLISLE COMPANIES INC's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of CARLISLE COMPANIES INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+145 added−171 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-16)

Top changes in CARLISLE COMPANIES INC's 2023 10-K

145 paragraphs added · 171 removed · 110 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

23 edited+5 added−19 removed31 unchanged
Biggest changeYear ended December 31, 2021 (in millions, except percentages) CCM CWT CIT CFT Corporate and unallocated Operating income (loss) (GAAP) $ 619.9 $ 64.4 $ (17.5) $ 24.0 $ (123.3) Non-operating expense (income), net (1) 2.5 (0.4) (0.2) 1.6 2.4 EBIT 617.4 64.8 (17.3) 22.4 (125.7) Exit and disposal, and facility rationalization costs 0.1 0.4 15.5 0.9 0.2 Inventory step-up amortization and acquisition costs — 24.4 — 0.1 1.9 Impairment charges — — 1.8 — 3.2 Losses from acquisitions and disposals 2.2 — 0.4 0.2 1.9 Losses (gains) from insurance 0.3 0.4 — (0.3) — Losses from litigation — — 0.3 — 0.1 Total non-comparable items 2.6 25.2 18.0 0.9 7.3 Adjusted EBIT 620.0 90.0 0.7 23.3 (118.4) Depreciation 36.6 15.7 24.9 5.5 3.7 Amortization 16.1 45.6 50.2 17.6 2.0 Adjusted EBITDA $ 672.7 $ 151.3 $ 75.8 $ 46.4 $ (112.7) Divided by: Total revenues $ 2,846.2 $ 990.5 $ 687.8 $ 285.8 $ — Adjusted EBITDA margin 23.6 % 15.3 % 11.0 % 16.2 % NM (1) Includes other non-operating (income) expense, net, which may be presented in separate line items on the Consolidated Statements of Income and Comprehensive Income. 32 Table of Contents Year ended December 31, 2020 (in millions, except percentages) CCM CWT CIT CFT Corporate and unallocated Operating income (loss) (GAAP) $ 524.2 $ 57.4 $ (2.1) $ 5.3 $ (97.0) Non-operating expense (income), net (1) 3.4 0.4 (0.2) (5.1) 13.2 EBIT 520.8 57.0 (1.9) 10.4 (110.2) Exit and disposal, and facility rationalization costs 0.4 0.6 16.4 3.7 — Inventory step-up amortization and acquisition costs 0.2 (0.1) 0.4 0.5 3.4 Impairment charges — — 6.0 — — Losses (gains) from acquisitions and disposals 3.1 3.9 — (2.9) (0.1) Gains from insurance — (0.7) — — — Losses on extinguishment of debt — — — — 8.8 Total non-comparable items 3.7 3.7 22.8 1.3 12.1 Adjusted EBIT 524.5 60.7 20.9 11.7 (98.1) Depreciation 35.6 12.6 25.2 5.6 3.1 Amortization 16.3 33.5 52.3 17.8 0.7 Adjusted EBITDA $ 576.4 $ 106.8 $ 98.4 $ 35.1 $ (94.3) Divided by: Total revenues $ 2,335.4 $ 660.2 $ 731.6 $ 242.7 $ — Adjusted EBITDA margin 24.7 % 16.2 % 13.4 % 14.5 % NM (1) Includes other non-operating (income) expense, net, which may be presented in separate line items on the Consolidated Statements of Income and Comprehensive Income.
Biggest changeYear Ended December 31, 2022 (in millions, except percentages) CCM CWT Corporate and unallocated Operating income (loss) (GAAP) $ 1,175.0 $ 128.6 $ (98.8) Non-operating expense (income), net (1) 2.0 0.8 (0.8) EBIT 1,173.0 127.8 (98.0) Exit and disposal, and facility rationalization costs 0.1 0.1 — Inventory step-up amortization and transaction costs — — 4.3 Impairment charges — 25.0 0.3 Losses from acquisitions and disposals — 0.3 (0.2) Losses from insurance — 0.3 — Losses from litigation — — 0.1 Total non-comparable items 0.1 25.7 4.5 Adjusted EBIT 1,173.1 153.5 (93.5) Depreciation 38.7 24.1 3.7 Amortization 16.9 73.0 2.2 Adjusted EBITDA $ 1,228.7 $ 250.6 $ (87.6) Divided by: Total revenues $ 3,885.2 $ 1,564.2 $ — Adjusted EBITDA margin 31.6 % 16.0 % NM (1) Includes other non-operating (income) expense, net, which may be presented in separate line items on the Consolidated Statements of Income and Comprehensive Income. 30 Table of Contents Year Ended December 31, 2021 (in millions, except percentages) CCM CWT Corporate and unallocated Operating income (loss) (GAAP) $ 619.9 $ 64.4 $ (110.9) Non-operating expense (income), net (1) 2.5 (0.4) 2.3 EBIT 617.4 64.8 (113.2) Exit and disposal, and facility rationalization costs 0.1 0.4 0.2 Inventory step-up amortization and transaction costs — 24.4 1.9 Impairment charges — — 3.2 Losses from acquisitions and disposals 2.2 — 1.9 Losses from insurance 0.3 0.4 — Losses from litigation — — 0.1 Total non-comparable items 2.6 25.2 7.3 Adjusted EBIT 620.0 90.0 (105.9) Depreciation 36.6 15.7 3.7 Amortization 16.1 45.6 2.0 Adjusted EBITDA $ 672.7 $ 151.3 $ (100.2) Divided by: Total revenues $ 2,846.2 $ 990.5 $ — Adjusted EBITDA margin 23.6 % 15.3 % NM (1) Includes other non-operating (income) expense, net, which may be presented in separate line items on the Consolidated Statements of Income and Comprehensive Income.
We utilize an estimate of expected gross margin based on historical margin patterns and management’s experience, which vary based on the customers and end markets being evaluated. There are multiple unique customer contracts at CIT or CFT. Accordingly, the estimate of expected margin is done for each customer discretely.
We utilize an estimate of expected gross margin based on historical margin patterns and management’s experience, which may vary based on the customers and end markets being evaluated. There are multiple unique customer contracts at CIT or CFT. Accordingly, the estimate of expected margin is done for each customer discretely.
We monitor for significant changes in those 28 Table of Contents assumptions during interim reporting periods. We also periodically re-assess indefinite-lived intangible assets as to whether its useful lives can be determined, and if so, we would begin amortizing any applicable intangible asset. Annual Impairment Test We test our indefinite-lived intangible assets for impairment annually as of November 1.
We monitor for significant changes in those assumptions during interim reporting periods. We also periodically re-assess indefinite-lived intangible assets as to whether its useful lives can be determined, and if so, we would begin amortizing any applicable intangible asset. Annual Impairment Test We test our indefinite-lived intangible assets for impairment annually as of November 1.
It is possible that our future performance may differ materially from current expectations expressed in these forward-looking statements, due to a variety of factors such as: increasing price and product/service competition by foreign and domestic competitors, including new entrants; technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; our mix of products/services; increases in raw material costs that cannot be recovered in product pricing; domestic and foreign governmental and public policy changes including environmental and industry regulations; the ability to meet our goals relating to our intended reduction of greenhouse gas emissions, including our net zero commitments; threats associated with and efforts to combat terrorism; protection and validity of patent and other intellectual property rights; the identification of strategic acquisition targets and our successful completion of any transaction and integration of our strategic acquisitions; our successful completion of strategic dispositions; the cyclical nature of our businesses; the impact of information technology, cybersecurity or data security breaches at our businesses or third parties; the outcome of pending and future litigation and governmental proceedings; risks from the global COVID-19 pandemic, including, for example, expectations regarding the impact of the COVID-19 pandemic on our businesses, including on customer demand, supply chains and distribution systems, production, our ability to maintain appropriate labor levels, our ability to ship products to our customers, our future results, or our full-year financial outlook; and the other factors discussed in the reports we file with or furnish to the Securities and Exchange Commission from time to time.
It is possible that our future performance may differ materially from current expectations expressed in these forward-looking statements, due to a variety of factors such as: increasing price and product/service competition by foreign and domestic competitors, including new entrants; technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; our mix of products/services; increases in raw material costs that cannot be recovered in product pricing; domestic and foreign governmental and public policy changes including environmental and industry regulations; the ability to meet 31 Table of Contents our goals relating to our intended reduction of greenhouse gas emissions, including our net zero commitments; threats associated with and efforts to combat terrorism; protection and validity of patent and other intellectual property rights; the identification of strategic acquisition targets and our successful completion of any transaction and integration of our strategic acquisitions; our successful completion of strategic dispositions; the cyclical nature of our businesses; the impact of information technology, cybersecurity or data security breaches at our businesses or third parties; the outcome of pending and future litigation and governmental proceedings; the emergence or continuation of widespread health emergencies such as the COVID-19 pandemic, including, for example, expectations regarding their impact on our businesses, including on customer demand, supply chains and distribution systems, production, our ability to maintain appropriate labor levels, our ability to ship products to our customers, our future results, or our full-year financial outlook; and the other factors discussed in the reports we file with or furnish to the Securities and Exchange Commission from time to time.
Refer to Note 12 for more information regarding goodwill. Subsequent Measurement of Indefinite-Lived Intangible Assets As discussed above, indefinite-lived intangible assets are recognized and recorded at their acquisition-date fair value.
Refer to Note 11 for more information regarding goodwill. Subsequent Measurement of Indefinite-Lived Intangible Assets As discussed above, indefinite-lived intangible assets are recognized and recorded at their acquisition-date fair value.
Item 1. Business. Business Strategy, we have a history and a strategy of acquiring businesses. We account for these business combinations as required by GAAP under the acquisition method of accounting, which 26 Table of Contents requires us to recognize the assets acquired and the liabilities assumed at their acquisition date fair values.
Item 1. Business. Business Strategy", we have a history and a strategy of acquiring businesses. We account for these business combinations as required by GAAP under the acquisition method of accounting, which requires us to recognize the assets acquired and the liabilities assumed at their acquisition date fair values.
We recognize an impairment for the amount by which the carrying amount exceeds the fair value. We estimate the fair value of our reporting units based on the income approach utilizing the 27 Table of Contents discounted cash flow method and the market approach utilizing the public company market multiple method.
We recognize an impairment for the amount by which the carrying amount exceeds the fair value. We estimate the fair value of our reporting units based on the income approach utilizing the discounted cash flow method and the market approach utilizing the public company market multiple method.
Further, any conflict in the international arena, including the Russian invasion of Ukraine, may adversely affect general market conditions and our future performance.
Further, any conflict in the international arena, including the Russian invasion of Ukraine and war in the Middle East, may adversely affect general market conditions and our future performance.
The weighted average life of the contracts as of December 31, 2022, is approximately 20 years.
The weighted average life of the contracts as of December 31, 2023, is approximately 20 years.
If our adjusted expectations of the operating results, both in size and timing, of CIT Medical do not materialize, if the discount rate increases (based on increases in interest rates, market rates of return or market volatility) or if market multiples decline, we may be required to record goodwill impairment charges, which may be material.
If our adjusted expectations of the operating results, both in size and timing, of CCM - Europe do not materialize, if the discount rate increases (based on increases in interest rates, market rates of return or market volatility) or if market multiples decline, we may be required to record goodwill impairment charges.
The key techniques and assumptions utilized by type of major acquired asset or liability generally include: Asset/Liability Typical Valuation Technique Key Assumptions Technology-based intangible assets Relief from royalty method • Estimated future revenues from acquired technology • Royalty rates that would be paid if licensed from a third-party • Discount rates Customer-based intangible assets Multiple-period excess earnings method • Estimated future revenues from existing customers • Rates of customer attrition • Earnings before interest, taxes, depreciation and amortization ("EBITDA") margins • Discount rates • Contributory asset charges Trademark/trade name intangible assets Relief from royalty method • Estimated future revenues from acquired trademark/trade name • Economic useful lives (definite vs. indefinite) • Royalty rates that would be paid if licensed from a third-party • Discount rates Property, plant & equipment Market comparable transactions (real property) and replacement cost, new less economic deprecation (personal property) • Similarity of subject property to market comparable transactions • Costs of like equipment in new condition • Economic obsolescence rates Inventory Net realizable value less (i) estimated costs of completion and disposal, and (ii) a reasonable profit allowance for the seller • Estimated percentage complete (WIP inventory) • Estimated selling prices • Estimated completion and disposal costs • Estimated profit allowance for the seller Contingent consideration Discounted future cash flows • Future revenues and/or net earnings • Discount rates In selecting techniques and assumptions noted above, we generally engage third-party, independent valuation professionals to assist us in developing the assumptions and applying the valuation techniques to a particular business combination transaction.
