Carlisle Companies (NYSE: CSL) reported Q3 2026 revenue of $1.463 billion, up 9% year over year, while diluted EPS from continuing operations rose 5% to $5.22 from $4.97. Adjusted EPS increased 6% to a third-quarter record of $5.92, but adjusted EBITDA was nearly flat as higher petroleum-derived input and freight costs outpaced pricing.
Core Financial Results
Sales growth did not translate into comparable profit growth. Operating income was essentially unchanged, and adjusted EBITDA margin contracted by 210 basis points to 23.8%. Carlisle attributed the pressure to raw material and freight inflation that rose faster than price realization.
Income from continuing operations declined 3%, but diluted EPS increased because the average diluted share count fell to 39.6 million from 42.9 million. The lower share count, supported by Carlisle’s repurchase activity, helped offset the decline in earnings.
| Metric | Q3 2026 | Q3 2025 | YoY Change |
|---|---|---|---|
| Revenue | $1,463.4 million | $1,346.9 million | +9% |
| Operating income | $293.2 million | $293.9 million | Flat |
| Operating margin | 20.0% | 21.8% | -180 bps |
| Income from continuing operations | $207.4 million | $213.5 million | -3% |
| Diluted EPS, continuing operations | $5.22 | $4.97 | +5% |
| Adjusted EPS | $5.92 | $5.61 | +6% |
| Adjusted EBITDA | $348.1 million | $348.7 million | Flat |
| Adjusted EBITDA margin | 23.8% | 25.9% | -210 bps |
| Free cash flow from continuing operations | $277.3 million | $392.7 million | Approximately -29% |
Adjusted EBITDA, adjusted EPS, and free cash flow are non-GAAP measures. EPS figures referenced above are from continuing operations.
Business and Segment Performance
Both operating segments delivered high-single-digit reported revenue growth, but their profitability diverged. Carlisle Construction Materials remained the primary earnings contributor, while Carlisle Weatherproofing Technologies produced the stronger incremental profit performance.
| Segment | Revenue and Growth | Adjusted EBITDA and Growth | Adjusted EBITDA Margin | Margin Change |
|---|---|---|---|---|
| Carlisle Construction Materials (CCM) | $1,084.9 million, +8% | $305.7 million, +1% | 28.2% | -200 bps |
| Carlisle Weatherproofing Technologies (CWT) | $378.5 million, +9% | $68.3 million, +13% | 18.0% | +60 bps |
CCM’s growth reflected higher volume from strategic initiatives, increasing data-center activity, re-roofing demand, and price realization. These benefits were partly offset by continued softness in commercial new construction. Organic revenue grew 9%, but input and freight inflation prevented most of the additional sales from reaching adjusted EBITDA.
CWT’s organic revenue increased 10% as market-share gains and weather-driven demand for roof coatings outweighed weakness in residential and non-residential new construction. Automation, manufacturing consolidation, additional in-house expanded polystyrene resin capacity, and higher volume more than offset cost inflation, allowing the segment to expand its margin.
Input-Cost Inflation Outran Pricing, Holding EBITDA Flat
The quarter’s central issue was the timing gap between higher costs and Carlisle’s pricing actions. Petroleum-derived raw materials, diesel, and freight costs rose more than management had anticipated in its July outlook following renewed escalation of conflict in the Middle East. Although Carlisle implemented freight surcharges and broad price increases, those measures did not fully recover the higher costs during Q3.
The consolidated figures show the effect clearly: revenue increased by $116.5 million, but adjusted EBITDA declined by $0.6 million. Cost of goods sold rose approximately 12%, faster than the roughly 9% increase in revenue. Management characterized the pricing-cost gap as a timing issue and expects the benefit from pricing actions to build through Q4 and into 2027, although that outcome depends partly on raw material costs normalizing.
CWT demonstrated how productivity improvements can offset inflation, while CCM’s 200-basis-point margin contraction showed the larger exposure when pricing trails input costs. This segment split will be important for assessing whether consolidated margin expansion can resume.
Profitability, Cash Flow, and the Balance Sheet
Quarterly operating cash flow declined to $314.1 million from $426.9 million, while free cash flow from continuing operations fell to $277.3 million from $392.7 million. For the first nine months of 2026, operating cash flow was $511.2 million and free cash flow was $406.9 million, compared with $715.8 million and $620.3 million, respectively, a year earlier.
Carlisle returned approximately $990 million to shareholders during the first nine months, comprising $850 million of share repurchases and $139.6 million of dividends. That exceeded year-to-date free cash flow and contributed to cash and equivalents declining from $1.112 billion at the end of 2025 to $546.7 million on September 30. Long-term debt, including the current portion, was largely unchanged at $2.893 billion, and Carlisle had $1.0 billion available under its revolving credit facility.
The company repurchased $350 million of shares during Q3 and said it remained on track for its $1.2 billion 2026 repurchase target. Carlisle also raised its quarterly dividend 14% to $1.25 per share, marking its 50th consecutive annual dividend increase.
Q4 2026 Guidance
Carlisle expects high-single-digit revenue growth in Q4 across both segments, but it does not expect consolidated adjusted EBITDA margin to expand year over year. The outlook assumes no near-term recovery in new construction markets, leaving re-roofing demand, market-share gains, and pricing realization as important drivers.
| Metric | Q4 2026 Outlook |
|---|---|
| Consolidated revenue | High-single-digit YoY growth |
| CCM revenue | High-single-digit YoY growth |
| CWT revenue | High-single-digit YoY growth |
| Adjusted EBITDA margin | Flat year over year |
The flat-margin outlook indicates that pricing is expected to provide more support, but not enough to produce year-over-year margin expansion during Q4.
Risks Investors Need to Watch
- Continued input and freight inflation: Further increases in petroleum-derived materials, diesel, or freight costs could keep pricing behind costs and extend margin pressure.
- Persistent new construction weakness: Both segments faced soft new construction activity, and the Q4 outlook does not assume a near-term recovery. Greater deterioration could weigh on volume growth.
- Lower cash conversion: Quarterly and nine-month operating cash flow and free cash flow declined from the prior year. With substantial repurchases continuing, cash generation and balance-sheet liquidity remain important measures to monitor.
- Execution of price increases: Carlisle reported no material demand change as pricing took effect, but future margin recovery depends on maintaining price realization while retaining volume.
Summary
Carlisle’s Q3 2026 results combined 9% revenue growth and higher EPS with flat adjusted EBITDA and lower margins. CCM drove most of the sales and earnings base but absorbed significant cost pressure, while CWT delivered stronger profit growth through volume gains and operating efficiencies. The next key test is whether pricing can catch up with raw material and freight inflation while new construction remains weak and cash flow trails the prior year.
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