Quietly compounding wealth for decades, turning shingles into shareholder gold.

A 50-Year Dividend Growth Streak Meets a 28.5% ROIC

There's something deeply satisfying about finding a company that does boring things exceptionally well. Carlisle Companies (NYSE: CSL) makes roofing materials. Not exactly dinner party conversation material. But while others chase the latest AI darling, this Arizona-based building products specialist has been quietly compounding wealth for decades, turning shingles into shareholder gold.

Despite shedding roughly a quarter of its market cap from its 52-week highs, CSL has delivered approximately 310% returns over the past ten years, substantially outperforming the S&P 500's impressive 264% run. The question isn't whether Carlisle is a quality business — it clearly is. The question is whether today's price offers a compelling entry point for long-term compounders.

What Carlisle Does (And Why It Matters)

Carlisle is now a pure-play building envelope company after divesting its Carlisle Interconnect Technologies business to Amphenol in 2024 for $2 billion. The company operates through two segments: Carlisle Construction Materials (CCM) and Carlisle Weatherproofing Technologies (CWT).

Here's what makes this business particularly attractive: over 70% of CCM's commercial roofing revenue comes from re-roofing activities, not new construction. The average commercial building in the United States is older than 50 years, creating a massive and recurring demand cycle that's largely insulated from new construction volatility.

Think about it — roofs don't care about interest rates. They deteriorate regardless of what the Fed does. And when they leak, building owners have no choice but to fix them.

The Vision 2030 Roadmap

Management has laid out ambitious but achievable targets under their Vision 2030 strategy: $40 in adjusted EPS (up from $20.20 in 2024), ROIC above 25%, and organic revenue growth of at least 5% annually. The company achieved record adjusted EPS of $20.20 in 2024, representing a 30% year-over-year increase, putting them squarely on track.

The path to $40 EPS requires roughly 12-13% annual EPS growth through 2030 — aggressive but not unrealistic given Carlisle's track record and the structural tailwinds supporting their business. Applying a 20.5x multiple to that target yields a fair value around $820 per share, representing significant upside from today's $324 price.

The Numbers That Matter

Full Year 2024 Results:

• Revenue: $5.0 billion (+9% YoY)

• Adjusted EPS: $20.20 (+30% YoY)

• Adjusted EBITDA margin: 26.6% (record, +150 bps)

• ROIC: 28.5%

• Free cash flow: $938 million

• Share repurchases: $1.6 billion

The company's balance sheet is pristine. Net debt-to-EBITDA sits at just 0.8x, with $754 million in cash and $1 billion available under their revolving credit facility. This fortress-like financial position gives management significant optionality for acquisitions, buybacks, and weathering any economic storms.

The Headwind Everyone's Talking About

Let's address the elephant in the room: construction weakness. Higher interest rates, restrictive lending conditions, and housing affordability challenges have created genuine headwinds, particularly in residential markets and new commercial construction.

Q4 2024 revenue was essentially flat year-over-year, and management expects these challenges to persist through the first half of 2025. The company has guided for mid-single-digit revenue growth in 2025 with approximately 50 basis points of EBITDA margin expansion.

This is real, and it's impacting sentiment. But here's what matters: even amid these headwinds, Carlisle continues generating record earnings and expanding margins. The re-roofing cycle provides ballast, and management's pricing discipline through the Carlisle Experience program keeps margins healthy.

Capital Allocation Excellence

Carlisle returned $1.8 billion to shareholders in 2024 through buybacks and dividends. The dividend has been raised for 49 consecutive years, placing CSL firmly in Dividend Aristocrat territory with a clear path to Dividend King status.

Current yield: 1.35% Payout ratio: ~22% 5-year dividend CAGR: 14.9%

That combination of yield, growth, and payout ratio is remarkably healthy. There's enormous room to continue double-digit dividend increases for years to come without stressing the balance sheet.

What separates great capital allocators from average ones is their ability to balance competing priorities. Carlisle excels here — they're simultaneously investing in organic growth through R&D and their new innovation center, executing bolt-on acquisitions (nearly $700 million deployed in 2024 including MTL, Plasti-Fab, and ThermaFoam), returning capital through buybacks and dividends, and maintaining a clean balance sheet. Few companies thread this needle as effectively.

Let’s Score CSL

CLS Overall Score: 80/100

Carlisle Companies represents what quality compounding looks like in practice: a dominant market position in a non-discretionary industry, exceptional capital efficiency, disciplined management, and a clear path to continued value creation.

The current construction weakness is real but appears largely priced in. For investors with a multi-year horizon, CSL offers a compelling opportunity to own an elite business at a reasonable price. The 28.5% ROIC isn't an accident — it's the result of decades of operational excellence and strategic focus.

Sometimes the best investments are found not in the latest tech craze, but in the companies quietly putting roofs over our heads. Always conduct your own due diligence before making investment decisions. Right now it sits on my watchlist, which you can access in real-time in our community.

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