The most critical areas of judgment in applying the acquisition method include selecting the appropriate valuation techniques and assumptions that are used to measure the acquired assets and assumed liabilities at fair value, particularly for intangible assets, contingent consideration, acquired tangible assets such as property, plant and equipment, and inventory. 25 Table of Contents The key techniques and assumptions utilized by type of major acquired asset or liability generally include: Asset/Liability Typical Valuation Technique Key Assumptions Technology-based intangible assets Relief from royalty method • Estimated future revenues from acquired technology • Royalty rates that would be paid if licensed from a third-party • Discount rates Customer-based intangible assets Multiple-period excess earnings method • Estimated future revenues from existing customers • Rates of customer attrition • Earnings before interest, taxes, depreciation and amortization ("EBITDA") margins • Discount rates • Contributory asset charges Trademark/trade name intangible assets Relief from royalty method • Estimated future revenues from acquired trademark/trade name • Economic useful lives (definite vs. indefinite) • Royalty rates that would be paid if licensed from a third-party • Discount rates Property, plant & equipment Market comparable transactions (real property) and replacement cost, new less economic depreciation (personal property) • Similarity of subject property to market comparable transactions • Costs of like equipment in new condition • Economic obsolescence rates Inventory Net realizable value less (i) estimated costs of completion and disposal, and (ii) a reasonable profit allowance for the seller • Estimated percentage complete (WIP inventory) • Estimated selling prices • Estimated completion and disposal costs • Estimated profit allowance for the seller Contingent consideration Discounted future cash flows • Future revenues and/or net earnings • Discount rates In selecting techniques and assumptions noted above, we generally engage third-party, independent valuation professionals to assist us in developing the assumptions and applying the valuation techniques to a particular business combination transaction.
Additionally, critical judgments and estimates related to revenue recognition relative to certain customer contracts in our CIT and CFT segments, in which they are contract manufacturers or where they have entered into an agreement to provide both services (engineering and design) and products resulting from those services, include the following: • Determination of whether revenue is earned at a "point-in-time" or "over time": Where contracts provide for the manufacture of highly customized products with no alternative use and provide CIT or CFT the right to payment for work performed to date, including a normal margin for that effort, we have concluded those contracts require the recognition of revenue over time. • Measurement of revenue using the key inputs of expected gross margin and inventory in our possession.
Additionally, critical judgments and estimates related to revenue recognition relative to certain customer contracts in our CIT and CFT businesses, which are classified as discontinued operations, in which they are contract manufacturers or where they have entered into an agreement to provide both services (engineering and design) and products resulting from those services, include the following: • Determination of whether revenue is earned at a "point-in-time" or "over time": Where contracts provide for the manufacture of highly customized products with no alternative use and provide CIT or CFT the right to payment for work performed to date, including a normal margin for that effort, we have concluded those contracts require the recognition of revenue over time. • For performance obligations satisfied over time, revenue is determined using the input method as we believe that best depicts the transfer of control to the customer, as the customer controls the inventory as it is produced.
We (1) record unrecognized tax benefits as liabilities in accordance with Accounting Standards Codification 740, Income Taxes ("ASC 740") and (2) adjust these liabilities when our judgment changes as a result of the evaluation 30 Table of Contents of new information not previously available.
In recognition of this risk, we have provided a valuation allowance of $15.1 million on the deferred tax assets related to these carryforwards. 28 Table of Contents We (1) record unrecognized tax benefits as liabilities in accordance with Accounting Standards Codification 740, Income Taxes ("ASC 740") and (2) adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available.
If our adjusted expectations of the revenues of these five trade names do not materialize or if the discount rate increases (based on increases in interest rates, market rates of return or market volatility), we may be required to record intangible asset impairment charges, which may be material. Refer to Note 12 for more information regarding intangible assets.
If our adjusted expectations of the revenues of this trade name does not 27 Table of Contents materialize or if the discount rate increases (based on increases in interest rates, market rates of return or market volatility), we may be required to record intangible asset impairment charges, which may be material.
Outlook Revenues Our expectations for segment revenues in 2023 follows: 2023 Revenue Primary Drivers Carlisle Construction Materials Low single-digit growth • Strong re-roofing activity • Pricing to the value of the Carlisle Experience • Increasing demand for energy-efficient building products Carlisle Weatherproofing Technologies Low double-digit decline • Headwinds in residential markets • Partially offset by continued channel penetration and more resilient commercial repair & remodel demand Carlisle Interconnect Technologies High single-digit growth • Increasing demand in commercial aerospace and medical markets • Backlog growing Carlisle Fluid Technologies High single-digit growth • New product traction and positive pricing • Backlog growing Total Carlisle Low single-digit growth Cash Flows Our priorities for the use of cash are to invest in growth and performance improvement opportunities for our existing businesses through capital expenditures, pursue strategic acquisitions that meet our stockholder return criteria, pay dividends to stockholders and return value to stockholders through share repurchases.
Outlook Revenues Our expectations for segment revenues in 2024 follows: 2024 Revenues Primary Drivers Carlisle Construction Materials ~ +6% • Channel tailwinds following 2023 inventory destocking • Strong contractor backlogs and re-roof demand Carlisle Weatherproofing Technologies ~ +4% • Strong residential demand • Partially offset by headwinds in new non-residential markets Total Carlisle ~ +5% Cash Flows Our priorities for the use of cash are to invest in growth and performance improvement opportunities for our existing businesses through capital expenditures, pursue strategic acquisitions that meet our stockholder return criteria, pay dividends to stockholders and return value to stockholders through share repurchases.
We believe that it is more likely than not that the benefit from certain U.S. federal, state and foreign net operating loss, and credit carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $33.1 million on the deferred tax assets related to these carryforwards.
We believe that it is more likely than not that the benefit from certain U.S. federal, state and foreign net operating loss, and credit carryforwards will not be realized.
December 31, (in millions, except percentages) 2022 2021 Net income (GAAP) $ 924.0 $ 421.7 Less: (loss) income from discontinued operations (GAAP) (1.2) 34.7 Income from continuing operations (GAAP) 925.2 387.0 Provision for income taxes 270.4 95.5 Interest expense, net 85.9 80.3 Interest income (7.1) (1.2) EBIT 1,274.4 561.6 Exit and disposal, and facility rationalization costs 5.8 17.1 Inventory step-up amortization and acquisition costs 4.4 26.4 Impairment charges 25.3 5.0 Losses from acquisitions and disposals 0.8 4.7 (Gains) losses from insurance (1.1) 0.4 Losses from litigation 2.1 0.4 Total non-comparable items 37.3 54.0 Adjusted EBIT 1,311.7 615.6 Depreciation 96.7 86.4 Amortization 154.6 131.5 Adjusted EBITDA $ 1,563.0 $ 833.5 Divided by: Total revenues $ 6,591.9 $ 4,810.3 Adjusted EBITDA margin 23.7 % 17.3 % 31 Table of Contents Year Ended December 31, 2022 (in millions, except percentages) CCM CWT CIT CFT Corporate and unallocated Operating income (loss) (GAAP) $ 1,175.0 $ 128.6 $ 37.2 $ 36.5 $ (101.6) Non-operating expense (income), net (1) 2.0 0.8 (1.0) — (0.5) EBIT 1,173.0 127.8 38.2 36.5 (101.1) Exit and disposal, and facility rationalization costs 0.1 0.1 5.4 0.2 — Inventory step-up amortization and acquisition costs — — — 0.1 4.3 Impairment charges — 25.0 — — 0.3 Losses (gains) from acquisitions and disposals — 0.3 0.7 — (0.2) Losses (gains) from insurance — 0.3 — (1.4) — Losses from litigation — — 2.0 — 0.1 Total non-comparable items 0.1 25.7 8.1 (1.1) 4.5 Adjusted EBIT 1,173.1 153.5 46.3 35.4 (96.6) Depreciation 38.7 24.1 24.5 5.7 3.7 Amortization 16.9 73.0 47.3 15.2 2.2 Adjusted EBITDA $ 1,228.7 $ 250.6 $ 118.1 $ 56.3 $ (90.7) Divided by: Total revenues $ 3,885.2 $ 1,564.2 $ 845.4 $ 297.1 $ — Adjusted EBITDA margin 31.6 % 16.0 % 14.0 % 18.9 % NM (1) Includes other non-operating (income) expense, net, which may be presented in separate line items on the Consolidated Statements of Income and Comprehensive Income.
December 31, (in millions, except percentages) 2023 2022 2021 Net income (GAAP) $ 767.4 $ 924.0 $ 421.7 Less: income from discontinued operations (GAAP) 48.5 66.0 36.1 Income from continuing operations (GAAP) 718.9 858.0 385.6 Provision for income taxes 211.5 265.7 104.3 Interest expense, net 75.6 85.9 80.2 Interest income (20.1) (6.8) (1.1) EBIT 985.9 1,202.8 569.0 Exit and disposal, and facility rationalization costs 7.8 0.2 0.7 Inventory step-up amortization and transaction costs 2.0 4.3 26.3 Impairment charges 1.8 25.3 3.2 Losses from acquisitions and disposals 2.8 0.1 4.1 Losses from insurance — 0.3 0.7 Losses from litigation 1.4 0.1 0.1 Total non-comparable items 15.8 30.3 35.1 Adjusted EBIT 1,001.7 1,233.1 604.1 Depreciation 66.3 66.5 56.0 Amortization 84.8 92.1 63.7 Adjusted EBITDA $ 1,152.8 $ 1,391.7 $ 723.8 Divided by: Total revenues $ 4,586.9 $ 5,449.4 $ 3,836.7 Adjusted EBITDA margin 25.1 % 25.5 % 18.9 % 29 Table of Contents Year Ended December 31, 2023 (in millions, except percentages) CCM CWT Corporate and unallocated Operating income (loss) (GAAP) $ 913.9 $ 187.9 $ (119.0) Non-operating (income) expense, net (1) (0.4) 0.2 (2.9) EBIT 914.3 187.7 (116.1) Exit and disposal, and facility rationalization costs 5.1 2.7 — Inventory step-up amortization and transaction costs — 0.5 1.5 Impairment charges — 1.8 — Losses (gains) from acquisitions and disposals 0.4 2.5 (0.1) Losses (gains) from litigation — 1.5 (0.1) Total non-comparable items 5.5 9.0 1.3 Adjusted EBIT 919.8 196.7 (114.8) Depreciation 45.0 17.5 3.8 Amortization 12.0 70.6 2.2 Adjusted EBITDA $ 976.8 $ 284.8 $ (108.8) Divided by: Total revenues $ 3,253.4 $ 1,333.5 $ — Adjusted EBITDA margin 30.0 % 21.4 % NM (1) Includes other non-operating (income) expense, net, which may be presented in separate line items on the Consolidated Statements of Income and Comprehensive Income.
Such statements are made based on known events and circumstances at the time of publication and, as such, are subject in the future to unforeseen risks and uncertainties.
Forward-looking statements generally use words such as "expect," "foresee," "anticipate," "believe," "project," "should," "estimate," "will," "plans," "intends," "forecast," and similar expressions, and reflect our expectations concerning the future. Such statements are made based on known events and circumstances at the time of publication and, as such, are subject in the future to unforeseen risks and uncertainties.
For the November 1, 2022 impairment test, all indefinite-lived intangible assets were tested for impairment using the quantitative approach described above, resulting in fair values that substantially exceeded the carrying values, with the exception of five trade names with an aggregate carrying value of $331.3 million that exceeded their carrying amounts by less than 10%.
The Henry trade name, with an aggregate carrying value of $218.9 million, was tested for impairment using the quantitative approach described above, resulting in a fair value that exceeded its carrying amount by less than 10%.
If the disposal group’s fair value exceeds its carrying value, we record a gain, assuming all other criteria for a sale are met, when the transaction closes. Revenue Recognition Revenue is recognized when obligations under the terms of a contract with a customer are satisfied; generally, this occurs with the transfer of control of our products or services.
Refer to Note 11 for more information regarding intangible assets. Revenue Recognition Revenue is recognized when obligations under the terms of a contract with a customer are satisfied; generally, this occurs with the transfer of control of our products or services.
For the November 1, 2022 impairment test, all reporting units were tested for impairment using the quantitative approach described above, resulting in fair values that substantially exceeded the carrying values, with the exception of CIT Medical, which exceeded its carrying value by approximately 10%.
The CCM - Europe reporting unit was tested for impairment using the quantitative approach described above, resulting in a fair value that exceeded the carrying value by less than 10%.
The key techniques and assumptions generally include: Valuation Technique Key Assumptions Discounted future cash flows • Estimated future revenues • EBITDA margins • Discount rates Market multiple method • Peer public company group • Financial performance of reporting units relative to peer public company group In 2022, the CCM reporting unit was divided into four reporting units, CCM Commercial Roofing, CCM Architectural Metals, CCM Europe and CWT, in conjunction with our re-segmentation in early 2022 and to align with the segment managers' review of the business.
The key techniques and assumptions generally include: Valuation Technique Key Assumptions Discounted future cash flows • Estimated future revenues • EBITDA margins • Discount rates Market multiple method • Peer public company group • Financial performance of reporting units relative to peer public company group 26 Table of Contents We have determined that we have four reporting units and have allocated goodwill to those following reporting units as follows: (in millions) December 31, 2023 December 31, 2022 Carlisle Construction Materials - Commercial Roofing $ 848.9 848.9 Carlisle Construction Materials - Architectural Metals 59.5 59.5 Carlisle Construction Materials - Europe 26.3 24.4 Carlisle Weatherproofing Technologies 267.8 244.8 Total $ 1,202.5 $ 1,177.6 Annual Impairment Test We test our goodwill for impairment annually as of November 1.
Capital expenditures in 2023 are expected to be approximately $200 million to $225 million, which primarily includes continued investments in CCM and CWT. Planned capital expenditures for 2023 include new product and capacity expansion, business sustaining projects and cost reduction efforts.
Capital expenditures in 2024 are expected to be approximately $160 million to $180 million. Planned capital expenditures for 2024 include new product and capacity expansion, business sustaining projects and cost reduction efforts. Forward-Looking Statements This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Removed
The most critical areas of judgment in applying the acquisition method include selecting the appropriate valuation techniques and assumptions that are used to measure the acquired assets and assumed liabilities at fair value, particularly for intangible assets, contingent consideration, acquired tangible assets such as property, plant and equipment, and inventory.
Added
For the November 1, 2023 impairment test, the CCM - Commercial Roofing, CCM - Architectural Metals, and CWT reporting units were tested for impairment using a qualitative approach.
Removed
The goodwill previously assigned to the CCM reporting unit was allocated to the new reporting units based on their relative fair values. Accordingly, we have determined that we have seven reporting units as of December 31, 2022 and four reporting units as of December 31, 2021.
Added
Under this approach, an entity may assess qualitative factors as well as relevant events and circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
Removed
Goodwill has been allocated to the reporting units as follows: (in millions) December 31, 2022 December 31, 2021 Carlisle Construction Materials N/A $ 1,172.6 Carlisle Construction Materials - Commercial Roofing $ 848.9 N/A Carlisle Construction Materials - Architectural Metals 59.5 N/A Carlisle Construction Materials - Europe 24.4 N/A Carlisle Weatherproofing Technologies 244.8 N/A Carlisle Interconnect Technologies - Aerospace, Defense and Industrial 601.0 601.5 Carlisle Interconnect Technologies - Medical 234.6 233.7 Carlisle Fluid Technologies 187.5 191.2 Total $ 2,200.7 $ 2,199.0 Annual Impairment Test We test our goodwill for impairment annually as of November 1.
Added
Through the results of our analysis, we determined that it is not more likely than not that the fair value of the aforementioned reporting units were less than their carrying values and thus, a quantitative analysis was not performed.
Removed
Valuation of Long-Lived Assets Long-lived assets or asset groups, including amortizable intangible assets, are tested for recoverability whenever events or circumstances indicate that the undiscounted future cash flows do not exceed the carrying amount of the asset or asset group.
Added
For the November 1, 2023 impairment test, all indefinite-lived intangible assets, except for the Henry trade name within the CWT reportable segment, were tested for impairment using the qualitative approach.
Removed
For purposes of testing for impairment, we group our long-lived assets classified as held and used at the lowest level for which identifiable cash flows are largely independent of the cash flows from other assets and liabilities, which means that in many cases multiple assets are tested for recovery as a group.
Added
Measurement of revenue uses the key inputs of inventory in our possession and expected gross margin. We believe inventory reflects an appropriate measure of cost incurred to date, relative to total costs, to which we apply an expected gross margin to determine revenues.
Removed
Our asset groupings vary based on the related business in which the long-lived assets are employed and the interrelationship between those long-lived assets in producing net cash flows; for example, multiple manufacturing facilities may work in concert with one another or may work on a stand-alone basis to produce net cash flows.
Removed
We utilize our long-lived assets in multiple industries and economic environments and our asset groupings reflect these various factors.
Removed
We monitor the operating and cash flow results of our long-lived assets or asset groups classified as held and used to identify whether events and circumstances indicate the remaining useful lives of those assets should be adjusted, or if the carrying value of those assets or asset groups may not be recoverable.
Removed
Undiscounted estimated future cash flows are compared to the carrying value of the long-lived asset or asset group in the event indicators of impairment are identified.
Removed
In developing our estimates of future undiscounted cash flows, we utilize our internal estimates of future revenues, costs and other net cash flows from operating the long-lived asset or asset group over the life of the asset or primary asset, if an asset group.
Removed
This requires us to make judgments about future levels of sales volume, pricing, raw material costs and other operating expenses. If the undiscounted estimated future cash flows are less than the carrying amount, we determine the fair value of the asset or asset group and record an impairment charge in current earnings to the extent carrying value exceeds fair value.
Removed
Fair values may be determined based on estimated discounted cash flows, by prices for like or similar assets in similar markets or a combination of both. In the third quarter of 2022, the current and projected operating and cash flow losses at our rubber asset group within the CWT segment resulted in the determination that an indicator of impairment existed.
Removed
Accordingly, we performed a quantitative impairment analysis to determine whether the carrying value of the asset group was recoverable, and if not, determine the fair value of the asset group using the methods described above. Based on the analysis, we determined that the undiscounted cash flows for the asset group did not exceed its carrying value.
Removed
In determining the asset group's fair value, we utilized a market approach of assessing the exit prices for like or similar assets in similar markets and potential exit prices willing to be paid for the asset group by a market participant in an open market.
Removed
Based on this assessment, we determined that the asset group's carrying value exceeded its fair value as of September 30, 2022, resulting in an impairment of definite-lived intangible assets and property, plant, and equipment of $18.6 million and $6.2 million, respectively.
Removed
After recording the impairment in the third quarter of 2022, all of our asset groups were recoverable as of December 31, 2022. We will continue to closely monitor whether and to what extent any significant changes in current events or conditions may result in corresponding changes to our expectation on the market value of the collective asset group.
Removed
If our expectation of a market exit price willing to be paid by a market participant for the collective asset 29 Table of Contents group does not materialize or changes due to known market conditions, we may be required to record additional impairments to the asset group, which may be material.
Removed
Long-lived assets or asset groups that are part of a disposal group that meets the criteria to be classified as held for sale are not assessed for impairment, but rather a loss on sale is recorded against the disposal group if fair value, less cost to sell, of the disposal group is less than its carrying value.
Removed
Forward-Looking Statements This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally use words such as "expect," "foresee," 33 Table of Contents "anticipate," "believe," "project," "should," "estimate," "will," "plans," "intends," "forecast," and similar expressions, and reflect our expectations concerning the future.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

23 edited+3 added−9 removed28 unchanged
Biggest changeAdditionally, adverse weather conditions such as heavy or sustained rainfall, cold weather and snow can limit construction activity and reduce demand for roofing materials. The CCM and CWT segments compete through pricing, among other factors. Competition in this segment may increase pricing pressure on the Company which may negatively affect operating results in future periods.
Biggest changeA decline in the construction market, particularly in construction repair and replacement activities, could adversely affect the Company’s business, financial condition, results of operations and cash flows. Additionally, adverse weather conditions such as heavy or sustained rainfall, cold weather and snow can limit construction activity and reduce demand for roofing materials.
Moreover, we may determine that it is in the best interest of our company and our stockholders to prioritize other business, social, governance or sustainable investments over the achievement of our current commitments based on economic, regulatory and social factors, business strategy or pressure from investors, activist groups or other stakeholders.
Moreover, we may determine that it is in the best interest of the Company and our stockholders to prioritize other business, social, governance or sustainable investments over the achievement of our current commitments based on economic, regulatory and social factors, business strategy or pressure from investors, activist groups or other stakeholders.
However, the nature of the Company’s operations and its long history of industrial activities at certain of its current or former facilities, as well as those acquired, could potentially result in material environmental liabilities or asset retirement obligations. 14 Table of Contents Global climate change and related regulations could negatively affect the Company.
However, the nature of the Company’s operations and its long history of industrial activities at certain of its current or former facilities, as well as those acquired, could potentially result in material environmental liabilities or asset retirement obligations. 11 Table of Contents Global climate change and related regulations could negatively affect the Company.
The Company’s business, financial condition, results of operations and cash flows can be affected by a number of factors including those material factors set forth below, those set forth in our “Forward Looking Statements” disclosure in Item 7 and those set forth elsewhere in this Annual Report on Form 10-K, any one of which could 11 Table of Contents cause the Company’s actual results to vary materially from recent results or from anticipated future results and make an investment in the Company speculative or risky.
The Company’s business, financial condition, results of operations and cash flows can be affected by a number of factors including those material factors set forth below, those set forth in our “Forward Looking Statements” disclosure in Item 7 and those set forth elsewhere in this Annual Report on Form 10-K, any one of which could cause the Company’s actual results to vary materially from recent results or from anticipated future results and make an investment in the Company speculative or risky.
See “Item 1. Business—Overview—Description of Businesses by Segment” for a discussion of customer concentrations by segment. A significant reduction in purchases by one or more of these customers could have an adverse effect on the business, financial condition, results of operations or cash flows of one or more of the Company’s segments.
See “Item 1. Business—Overview—Description of Businesses by Segment” for a discussion of customer concentrations for CCM. A significant reduction in purchases by one or more of these customers could have an adverse effect on the business, financial condition, results of operations or cash flows of one or more of the Company’s segments.
To date, costs of complying with environmental, health and safety requirements have not been material, and the Company did not have any significant accruals related to potential future costs of environmental remediation as of December 31, 2022 and 2021, nor are any material asset retirement obligations recorded as of that date.
To date, costs of complying with environmental, health and safety requirements have not been material, and the Company did not have any significant accruals related to potential future costs of environmental remediation as of December 31, 2023 and 2022, nor are any material asset retirement obligations recorded as of that date.
Operating during a global pandemic exposes the Company to a number of risks, including diminished demand for our products and our customers’ products, suspensions in the operations of our manufacturing facilities, maintenance of appropriate labor levels, our ability to ship products to our customers, interruptions in our supply chains and distribution systems, increases in operating costs related to pay and benefits for our employees, collection of trade receivables in accordance with their terms, and potential impairment of goodwill and long-lived assets, any of which, individually or in the aggregate, could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows.
Operating during a widespread health emergency exposes the Company to a number of risks, including diminished demand for our products and our customers’ products, suspensions in the operations of our manufacturing facilities, maintenance of appropriate labor levels, our ability to ship products to our customers, interruptions in our supply chains and distribution systems, increases in operating costs related to pay and benefits for our employees, collection of trade receivables in accordance with their terms, and potential impairment of goodwill and long-lived assets, any of which, individually or in the aggregate, could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows.
The loss of, a significant decline in business with, or pricing pressure from, one or more of the Company’s key customers could adversely affect the Company’s business, financial condition, results of operations and cash flows. The Company operates in several niche markets in which a large portion of the segment’s revenues are attributable to a few large customers.
The loss of, a significant decline in business with, or pricing pressure from, one or more of the Company’s key customers could adversely affect the Company’s business, financial condition, results of operations and cash flows. The Company's CCM segment operates in several niche markets in which a large portion of the segment’s revenues are attributable to a few large customers.
If these integration initiatives are not fully realized, there may be a negative effect on the Company’s business, financial condition, results of operations and cash flows, including goodwill and/or intangible asset impairments, which may be material. See Note 3 for recent acquisition information.
If these integration initiatives are not fully realized, there may be a negative effect on the Company’s business, financial condition, results of operations and cash flows, including goodwill and/or intangible asset impairments, which may be material. Refer to Note 3 for recent acquisition information.
If these conditions deteriorate, however, the Company’s business, financial condition, results of operations and cash flows could be adversely affected. The Company is subject to risks arising from international economic, political, legal and business factors. The Company operates in global markets. Approximately 14% of the Company’s revenues in 2022 were generated outside the United States.
If these conditions deteriorate, however, the Company’s business, financial condition, results of operations and cash flows could be adversely affected. The Company is subject to risks arising from international economic, political, legal and business factors. The Company operates in global markets. Approximately 10% of the Company’s revenues in 2023 were generated outside the United States.
Such restructuring activities may divert management's attention from the Company’s core businesses, increase expenses on a short-term basis and lead to potential disputes with the employees, customers or suppliers of the affected businesses.
Such restructuring activities may divert management's attention 9 Table of Contents from the Company’s core businesses, increase expenses on a short-term basis and lead to potential disputes with the employees, customers or suppliers of the affected businesses.
If we are unable to maintain reliable information technology systems and appropriate controls with respect to privacy and security requirements, we may suffer regulatory consequences that could be costly or otherwise adversely affect our business. Item 1B. Unresolved Staff Comments. None.
If we are unable to maintain reliable information technology systems and appropriate controls with respect to privacy and 12 Table of Contents security requirements, we may suffer regulatory consequences that could be costly or otherwise adversely affect our business. Item 1B. Unresolved Staff Comments. None.
If restructuring activities are not completed in a timely manner or if anticipated cost savings, synergies and efficiencies are not realized, there may be a negative effect on the Company’s business, financial condition, results of operations and cash flows. 12 Table of Contents Refer to Notes 4 and 8 for a discussion of disposition and restructuring matters.
If restructuring activities are not completed in a timely manner or if anticipated cost savings, synergies and efficiencies are not realized, there may be a negative effect on the Company’s business, financial condition, results of operations and cash flows. Refer to Note 4 for a discussion of disposition matters.
For example, the CCM and CWT segments are susceptible to downturns in the commercial construction industry, particularly in the construction repair and replacement sectors, the CWT segment is susceptible to downturns in the residential construction industry, the CIT segment is susceptible to downturns in the commercial aerospace industry and the CFT segment is susceptible to downturns in the automotive industry.
For example, the CCM and CWT segments are susceptible to downturns in the commercial construction industry, particularly in the construction repair and replacement sectors, and the CWT segment is susceptible to downturns in the residential construction industry.
General Risk Factors The Company is subject to risks arising from global pandemics, including COVID-19. The Company’s businesses operate in market segments impacted by the COVID-19 pandemic.
General Risk Factors The Company is subject to risks arising from widespread health emergencies. The Company’s businesses operate in market segments impacted by widespread health emergencies, including the COVID-19 pandemic.
While these COVID-19-related impacts have not to date, in the aggregate, had a material adverse impact on the Company, we are unable to predict the extent or duration of these impacts as they will depend on future developments, which are highly uncertain and cannot be predicted at this time, such as the duration and frequency of coronavirus outbreaks and government responses to such outbreaks.
While these risks have not to date, in the aggregate, had a material adverse impact on the Company, we are unable to predict the extent or duration of impacts from widespread health emergencies as they will depend on future developments, which are highly uncertain and cannot be predicted at this time, such as the duration and frequency of, and government responses to, such emergencies.
In addition, to compete globally, all of the Company’s segments have manufacturing facilities outside the United States. In 2022, approximately 12% of cost of goods sold was derived from facilities outside of the United States.
In addition, to compete globally, both of the Company’s segments have manufacturing facilities outside the United States. In 2023, approximately 11% of cost of goods sold was derived from facilities outside of the United States.
Among the economic factors which may affect performance are: manufacturing activity, commercial and residential construction, passenger airline travel, difficulties entering new markets and general economic conditions such as inflation, deflation, interest rates and credit availability.
Uncertainty regarding global economic conditions may have an adverse effect on the businesses, results of operations and financial condition of the Company and its customers, distributors and suppliers. Among the economic factors which may affect performance are: manufacturing activity, commercial and residential construction, difficulties entering new markets and general economic conditions such as inflation, deflation, interest rates and credit availability.
However, any of the aforementioned breaches or disruptions could result in legal claims, liability or penalties under privacy laws or damage to operations or to the Company's reputation, which could adversely affect our business. 15 Table of Contents We are subject to data privacy and security laws, regulations and customer-imposed controls as a result of having access to and processing confidential, personal and/or sensitive data in the ordinary course of business.
We are subject to data privacy and security laws, regulations and customer-imposed controls as a result of having access to and processing confidential, personal and/or sensitive data in the ordinary course of business.
We are also subject to increasingly stringent environmental laws and regulations, including those relating to air emissions, wastewater discharges, and chemical and hazardous waste management and disposal. Some of these environmental laws hold owners or operators of land or businesses liable for their own and for previous owners’ or operators’ releases of hazardous or toxic substances or wastes.
Some of these environmental laws hold owners or operators of land or businesses liable for their own and for previous owners’ or operators’ releases of hazardous or toxic substances or wastes. Other environmental laws and regulations require the obtainment of, and compliance with, environmental permits.
Construction spending is affected by economic conditions, changes in interest rates, demographic and population shifts, new housing starts and changes in construction spending by federal, state and local governments. A decline in the construction market, particularly in construction repair and replacement activities, could adversely affect the Company’s business, financial condition, results of operations and cash flows.
The Company has significant concentrations in the construction market. Most of the Company’s revenues and operating income are generated from the construction market. Construction spending is affected by economic conditions, changes in interest rates, demographic and population shifts, new housing starts and changes in construction spending by federal, state and local governments.
Raw material costs are a significant component of the Company’s cost structure and are subject to volatility, including cost increases, significant disruptions to the Company's supply chains or significant shortages of materials. The Company utilizes petroleum-based products, chemicals, resins and other commodities in its manufacturing processes.
Competition in these segments may increase pricing pressure on the Company which may negatively affect operating results in future periods. 10 Table of Contents Raw material costs are a significant component of the Company’s cost structure and are subject to volatility, including cost increases, significant disruptions to the Company's supply chains or significant shortages of materials.
Raw materials, including inbound freight, accounted for approximately 79% of the Company’s cost of 13 Table of Contents goods sold in 2022.
The Company utilizes petroleum-based products, chemicals, resins and other commodities in its manufacturing processes. Raw materials, including inbound freight, accounted for approximately 67% of the Company’s cost of goods sold in 2023.
Removed
Uncertainty regarding global economic conditions may have an adverse effect on the businesses, results of operations and financial condition of the Company and its customers, distributors and suppliers.
Added
The CCM and CWT segments compete through pricing, among other factors.
Removed
The Company has significant concentrations in the domestic construction market. For the year ended December 31, 2022, approximately 83% of the Company’s revenues and approximately 102% of its operating income were generated by the CCM and CWT segments, principally from the construction market.
Added
Environmental, Regulatory and Legal Risks The Company's operations are subject to risks related to environmental laws and regulations. We are subject to increasingly stringent environmental laws and regulations, including those relating to air emissions, wastewater discharges, and chemical and hazardous waste management and disposal.
Removed
Environmental, Regulatory and Legal Risks The Company and certain of its customers’ operations are subject to regulatory risks. Certain products manufactured by our businesses and certain of our customers operating in the aerospace and medical markets are subject to extensive regulation by the FAA and EASA, and FDA, respectively.
Added
However, any of the aforementioned breaches or disruptions could result in legal claims, liability or penalties under privacy laws or damage to operations or to the Company's reputation, which could adversely affect our business.
Removed
It can be costly and time-consuming for the Company and our customers to obtain and maintain regulatory approvals and certifications to operate in these markets. Delays in FAA or EASA approvals or certifications of the products of our aerospace customers may impact the requirements for our interconnect components.
Removed
Product approvals subject to regulations might not be granted for new medical devices on a timely basis, if at all. Proposed new regulations or changes to regulations could result in the need to incur significant additional costs to comply.
Removed
Continued government scrutiny, including reviews of the FDA medical device pre-market authorization and post-market surveillance processes, may impact the requirements for our medical device components.
Removed
Failure of the Company or any of its customers operating in these markets to effectively respond to changes to applicable laws and regulations or comply with existing and future laws and regulations may have a negative effect on the Company’s business, financial condition, results of operations and cash flows.
Removed
Other environmental laws and regulations require the obtainment of, and compliance with, environmental permits.
Removed
We have experienced, and could continue to experience, diminished demand for our products as a result of COVID-19. The initial decline in domestic and international passenger airline travel caused by COVID-19 and foreign government lockdowns continue to impact demand for our products sold to customers operating in the commercial aerospace industry.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed0 unchanged
Biggest changeThe number, location and size of the Company’s principal properties as of December 31, 2022, by segment follows: Number of Facilities Square Footage (in millions) North America Europe Asia Other Total Owned Leased Carlisle Construction Materials 30 8 — — 38 3.9 1.3 Carlisle Weatherproofing Technologies 39 1 — — 40 2.2 0.8 Carlisle Interconnect Technologies 14 1 4 — 19 0.8 1.1 Carlisle Fluid Technologies 5 2 4 1 12 0.5 0.1 Totals 88 12 8 1 109 7.4 3.3 The Company considers its principal properties, as well as the related machinery and equipment, to be generally well maintained, and suitable and adequate for its intended purposes.
Biggest changeThe number, location and size of the Company’s principal properties as of December 31, 2023, by segment follows: Number of Facilities Square Footage (in millions) North America Europe Asia Total Owned Leased Carlisle Construction Materials 28 8 — 36 4.4 1.3 Carlisle Weatherproofing Technologies 37 3 — 40 1.9 1.0 Continuing Operations 65 11 — 76 6.3 2.3 Discontinued Operations 14 — 4 18 0.8 1.0 Total 79 11 4 94 7.1 3.3 The Company considers its principal properties, as well as the related machinery and equipment, to be generally well maintained, and suitable and adequate for its intended purposes.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

2 edited+0 added−0 removed0 unchanged
Biggest changeFinancial Statements and Supplementary Data. 36 Report of Independent Registered Public Accounting Firm (PCAOB ID 34 ) 36 Consolidated Statements of Income and Comprehensive Income 39 Consolidated Balance Sheets 40 Consolidated Statements of Cash Flows 41 Consolidated Statements of Stockholders’ Equity 42 Notes to Consolidated Financial Statements 43
Biggest changeFinancial Statements and Supplementary Data. 34 Report of Independent Registered Public Accounting Firm (PCAOB ID 34 ) 34 Consolidated Statements of Income and Comprehensive Income 37 Consolidated Balance Sheets 38 Consolidated Statements of Cash Flows 39 Consolidated Statements of Stockholders’ Equity 40 Notes to Consolidated Financial Statements 41
Item 4. Mine Safety Disclosures. 16 Part II 16 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 16 Item 6. [Reserved] 17 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 18 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 34 Item 8.
Item 4. Mine Safety Disclosures. 13 Part II 14 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 14 Item 6. [Reserved] 15 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 16 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 32 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+3 added−0 removed0 unchanged
Biggest changeThe number of beneficial holders is substantially greater than the number of record holders because a significant portion of our common stock is held of record in broker “street names.” Issuer Purchases of Equity Securities The Company’s purchases of its common stock during the three months ended December 31, 2022 follows: (in millions, except per share amounts) (a) Total Number of Shares Purchased (1) (b) Average Price Paid Per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 0.2 $ 282.82 0.2 4.0 November 0.4 243.25 0.4 3.6 December 0.2 250.28 0.2 3.4 Total 0.8 0.8 (1) The Company may also reacquire shares outside of the repurchase program from time to time in connection with the forfeiture of shares in satisfaction of tax withholding obligations from the vesting of share-based compensation.
Biggest changeFuture dividends remain subject to the discretion of the Board. 14 Table of Contents Issuer Purchases of Equity Securities The Company’s purchases of its common stock during the three months ended December 31, 2023 follows: (in millions, except per share amounts) (a) Total Number of Shares Purchased (1) (b) Average Price Paid Per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 0.6 $ 254.53 0.6 8.0 November 0.5 271.26 0.5 7.5 December 0.1 290.94 0.1 7.4 Total 1.2 1.2 (1) The Company may also reacquire shares outside of the repurchase program from time to time in connection with the forfeiture of shares in satisfaction of tax withholding obligations from the vesting of share-based compensation.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Performance Graph The table below shows how a $100 investment in Carlisle has grown over the five-year period ending December 31, 2022, as compared to a $100 investment in the S&P MidCap 400 ® Index and S&P 500 ® Index.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Performance Graph The table below shows how a $100 investment in Carlisle has grown over the five-year period ending December 31, 2023, as compared to a $100 investment in the S&P MidCap 400 ® Index and S&P 500 ® Index.
During the three months ended December 31, 2022, there were less than 0.1 million shares reacquired in transactions outside the repurchase program. (2) Represents the remaining total number of shares that can be repurchased under the Company’s stock repurchase program. On February 2, 2021, the Board approved a 5 million share increase in the Company's stock repurchase program.
During the three months ended December 31, 2023, there were less than 0.1 million shares reacquired in transactions outside the repurchase program. (2) Represents the remaining total number of shares that can be repurchased under the Company’s stock repurchase program. On February 2, 2021, the Board approved a 5 million share increase in the Company's stock repurchase program.
Market Information The Company’s common stock is traded on the New York Stock Exchange under the ticker symbol "CSL." As of December 31, 2022, there were 1,112 stockholders of record.
Market Information The Company’s common stock is traded on the New York Stock Exchange under the ticker symbol "CSL." As of December 31, 2023, there were 1,094 stockholders of record.
See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations — Sources and Uses of Cash and Cash Equivalents — Share Repurchases" below.
Management's Discussion and Analysis of Financial Condition and Results of Operations — Sources and Uses of Cash and Cash Equivalents — Share Repurchases" below.
The graph and corresponding chart assumes the investment of $100 in our common stock and each of the indices as of December 31, 2017 and the reinvestment of all dividends.
The graph and corresponding chart assume the investment of $100 in our common stock and each of the indices as of December 31, 2018 and the reinvestment of all dividends.
Carlisle S&P MidCap 400 S&P 500 2017 $100.00 $100.00 $100.00 2018 89.69 87.50 93.76 2019 146.27 108.55 120.84 2020 143.36 121.36 140.49 2021 230.28 149.53 178.27 2022 220.88 127.88 143.61 16 Table of Contents The graph below shows a five-year comparison of cumulative returns for a $100 investment in the Company as compared to the S&P MidCap 400 ® Index and S&P 500 ® Index.
Carlisle S&P MidCap 400 S&P 500 2018 $100.00 $100.00 $100.00 2019 163.09 128.88 124.05 2020 159.85 149.83 138.70 2021 256.76 190.13 170.89 2022 246.28 153.16 146.14 2023 330.65 190.27 167.26 The graph below shows a five-year comparison of cumulative returns for a $100 investment in the Company as compared to the S&P MidCap 400 ® Index and S&P 500 ® Index.
Added
The number of beneficial holders is substantially greater than the number of record holders because a significant portion of our common stock is held of record in broker “street names.” Dividends We intend to pay dividends to our stockholders and have increased our dividend rate annually for the past 47 years.
Added
On January 30, 2024, the Board declared a regular quarterly dividend of $0.85 per share, payable on March 1, 2024, to stockholders of record at the close of business on February 16, 2024.
Added
On August 3, 2023, the Company's Board of Directors approved a 7.5 million share increase in the Company's share repurchase program. The share repurchase program has no expiration date, does not obligate the Company to purchase any specified amount of shares and remains subject to the discretion of the Board of Directors. See "Item 7.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

43 edited+24 added−33 removed11 unchanged
Biggest changeRevenues by Geographic Area (in millions, except percentages) 2022 2021 United States $ 5,663.8 86 % $ 4,039.5 84 % International: Europe 374.9 359.8 Asia and Middle East 201.9 198.5 North America (excluding U.S.) 284.3 170.0 Africa 19.0 13.0 Other 48.0 29.5 Total International 928.1 14 % 770.8 16 % Revenues $ 6,591.9 $ 4,810.3 19 Table of Contents Gross Margin (in millions, except percentages) 2022 2021 Change % Gross margin $ 2,157.4 $ 1,314.7 $ 842.7 64.1 % Gross margin percentage 32.7 % 27.3 % Depreciation and amortization $ 103.1 $ 102.4 Gross margin percentage (gross margin expressed as a percentage of revenues) increased in 2022, driven by positive pricing and COS savings, partially offset by raw material and wage inflation.
Biggest changeRevenues by Geographic Area (in millions, except percentages) 2023 2022 2021 United States $ 4,130.1 90.0 % $ 4,924.0 90.4 % $ 3,413.3 89.0 % International: Europe 211.8 252.6 243.9 North America (excluding U.S.) 198.0 225.8 136.5 Asia and Middle East 26.2 24.1 25.5 Africa 7.1 5.9 7.1 Other 13.7 17.0 10.4 Total International 456.8 10.0 % 525.4 9.6 % 423.4 11.0 % Revenues $ 4,586.9 $ 5,449.4 $ 3,836.7 17 Table of Contents Gross Margin 2023 Compared with 2022 (in millions, except percentages) 2023 2022 Change % Gross margin $ 1,634.2 $ 1,866.0 $ (231.8) (12.4) % Gross margin percentage 35.6 % 34.2 % Depreciation and amortization $ 60.9 $ 63.5 Gross margin percentage (gross margin expressed as a percentage of revenues) increased in 2023, driven by operating efficiencies gained through targeted restructuring, strategic sourcing and realized synergies, primarily from the acquisition of Henry on September 1, 2021. 2022 Compared with 2021 (in millions, except percentages) 2022 2021 Change % Gross margin $ 1,866.0 $ 1,095.5 $ 770.5 70.3 % Gross margin percentage 34.2 % 28.6 % Depreciation and amortization $ 63.5 $ 60.2 Gross margin percentage (gross margin expressed as a percentage of revenues) increased in 2022, driven by favorable price to raw materials inflation across both segments.
Investing Activities Cash used in investing activities of $61.1 million for 2022 primarily reflected capital expenditures of $183.5 million and the acquisition of MBTechnology for $24.7 million, partially offset by the proceeds of the contingent consideration from the earn out payment and sale of real estate associated with the 2021 sale of CBF for $132.0 million and proceeds from investment in securities of $10.3 million.
Cash used in investing activities of $61.1 million for 2022 primarily reflected capital expenditures of $183.5 million and the acquisition of MBTechnology for $24.7 million, partially offset by the proceeds of the contingent consideration from the earn out payment and sale of real estate associated with the 2021 sale of CBF for $132.0 million and proceeds from investment in securities of $10.3 million.
(in millions, except percentages) 2022 2021 Change % Acquisition Effect Price / Volume Effect Exchange Rate Effect Revenues $ 3,885.2 $ 2,846.2 $ 1,039.0 36.5 % — % 37.3 % (0.8) % Operating income $ 1,175.0 $ 619.9 $ 555.1 89.5 % Operating margin 30.2 % 21.8 % Adjusted EBITDA (1) $ 1,228.7 $ 672.7 Adjusted EBITDA margin (1) 31.6 % 23.6 % (1) Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items.
(in millions, except percentages) 2022 2021 Change % Organic Acquisition Exchange Rate Revenues $ 3,885.2 $ 2,846.2 $ 1,039.0 36.5 % 37.3 % — % (0.8) % Operating income $ 1,175.0 $ 619.9 $ 555.1 89.5 % Operating margin 30.2 % 21.8 % Adjusted EBITDA (1) $ 1,228.7 $ 672.7 Adjusted EBITDA margin (1) 31.6 % 23.6 % (1) Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items.
We may access the capital markets for a variety of reasons, including to repay the outstanding balances of our outstanding debt and fund acquisitions. Refer to Note 14 for further information on long-term debt.
We may access the capital markets for a variety of reasons, including to repay the outstanding balances of our outstanding debt and fund acquisitions. Refer to Note 13 for further information on long-term debt.
We also have unsecured senior unsecured notes outstanding of $300.0 million due September 1, 2023 (at a stated interest rate of 0.55%), $400.0 million due December 1, 2024 (at a stated interest rate of 3.5%), $600.0 million due December 1, 2027 (at a stated interest rate of 3.75%), $750 million due March 1, 2030 (at a stated interest rate of 2.75%) and $550.0 million due March 1, 2032 (at a stated interest rate of 2.20% that are rated BBB by Standard & Poor’s and Baa2 by Moody’s.
We also have unsecured senior notes outstanding of $400.0 million due December 1, 2024 (at a stated interest rate of 3.5%), $600.0 million due December 1, 2027 (at a stated interest rate of 3.75%), $750 million due March 1, 2030 (at a stated interest rate of 2.75%) and $550.0 million due March 1, 2032 (at a stated interest rate of 2.20%) that are rated BBB by Standard & Poor’s and Baa2 by Moody’s.
Sources and Uses of Cash and Cash Equivalents (in millions) 2022 2021 Net cash provided by operating activities $ 1,000.9 $ 421.7 Net cash used in investing activities (61.1) (1,486.4) Net cash (used in) provided by financing activities (862.0) 488.1 Effect of foreign currency exchange rate changes on cash (2.2) (1.2) Change in cash and cash equivalents $ 75.6 $ (577.8) Operating Activities We generated operating cash flows totaling $1,000.9 million for 2022 (including working capital uses of $222.0 million), compared with $421.7 million for 2021 (including working capital uses of $275.2 million).
Sources and Uses of Cash and Cash Equivalents (in millions) 2023 2022 2021 Net cash provided by operating activities $ 1,201.3 $ 1,000.9 $ 421.7 Net cash provided by (used in) investing activities 352.4 (61.1) (1,486.4) Net cash (used in) provided by financing activities (1,349.7) (862.0) 488.1 Effect of foreign currency exchange rate changes on cash 1.5 (2.2) (1.2) Change in cash and cash equivalents $ 205.5 $ 75.6 $ (577.8) Operating Activities We generated operating cash flows totaling $1,201.3 million for 2023 (including working capital sources of $107.6 million), compared with $1,000.9 million for 2022 (including working capital uses of $222.0 million).
Refer to Note 4 for additional information related to discontinued operations. 21 Table of Contents Segment Results of Operations Carlisle Construction Materials (“CCM”) This segment produces a complete line of premium energy-efficient single-ply roofing products and warranted roof systems and accessories for the commercial building industry, including ethylene propylene diene monomer (“EPDM”), thermoplastic polyolefin (“TPO”) and polyvinyl chloride (“PVC”) membrane, polyisocyanurate ("polyiso") insulation, and engineered metal roofing and wall panel systems for commercial and residential buildings.
Segment Results of Operations Carlisle Construction Materials (“CCM”) This segment produces a complete line of premium energy-efficient single-ply roofing products and warranted roof systems and accessories for the commercial building industry, including ethylene propylene diene monomer (“EPDM”), thermoplastic polyolefin (“TPO”) and polyvinyl chloride (“PVC”) membrane, polyisocyanurate ("polyiso") insulation, and engineered metal roofing and wall panel systems for commercial and residential buildings.
Refer to Note 9 for further information related to income taxes.
Refer to Note 8 for further information related to income taxes.
In addition, upon permanent transfer of cash outside of certain jurisdictions, primarily in Canada and China, we may be subject to withholding taxes, and as such we have accrued $6.9 million in anticipation of those taxes as of December 31, 2022.
In addition, upon permanent transfer of cash outside of certain jurisdictions, primarily in Canada, we may be subject to withholding taxes, and as such we have accrued $5.8 million in anticipation of those taxes as of December 31, 2023.
Cash provided by financing activities of $488.1 million for 2021 primarily reflected net proceeds from our September public offering of $850.0 million in aggregate principal amount of unsecured senior notes and proceeds from the exercise of stock options, net of withholding tax, of $77.4 million, partially offset by share repurchases of $315.6 million and cash dividend payments of $112.5 million. 25 Table of Contents Share Repurchases On February 2, 2021, the Board approved a 5 million share increase in the Company's stock repurchase program.
Cash provided by financing activities of $488.1 million for 2021 primarily reflected net proceeds from our September public offering of $850.0 million in aggregate principal amount of unsecured senior notes and proceeds from the exercise of stock options, net of withholding tax, of $77.4 million, partially offset by share repurchases of $315.6 million and cash dividend payments of $112.5 million.
(in millions, except percentages) 2021 2020 Change % Acquisition Effect Price / Volume Effect Exchange Rate Effect Revenues $ 990.5 $ 660.2 $ 330.3 50.0 % 26.9 % 23.1 % — % Operating income $ 64.4 $ 57.4 $ 7.0 12.2 % Operating margin 6.5 % 8.7 % Adjusted EBITDA (1) $ 151.3 $ 106.8 Adjusted EBITDA margin (1) 15.3 % 16.2 % (1) Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items.
(in millions, except percentages) 2022 2021 Change % Organic Acquisition Exchange Rate Revenues $ 1,564.2 $ 990.5 $ 573.7 57.9 % 13.6 % 44.8 % (0.5) % Operating income $ 128.6 $ 64.4 $ 64.2 99.7 % Operating margin 8.2 % 6.5 % Adjusted EBITDA (1) $ 250.6 $ 151.3 Adjusted EBITDA margin (1) 16.0 % 15.3 % (1) Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items.
Financing Activities Cash used in financing activities of $862.0 million for 2022 primarily reflected share repurchases of $400.0 million, the redemption of the 2022 Notes of $350.0 million and cash dividend payments of $134.4 million, reflecting the increased annual dividend rate of $3.00 per share.
Cash used in financing activities of $862.0 million for 2022 primarily reflected share repurchases of $400.0 million, the redemption of the 2022 Notes of $350.0 million and cash dividend payments of $134.4 million.
Such decisions include the selection of the appropriate accounting principles to be applied and assumptions on which to base estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities.
Generally Accepted Accounting Principles (“GAAP”), the Company’s management must make informed decisions which impact the reported amounts and related disclosures. Such decisions include the selection of the appropriate accounting principles to be applied and assumptions on which to base estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities.
Refer to Non-GAAP Financial Measures in this MD&A for more information about, and a detailed reconciliation of, these items. CCM’s revenue increase in 2021 primarily reflected higher volumes from strength in U.S. commercial roofing and price realization across all markets.
Refer to Non-GAAP Financial Measures in this MD&A for more information about, and a detailed reconciliation of, these items. CCM’s revenue increase in 2022 primarily reflected higher organic revenues from strength in U.S. commercial roofing and price realization across all markets. CCM’s operating margin and adjusted EBITDA margin increase in 2022 primarily reflected favorable price to raw materials inflation.
(in millions, except percentages) 2022 2021 Change % Acquisition Effect Price / Volume Effect Exchange Rate Effect Revenues $ 297.1 $ 285.8 $ 11.3 4.0 % — % 9.3 % (5.3) % Operating income $ 36.5 $ 24.0 $ 12.5 52.1 % Operating margin 12.3 % 8.4 % Adjusted EBITDA (1) $ 56.3 $ 46.4 Adjusted EBITDA margin (1) 18.9 % 16.2 % (1) Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items.
(in millions, except percentages) 2023 2022 Change % Organic Acquisition Exchange Rate Revenues $ 1,333.5 $ 1,564.2 $ (230.7) (14.7) % (14.7) % 0.2 % (0.2) % Operating income $ 187.9 $ 128.6 $ 59.3 46.1 % Operating margin 14.1 % 8.2 % Adjusted EBITDA (1) $ 284.8 $ 250.6 Adjusted EBITDA margin (1) 21.4 % 16.0 % (1) Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items.
Liquidity and Capital Resources A summary of our cash and cash equivalents by region follows: (in millions) December 31, 2022 December 31, 2021 Europe $ 20.1 $ 12.3 North America (excluding U.S.) 28.5 40.8 China 4.5 17.8 Asia Pacific (excluding China) 19.2 12.9 International cash and cash equivalents 72.3 83.8 U.S. cash and cash equivalents 327.7 240.6 Total cash and cash equivalents $ 400.0 $ 324.4 24 Table of Contents We maintain liquidity sources primarily consisting of cash and cash equivalents as well as availability under the Company's Fourth Amended and Restated Credit Agreement (as amended, the "Facility").
Liquidity and Capital Resources A summary of our cash and cash equivalents by region follows: (in millions) December 31, 2023 December 31, 2022 Europe $ 14.0 $ 19.5 North America (excluding U.S.) 34.1 14.2 China 9.8 3.4 International cash and cash equivalents 57.9 37.1 U.S. cash and cash equivalents 518.8 327.7 Total cash and cash equivalents $ 576.7 $ 364.8 We maintain liquidity sources primarily consisting of cash and cash equivalents as well as availability under the Company's Fourth Amended and Restated Credit Agreement (as amended, the "Facility").
Operating margin also included definite-lived intangible asset impairments of $18.6 million and plant, property and equipment impairments of $6.2 million in 2022 and transaction related expenses of $24.4 million from the acquisition of Henry in 2021.
Operating margin also included definite-lived intangible asset impairments of $18.6 22 Table of Contents million and plant, property and equipment impairments of $6.2 million in 2022 and transaction related expenses of $24.4 million from the acquisition of Henry in 2021. CWT’s adjusted EBITDA margin increase in 2022 primarily reflected favorable price to raw material inflation.
The increase in cash and cash equivalents compared to December 31, 2021, is primarily related to cash generated from operations and the receipt of the $125 million earn out payment from the sale of CBF, partially offset by share repurchases, the redemption of the 2022 Notes, capital expenditures and payment of dividends to stockholders.
The increase in cash and cash equivalents compared to December 31, 2022, is primarily related to cash received from the sale of the CFT business and cash generated from operations, partially offset by cash used on share repurchases, repayment of senior notes, capital expenditures and payment of dividends to stockholders.
Debt Covenants We are required to meet various covenants and limitations under our senior notes and Facility, including certain leverage ratios, interest coverage ratios and limits on outstanding debt balances held by certain subsidiaries. We were in compliance with all covenants and limitations as of December 31, 2022 and 2021.
As of December 31, 2023 and December 31, 2022, there were no borrowings under the Facility and $1.0 billion of availability. 24 Table of Contents Debt Covenants We are required to meet various covenants and limitations under our senior notes and Facility, including certain leverage ratios, interest coverage ratios and limits on outstanding debt balances held by certain subsidiaries.
(in millions, except percentages) 2021 2020 Change % Acquisition Effect Price / Volume Effect Exchange Rate Effect Revenues $ 2,846.2 $ 2,335.4 $ 510.8 21.9 % — % 21.5 % 0.4 % Operating income $ 619.9 $ 524.2 $ 95.7 18.3 % Operating margin 21.8 % 22.4 % Adjusted EBITDA (1) $ 672.7 $ 576.4 Adjusted EBITDA margin (1) 23.6 % 24.7 % (1) Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items.
(in millions, except percentages) 2023 2022 Change % Organic Acquisition Exchange Rate Revenues $ 3,253.4 $ 3,885.2 $ (631.8) (16.3) % (16.3) % — % — % Operating income $ 913.9 $ 1,175.0 $ (261.1) (22.2) % Operating margin 28.1 % 30.2 % Adjusted EBITDA (1) $ 976.8 $ 1,228.7 Adjusted EBITDA margin (1) 30.0 % 31.6 % (1) Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items.
Operating Income (in millions, except percentages) 2022 2021 Change % Operating income $ 1,275.7 $ 567.5 $ 708.2 124.8 % Operating margin percentage 19.4 % 11.8 % Refer to Segment Results of Operations within this MD&A for further information related to segment operating income results. 20 Table of Contents Interest Expense, net (in millions, except percentages) 2022 2021 Change % Interest expense, net $ 85.9 $ 80.3 $ 5.6 7.0 % Interest expense, net of capitalized interest, increased during 2022 primarily reflecting higher long-term debt balances associated with our public offering of $550.0 million of 2.20% unsecured senior notes and $300.0 million of 0.55% unsecured senior notes completed in September 2021, partially offset by the redemption of $350.0 million of 3.75% unsecured senior notes (the "2022 Notes") in October 2022.
Refer to Note 13 for further information on our long-term debt. 19 Table of Contents 2022 Compared with 2021 (in millions, except percentages) 2022 2021 Change % Interest expense, net $ 85.9 $ 80.2 $ 5.7 7.1 % Interest expense, net of capitalized interest, increased during 2022 primarily reflecting higher long-term debt balances associated with our public offering of $550.0 million of 2.20% unsecured senior notes and the 2023 Notes completed in September 2021, partially offset by the redemption in full of the 2022 Notes in October 2022.
Refer to Non-GAAP Financial Measures in this MD&A for more information about, and a detailed reconciliation of, these items. CWT’s revenue increased in 2022 primarily reflecting contributions from the Henry acquisition and positive pricing.
Refer to Non-GAAP Financial Measures in this MD&A for more information about, and a detailed reconciliation of, these items. CWT’s revenue increased in 2022 primarily reflecting contributions from the Henry acquisition of $444.1 million and organic revenue growth of $135.0 million. CWT’s operating margin increase in 2022 primarily reflected favorable price to raw material inflation.
We continue to manage an active merger and acquisition pipeline focused on synergistic businesses with attractive growth characteristics that complement our high-margin product lines.
We remain balanced and disciplined in our approach to capital deployment and plan to elevate our level of capital expenditures and research and development to drive future growth. We continue to manage an active merger and acquisition pipeline focused on synergistic businesses with attractive growth characteristics that complement our high-margin product lines.
We expect to remain active in returning capital to stockholders, after raising our dividend in 2022 for the 46 th consecutive year and returning $534.4 million to stockholders in the form of share repurchases and cash dividends. 18 Table of Contents Summary Financial Results (in millions, except per share amounts and percentages) 2022 2021 Revenues $ 6,591.9 $ 4,810.3 Operating income $ 1,275.7 $ 567.5 Operating margin 19.4 % 11.8 % Income from continuing operations $ 925.2 $ 387.0 (Loss) income from discontinued operations $ (1.2) $ 34.7 Diluted earnings per share attributable to common shares: Income from continuing operations $ 17.58 $ 7.26 (Loss) income from discontinued operations $ (0.02) $ 0.65 Adjusted EBITDA (1) $ 1,563.0 $ 833.5 Adjusted EBITDA margin (2) 23.7 % 17.3 % (1) Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items.
We also raised our dividend for the 47 th consecutive year using cash generated from operations to return $160.3 million to stockholders in the form of cash dividends. 16 Table of Contents Summary Financial Results (in millions, except per share amounts and percentages) 2023 2022 2021 Revenues $ 4,586.9 $ 5,449.4 $ 3,836.7 Operating income $ 982.8 $ 1,204.8 $ 573.4 Operating margin 21.4 % 22.1 % 14.9 % Income from continuing operations $ 718.9 $ 858.0 $ 385.6 Income from discontinued operations $ 48.5 $ 66.0 $ 36.1 Diluted earnings per share attributable to common shares: Income from continuing operations $ 14.22 $ 16.30 $ 7.23 Income from discontinued operations $ 0.96 $ 1.26 $ 0.68 Adjusted EBITDA (1) $ 1,152.8 $ 1,391.7 $ 723.8 Adjusted EBITDA margin (1) 25.1 % 25.5 % 18.9 % (1) Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items.
Research and Development Expenses (in millions, except percentages) 2022 2021 Change % Research and development expenses $ 50.8 $ 49.9 $ 0.9 1.8 % As a percentage of revenues 0.8 % 1.0 % Depreciation and amortization $ 2.2 $ 1.8 Research and development expenses were higher in 2022 primarily reflecting higher new product development expenses at our CIT, CCM and CWT segments.
Research and Development Expenses 2023 Compared with 2022 (in millions, except percentages) 2023 2022 Change % Research and development expenses $ 28.7 $ 19.0 $ 9.7 51.1 % As a percentage of revenues 0.6 % 0.3 % Depreciation and amortization $ 1.4 $ 1.5 Research and development expenses were higher in 2023 primarily reflecting higher new product development expenses of $6.8 million at our CCM segment and $2.9 million at our CWT segment. 18 Table of Contents 2022 Compared with 2021 (in millions, except percentages) 2022 2021 Change % Research and development expenses $ 19.0 $ 16.4 $ 2.6 15.9 % As a percentage of revenues 0.3 % 0.4 % Depreciation and amortization $ 1.5 $ 1.3 Research and development expenses were higher in 2022 primarily reflecting higher new product development expenses of $2.2 million at our CWT segment and $0.4 million at our CCM segment.
We repurchased approximately 1.6 million shares in 2022 as part of our plan to return capital to stockholders, utilizing $400.0 million of our cash on hand. As of December 31, 2022, we had authority to repurchase 3.4 million shares.
Share Repurchases On August 3, 2023, the Board approved a 7.5 million share increase in the Company's share repurchase program. We repurchased approximately 3.5 million shares in 2023 as part of our plan to return capital to stockholders, utilizing $900.0 million of our cash on hand. As of December 31, 2023, we had authority to repurchase 7.4 million shares.
Revolving Credit Facility During 2022, we had no borrowings or repayments under the Facility. During 2021, borrowings and repayments under the Facility totaled $650.0 million with a weighted average interest rate of 1.1%. As of December 31, 2022 and December 31, 2021, there were no borrowings under the Facility and $1.0 billion of availability.
Revolving Credit Facility During 2023, we had $84.0 million in borrowings and repayments under the Facility with a weighted average interest rate of 6.61%. During 2022, we had no borrowings or repayments under the Facility.
Refer to Non-GAAP Financial Measures in this MD&A for more information about, and a detailed reconciliation of, these items. CIT's revenue increase in 2022 primarily reflected continued strengthening of aerospace and medical end markets and favorable pricing.
Refer to Non-GAAP Financial Measures in this MD&A for more information about, and a detailed reconciliation of, these items.
Other Operating Expense (Income), net (in millions, except percentages) 2022 2021 Change % Other operating expense (income), net $ 19.4 $ (0.9) $ 20.3 NM Other operating expense, net in 2022 reflected intangible asset impairments of $18.6 million and fixed asset impairments of $6.2 million at our CWT segment, partially offset by rebates of $4.2 million and royalty income of $1.8 million.
Other Operating (Income) Expense, net 2023 Compared with 2022 (in millions, except percentages) 2023 2022 Change % Other operating (income) expense, net $ (2.5) $ 18.7 $ (21.2) NM The change in other operating (income) expense, net, primarily reflected intangible asset impairments of $18.6 million and fixed asset impairments of $6.2 million recorded in 2022 in our rubber asset group partially offset by an increase in the loss on sale of fixed assets of $2.3 million in 2023 compared to 2022. 2022 Compared with 2021 (in millions, except percentages) 2022 2021 Change % Other operating expense (income), net $ 18.7 $ (2.1) $ 20.8 NM The change in other operating expense (income), net, primarily reflected intangible asset impairments of $18.6 million and fixed asset impairments of $6.2 million recorded in 2022 in our rubber asset group partially offset by an impairment loss of $3.2 million recorded in 2021.
Income Taxes (in millions, except percentages) 2022 2021 Change % Provision for income taxes $ 270.4 $ 95.5 $ 174.9 183.1 % Effective tax rate 22.6 % 19.8 % The provision for income taxes on continuing operations for 2022 is higher than 2021 primarily reflecting higher pre-tax income in the U.S., and to a lesser extent in foreign jurisdictions which equated to higher taxes of $174.7 million.
Income Taxes 2023 Compared with 2022 (in millions, except percentages) 2023 2022 Change % Provision for income taxes $ 211.5 $ 265.7 $ (54.2) (20.4) % Effective tax rate 22.7 % 23.6 % The provision for income taxes on continuing operations for 2023 is lower than 2022, primarily reflecting lower pre-tax income which equated to lower taxes of $54.2 million.
Other Non-operating Expense, net (in millions, except percentages) 2022 2021 Change % Other non-operating expense, net $ 1.3 $ 5.9 $ (4.6) (78.0) % Other non-operating expense, net in 2022 primarily reflected changes in foreign currencies against the U.S. Dollar and unrealized losses on Rabbi Trust investments, partially offset by unrealized gains on pension assets.
Other Non-operating (Income) Expense, net 2023 Compared with 2022 (in millions, except percentages) 2023 2022 Change % Other non-operating (income) expense, net $ (3.1) $ 2.0 $ (5.1) NM Other non-operating (income) expense, net in 2023 primarily reflected favorable changes to Rabbi Trust investments of $3.3 million and favorable changes in foreign currencies against the U.S.
Other non-operating expense, net in 2021 primarily reflected the release of the remaining indemnification assets related to the acquisitions of Petersen Aluminum Corporation ("Petersen") and Accella Holdings LLC ("Accella") resulting from escrow expirations, and changes in foreign currencies against the U.S. Dollar.
Dollar of $2.6 million, partially offset by unfavorable changes to pension assets of $0.8 million. 2022 Compared with 2021 (in millions, except percentages) 2022 2021 Change % Other non-operating expense, net $ 2.0 $ 4.4 $ (2.4) NM Other non-operating expense, net in 2022 primarily reflected a favorable change related to the release of the remaining indemnification assets related to the acquisitions of Petersen Aluminum Corporation and Accella Holdings LLC resulting from escrow expirations of $3.6 million and favorable changes to pension assets of $2.5 million.
Refer to Note 14 for further information on our debt instruments. Critical Accounting Estimates Our significant accounting policies are more fully described in Note 1. In preparing the Consolidated Financial Statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company’s management must make informed decisions which impact the reported amounts and related disclosures.
We were in compliance with all covenants and limitations as of December 31, 2023 and 2022. Refer to Note 13 for further information on our debt instruments. Critical Accounting Estimates Our significant accounting policies are more fully described in Note 1. In preparing the Consolidated Financial Statements in conformity with U.S.
Refer to Note 14 for further information on our long-term debt. Interest Income (in millions, except percentages) 2022 2021 Change % Interest income $ (7.1) $ (1.2) $ (5.9) 491.7 % Interest income increased during 2022 primarily relating higher yields and a higher invested cash balance.
Interest Income 2023 Compared with 2022 (in millions, except percentages) 2023 2022 Change % Interest income $ (20.1) $ (6.8) $ (13.3) 195.6 % Interest income increased during 2023 primarily relating to higher yields compared to the prior year. 2022 Compared with 2021 (in millions, except percentages) 2022 2021 Change % Interest income $ (6.8) $ (1.1) $ (5.7) 518.2 % Interest income increased during 2022 primarily relating to higher yields and a higher invested cash balance compared to the prior year.
Higher operating cash flows in 2022 primarily reflected higher net income and a reduction in working capital uses related to collection of accounts receivable, partially offset by a reduction in accounts payable.
Higher operating 23 Table of Contents cash flows of $579.2 million in 2022 primarily reflected higher net income of $502.3 million reflecting improved operating results, and a reduction in working capital uses of $53.2 million related to collection of accounts receivable of $181.0 million reflecting increased revenues, partially offset by a reduction in accounts payable of $145.9 million reflecting reduced purchases to manage inventory balances as we return to normal seasonal buying patterns.
Refer to Non-GAAP Financial Measures in this MD&A for more information about, and a detailed reconciliation of, these items. CFT's revenue increase in 2022 primarily reflected positive pricing and increased volumes in the transportation end market, partially offset by unfavorable changes in foreign currency rates.
Refer to Non-GAAP Financial Measures in this MD&A for more information about, and a detailed reconciliation of, these items. CWT’s revenue decreased in 2023 primarily reflecting broad market underperformance from project delays and uncertainty caused by higher interest rates.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of our financial statements with a narrative from the perspective of Company management. All references to “Notes” refer to our Notes to Consolidated Financial Statements in this Annual Report on Form 10-K.
Carlisle is committed to generating superior stockholder returns and maintaining a balanced capital deployment approach, including investments in our businesses, strategic acquisitions, share repurchases and continued dividend increases. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of our financial statements with a narrative from the perspective of Company management.
Consolidated Results of Operations Revenues (in millions, except percentages) 2022 2021 Change % Acquisition Effect Price / Volume Effect Exchange Rate Effect Revenues $ 6,591.9 $ 4,810.3 $ 1,781.6 37.0 % 9.2 % 28.7 % (0.9) % The increase in revenues in 2022 primarily reflected positive pricing across all segments, contributions from the acquisition of Henry in the CWT segment and higher sales volumes in the CCM, CIT and CFT segments, partially offset by unfavorable foreign currency impacts.
Additionally, sales were lower in the general industrial end market by $64.9 million, primarily from the exit of a non-core business. 2022 Compared with 2021 (in millions, except percentages) 2022 2021 Change % Organic Acquisition Exchange Rate Revenues $ 5,449.4 $ 3,836.7 $ 1,612.7 42.0 % 31.2 % 11.6 % (0.8) % The increase in revenues in 2022 primarily reflected organic revenue growth of nearly $1.2 billion and contributions from the acquisition of Henry of $444.1 million in the CWT segment, partially offset by unfavorable foreign currency impacts of $28.3 million.
CCM’s operating margin and adjusted EBITDA margin decline in 2021 primarily reflected raw material, wage and freight inflation, offset by pricing actions that served to substantially offset inflation on a dollar basis during the year. Carlisle Weatherproofing Technologies ("CWT") This segment produces building envelope solutions that drive energy efficiency and sustainability in commercial and residential applications.
Carlisle Weatherproofing Technologies ("CWT") This segment produces building envelope solutions that drive energy efficiency and sustainability in commercial and residential applications.
(Loss) Income from Discontinued Operations (in millions, except percentages) 2022 2021 Change % (Loss) income from discontinued operations before taxes $ (5.4) $ 9.9 $ (15.3) NM Benefit from income taxes (4.2) (24.8) (Loss) income from discontinued operations $ (1.2) $ 34.7 Loss from discontinued operations in 2022 primarily reflects legal settlement accruals associated with a previously disposed business, partially offset by a gain on the sale of real estate associated with the 2021 sale of the equity interests and assets comprising the Carlisle Brake & Friction ("CBF") segment.
Income from Discontinued Operations 2023 Compared with 2022 (in millions, except percentages) 2023 2022 Change % Income from discontinued operations before taxes $ 21.7 $ 66.6 $ (44.9) NM (Benefit from) provision for income taxes (26.8) 0.6 Income from discontinued operations $ 48.5 $ 66.0 Income from discontinued operations in 2023 primarily reflects operating results from the CIT and Carlisle Fluid Technologies ("CFT") businesses of $141.6 million, partially offset by the loss on sale of CFT, net of tax, of $61.8 and an impairment of goodwill of $24.8 million.
Debt Instruments Senior Notes On September 14, 2022, we issued a notice for the redemption in full of our outstanding $350.0 million aggregate principal amount of 2022 Notes. The 2022 Notes were redeemed on October 17, 2022, at the redemption price of $355.5 million, including $5.5 million of interest to the redemption date.
The Company plans to continue to repurchase shares in 2024 on an opportunistic basis. Debt Instruments Senior Notes On September 1, 2023, the Company redeemed in full the 2023 Notes at the redemption price of $300.8 million, consisting of the principal amount of $300.0 million and $0.8 million of interest.
Products include high-performance waterproofing and moisture protection products, protective roofing underlayments, fully integrated liquid and sheet applied air/vapor barriers, sealants/primers and flashing systems, roof coatings and mastics, spray polyurethane foam and coating systems for a wide variety of thermal protection applications and other premium polyurethane products, block-molded expanded polystyrene insulation, engineered products for HVAC applications, and premium rubber products for a variety of industrial and surfacing applications. 22 Table of Contents (in millions, except percentages) 2022 2021 Change % Acquisition Effect Price / Volume Effect Exchange Rate Effect Revenues $ 1,564.2 $ 990.5 $ 573.7 57.9 % 44.8 % 13.6 % (0.5) % Operating income $ 128.6 $ 64.4 $ 64.2 99.7 % Operating margin 8.2 % 6.5 % Adjusted EBITDA (1) $ 250.6 $ 151.3 Adjusted EBITDA margin (1) 16.0 % 15.3 % (1) Adjusted EBITDA and adjusted EBITDA margin are intended to provide investors and others with information about Carlisle's and our segments' performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items.
Products include high-performance waterproofing and moisture protection products, protective roofing underlayments, fully integrated liquid and sheet applied air/vapor barriers, sealants/primers and flashing systems, roof coatings and mastics, spray polyurethane foam and coating systems for a wide variety of thermal protection applications and other premium polyurethane products, block-molded expanded polystyrene insulation, engineered products for HVAC applications, and premium products for a variety of industrial and surfacing applications.
Refer to Non-GAAP Financial Measures in this MD&A for more information about, and a detailed reconciliation of, these items. CCM’s revenue increased in 2022 primarily reflecting positive pricing across all product lines and the strength of U.S. commercial roofing demand.
Refer to Non-GAAP Financial Measures in this MD&A for more information about, and a detailed reconciliation of, these items. CCM’s revenue decreased in 2023 primarily reflecting lower sales in non-residential end market of $597.8 million from project delays and uncertainty caused by higher interest rates, and prolonged distributor destocking during the 21 Table of Contents first part of the year.
Removed
Carlisle is committed to generating superior stockholder returns and maintaining a balanced capital deployment approach, including investments in our businesses, strategic acquisitions, share repurchases and continued dividend increases. We are also a leading provider of products to the aerospace, medical technologies and general industrial markets through our Carlisle Interconnect Technologies ("CIT") and Carlisle Fluid Technologies ("CFT") business segments.
Added
All references to “Notes” refer to our Notes to Consolidated Financial Statements in this Annual Report on Form 10-K. Executive Overview We are pleased by the Carlisle team’s results, achieving full year 2023 income from continuing operations of $718.9 million, an operating margin of 21.4% and an adjusted EBITDA margin of 25.1%.
Removed
For more information regarding our consolidated results, segment results, with the exception of CCM and CWT as a result of the reportable segment change during 2022, and liquidity and capital resources for the year ended December 31, 2021 as compared to the year ended December 31, 2020, refer to "Part II—Item 7.
Added
Despite destocking by distributors and contractors during the first half of the year, Carlisle had a strong finish to 2023 with results driven by stronger CCM sales and higher profitability at CWT.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 2021 Annual Report on Form 10-K (the "2021 Annual Report on Form 10-K"). Executive Overview The entire Carlisle team delivered excellent results throughout 2022, especially given the difficult macroeconomic environment.
Added
We continue to emphasize execution in our businesses through the Carlisle Operating System ("COS"), providing value to our customers by delivering innovative solutions for the building envelope, and delivering the Carlisle Experience to our customers.
Removed
Leveraging our continuous improvement culture and the Carlisle Experience, the Carlisle team delivered on our commitments, supported by continued strong underlying U.S. non-residential construction demand, ongoing recovery in commercial aerospace markets, and disciplined pricing to deliver a record sales and earnings performance.
Added
With our strong finish to 2023 and the end of the past year’s inventory destocking in our channels, our team enters 2024 energized and clearly aligned with our recently launched Vision 2030. The announced sale agreement of our Carlisle Interconnect Technologies ("CIT") business serves as a critical last step in our pivot to a best-in-class pure play building products company.
Removed
In 2018, we launched Vision 2025, our plan to deliver $15 of GAAP earnings per share ("EPS") by 2025. Vision 2025 has provided Carlisle with clarity of mission to keep us on course during the difficult operating conditions of the past few years.
Added
As part of our capital allocation philosophy, we made the strategic decision in 2021 to allocate future cash flow and human capital to maximize total returns by focusing on our building products businesses, which have consistently delivered the highest returns.
Removed
At its core, Vision 2025 consists of five fundamental pillars; driving organic revenue growth, leveraging that growth with COS, transforming the portfolio through synergistic acquisitions and strategic divestitures, deploying capital in a disciplined and return on investment-focused manner, and investing in and developing exceptional talent.
Added
With the expected proceeds from the sale, we begin 2024 with an eye toward significant value creation to deliver another year of superior returns to our stockholders. We expect combined benefits from a backlog of roofing projects due to constrained labor and tailwinds from prior year customer destocking to help mitigate potential macro-economic risks.
Removed
We are extremely pleased to confirm we have met our objective to deliver $15 of GAAP EPS three years in advance of our target date. As we exited 2022, we saw material supply conditions continuing to improve and our channel partners settling into a more normal purchasing cadence.
Added
We have entered 2024 with a positive growth outlook that we believe is reasonable, achievable and fully supported by our Vision 2030 strategic objectives. We are confident that innovation with a focus on energy efficiency and labor-saving solutions puts us on the right path to drive above-market growth and earn a premium price in the marketplace.
Removed
Inflationary pressures continue to abate, and greater availability of materials are leading us toward a more normalized operating environment, continuing the trends we started to experience in the third quarter of 2022. Seasonal buying patterns, which were disrupted in 2020 and 2021, are approaching normalization with our customers working down inventory in the fourth quarter and into early 2023.
Added
In 2023, we returned value to our stockholders by repurchasing $900.0 million of shares, adding to our cumulative share repurchases since 2017 of over $3.1 billion. As of December 31, 2023, we had 7.4 million shares available for repurchase under our share repurchase program.
Removed
As strong underlying fundamentals in our core businesses persist, we expect to build inventory, as we typically do, in anticipation of seasonally strong demand in the second and third quarters of 2023.
Added
Consolidated Results of Operations Revenues 2023 Compared with 2022 (in millions, except percentages) 2023 2022 Change % Organic Acquisition Exchange Rate Revenues $ 4,586.9 $ 5,449.4 $ (862.5) (15.8) % (15.8) % — % — % The decrease in revenues in 2023 primarily reflects lower sales in the non-residential construction end market of $667.6 million and residential construction end market of $128.4 million, as project delays and uncertainty caused by higher interest rates during the year led to a broad market underperformance and distributors continued to adjust inventory to pre-pandemic levels.
Removed
Non-discretionary commercial re-roofing demand continues, including significant interest and activity in Carlisle's sustainable building solutions driven by rising energy costs, sustainability trends and projected investment from the Inflation Reduction Act. We remain balanced and disciplined in our approach to capital deployment. We are maintaining an elevated level of capital expenditures to drive future growth, particularly in our building products businesses.
Added
Selling and Administrative Expenses 2023 Compared with 2022 (in millions, except percentages) 2023 2022 Change % Selling and administrative expenses $ 625.2 $ 623.5 $ 1.7 0.3 % As a percentage of revenues 13.6 % 11.4 % Depreciation and amortization $ 88.8 $ 93.6 Selling and administrative expenses was relatively flat in 2023 as increases related to employee benefits of $8.5 million, professional fees of $4.4 million and travel expenses of $3.4 million were offset by a reduction in sales and marketing expenses of $14.0 million, as lower sales resulted in a lower commissions expense. 2022 Compared with 2021 (in millions, except percentages) 2022 2021 Change % Selling and administrative expenses $ 623.5 $ 507.8 $ 115.7 22.8 % As a percentage of revenues 11.4 % 13.2 % Depreciation and amortization $ 93.6 $ 58.2 Selling and administrative expenses increased in 2022 primarily reflecting an increase in sales and marketing expense of $39.7 million, amortization expense of acquired intangible assets of $35.0 million, facility and services expense of $12.5 million, travel expense of $10.6 million and professional fees of $8.0 million.
Removed
Refer to Non-GAAP Financial Measures in this MD&A for more information about, and a detailed reconciliation of, these items. Revenues increased in 2022 primarily reflecting positive pricing across all segments, contributions from the acquisition of ASP Henry Holdings, Inc.
Added
Operating Income 2023 Compared with 2022 (in millions, except percentages) 2023 2022 Change % Operating income $ 982.8 $ 1,204.8 $ (222.0) (18.4) % Operating margin percentage 21.4 % 22.1 % Refer to Segment Results of Operations within this MD&A for further information related to segment operating income results. 2022 Compared with 2021 (in millions, except percentages) 2022 2021 Change % Operating income $ 1,204.8 $ 573.4 $ 631.4 110.1 % Operating margin percentage 22.1 % 14.9 % Refer to Segment Results of Operations within this MD&A for further information related to segment operating income results.
Removed
(“Henry”) in the CWT segment and higher sales volumes in the CCM, CIT and CFT segments, partially offset by unfavorable foreign currency impacts. Operating income and operating income margin increased in 2022 primarily reflecting positive pricing, higher volumes and favorable product mix, partially offset by raw material and wage inflation across all segments.
Added
Interest Expense, net 2023 Compared with 2022 (in millions, except percentages) 2023 2022 Change % Interest expense, net $ 75.6 $ 85.9 $ (10.3) (12.0) % Interest expense, net of capitalized interest, decreased during 2023 primarily reflecting lower long-term debt balances associated with the redemption in full of $350.0 million of our 3.75% unsecured senior notes due November 15, 2022 (the "2022 Notes") in October 2022 and the redemption in full of $300.0 million of our 0.55% unsecured senior notes due September 1, 2023 (the "2023 Notes") in September 2023.
Removed
Diluted earnings per share from continuing operations increased primarily from the above operating income performance ($10.03 per share) and reduced average shares outstanding ($0.21 per share) resulting from our share repurchase program.
Added
Refer to Note 13 for further information on our long-term debt.
Removed
Also included in cost of goods sold were exit and disposal costs totaling $5.7 million in 2022, primarily at CIT, attributable to our restructuring initiatives, compared with $9.7 million in 2021. Refer to Note 8 for further information on exit and disposal activities.
Added
These changes were partially offset by unfavorable changes to Rabbi Trust investments of $2.9 million and unfavorable changes in foreign currencies against the U.S. Dollar of $1.6 million.
Removed
In 2021, cost of goods sold included $2.2 million of inventory step-up amortization associated with the Henry acquisition.
Added
Refer to Note 8 for further information related to income taxes. 20 Table of Contents 2022 Compared with 2021 (in millions, except percentages) 2022 2021 Change % Provision for income taxes $ 265.7 $ 104.3 $ 161.4 154.7 % Effective tax rate 23.6 % 21.3 % The provision for income taxes on continuing operations for 2022 is higher than 2021 primarily reflecting higher pre-tax income which equated to higher taxes of $161.4 million.
Removed
Selling and Administrative Expenses (in millions, except percentages) 2022 2021 Change % Selling and administrative expenses $ 811.5 $ 698.2 $ 113.3 16.2 % As a percentage of revenues 12.3 % 14.5 % Depreciation and amortization $ 146.0 $ 113.7 Selling and administrative expenses increased in 2022 primarily reflecting incremental costs in the CWT segment from the acquisition of Henry, higher commissions, travel, incentive compensation costs and wage inflation.
Added
Income from discontinued operations in 2022 primarily reflects operating results from the CIT and CFT businesses of $70.9 million.
Removed
Also included in selling and administrative expenses were exit and disposal costs totaling $0.6 million in 2022, primarily at CIT, attributable to our restructuring initiatives, compared with $4.5 million in 2021. Refer to Note 8 for further information on exit and disposal activities.
Added
Refer to Note 4 for additional information related to discontinued operations. 2022 Compared with 2021 (in millions, except percentages) 2022 2021 Change % Income from discontinued operations before taxes $ 66.6 $ 2.5 $ 64.1 NM Provision for (benefit from) income taxes 0.6 (33.6) Income from discontinued operations $ 66.0 $ 36.1 Income from discontinued operations in 2022 primarily reflects operating results from the CIT and CFT businesses of $70.9 million.
Removed
Other operating income, net in 2021 primarily reflected $3.5 million of rebates, $1.6 million of royalty income and $0.4 million from rental income, partially offset by $5.0 million of impairment charges.
Added
Income from discontinued operations in 2021 primarily reflects income from the sale of Carlisle Brake and Friction ("CBF"), net of tax, of $19.1 million and operating results from the CIT, CFT and CBF businesses of $12.1 million. Refer to Note 4 for additional information related to discontinued operations.
Removed
Income from discontinued operations in 2021 primarily reflects operating results of CBF prior to the disposition and a pre-tax loss on sale, offset by an income tax benefit from the sale of the equity interests and assets comprising the CBF segment in August 2021.

… 20 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+0 added−0 removed10 unchanged
Biggest changeWe consider the risk to our results of operations from changes in market rates of interest to be minimal as our interest bearing debt instruments are fixed-rate. Foreign Currency Exchange Risk A portion of our operating cash flows are denominated in foreign currencies. As such we are exposed to market risk from changes in foreign currency exchange rates.
Biggest changeThe nature and amount of our long-term debt may vary from time to time as a result of business requirements, market conditions and other factors. We consider the risk to our results of operations from changes in market rates of interest to be minimal as our interest bearing debt instruments are fixed-rate.
We may enter into other interest rate derivatives such as treasury locks or zero cost collars to manage forecasted interest rates associated with bond offerings. As of December 31, 2022 and 2021, there were no interest rate swaps or other derivative instruments in place and, at both dates, all of our long-term debt was fixed-rate and U.S. Dollar denominated.
We may enter into other interest rate derivatives such as treasury locks or zero cost collars to manage forecasted interest rates associated with bond offerings. As of December 31, 2023 and 2022, there were no interest rate swaps or other derivative instruments in place and, at both dates, all of our long-term debt was fixed-rate and U.S. Dollar denominated.
The gains and losses on these contracts offset changes in the value of the related exposures. It is our policy to enter into foreign currency derivative financial instruments only to the extent considered necessary to meet the objectives set forth above. We generally do not hedge the risk of foreign currency net investments into U.S. Dollars for financial reporting.
The gains and losses on these contracts offset changes in the value of the related exposures. It is our policy to enter into foreign currency derivative financial instruments only to the extent considered necessary to meet the objectives set forth above. We generally do not hedge the risk of foreign currency net investments into U.S.
The gross fair value was $(0.3) million and $0.2 million as of December 31, 2022 and 2021, respectively. The unrealized gains and losses resulting from these contracts are not significant and are recognized in other non-operating expense, net and partially offset corresponding foreign exchange gains and losses on the underlying items being economically hedged.
The gross fair value was $(0.6) million and $(0.2) million as of December 31, 2023 and 2022, respectively. The unrealized gains and losses resulting from these contracts are not significant and are recognized in other non-operating expense, net and partially offset corresponding foreign exchange gains and losses on the underlying items being economically hedged.
The gross fair value was $0.7 million and $2.7 million as of December 31, 2022 and 2021, respectively. The effective portion of changes in the fair value of the contracts is recorded in accumulated other comprehensive income (loss) and is recognized in operating income when the underlying forecasted transaction impacts earnings.
The gross fair value was $(0.9) million and $0.7 million as of December 31, 2023 and 2022, respectively. The effective portion of changes in the fair value of the contracts is recorded in accumulated other comprehensive income (loss) and is recognized in operating income when the underlying forecasted transaction impacts earnings.
We may also from time to time enter into derivative financial instruments to mitigate such impact; however, as of December 31, 2022 and 2021, we had no derivative financial instruments in place. 35 Table of Contents
We may also from time to time enter into derivative financial instruments to mitigate such impact; however, as of December 31, 2023 and 2022, we had no derivative financial instruments in place. 33 Table of Contents
We also had foreign exchange contracts with maturities less than one year for instruments that are not designed as a cash flow hedge, but nonetheless are entered into as an economic hedge of certain foreign currency risk with an aggregate U.S. Dollar equivalent notional value of $124.3 million and $82.5 million as of December 31, 2022 and 2021, respectively.
We also had foreign exchange contracts with maturities less than one year for instruments that are not designed as a cash flow hedge, but nonetheless are entered into as an economic hedge of certain foreign currency risk with an aggregate U.S. Dollar equivalent notional value of $56.4 million and $49.1 million as of December 31, 2023 and 2022, respectively.
We had foreign exchange contracts with maturities less than one year for instruments that are designated and qualify as an accounting cash flow hedge with an aggregate U.S. Dollar equivalent notional value of $87.9 million and $127.6 million as of December 31, 2022 and 2021, respectively.
Dollars for financial reporting. 32 Table of Contents We had foreign exchange contracts with maturities less than one year for instruments that are designated and qualify as an accounting cash flow hedge with an aggregate U.S. Dollar equivalent notional value of $26.6 million and $17.5 million as of December 31, 2023 and 2022, respectively.
We manage most of our foreign currency exposure on a consolidated basis, which allows 34 Table of Contents us to net certain exposures and take advantage of natural offsets.
We continually evaluate our foreign currency exposure based on current market conditions and the locations in which we conduct our business. We manage most of our foreign currency exposure on a consolidated basis, which allows us to net certain exposures and take advantage of natural offsets.
We also have a $1.0 billion revolving credit facility that allows for borrowings at a variable interest rate. We had no outstanding borrowings under this facility as of December 31, 2022 and 2021. The nature and amount of our long-term debt may vary from time to time as a result of business requirements, market conditions and other factors.
We also have a revolving credit facility that allows for borrowings of up to $1.0 billion at a variable interest rate. We had no outstanding borrowings under this facility as of December 31, 2023 and 2022.
We are primarily exposed to the exchange rates of currencies including the Chinese Renminbi, Euro, British Pound, Mexican Peso, Canadian Dollar and Japanese Yen. We continually evaluate our foreign currency exposure based on current market conditions and the locations in which we conduct our business.
Foreign Currency Exchange Risk A portion of our operating cash flows are denominated in foreign currencies. As such we are exposed to market risk from changes in foreign currency exchange rates. We are primarily exposed to the exchange rates of currencies including the Chinese Renminbi, Euro, British Pound, Mexican Peso, Canadian Dollar and Japanese Yen.

Other CSL 10-K year-over-year comparisons