Q2 2021 Carlisle Companies Inc Earnings Call
Sales and CEO signatories.
In order for Carlisle employees to participate and our ongoing success, we issued a special stock option grant or equity equivalent of 100 shares to employees on May <unk> 2018, those shares vested in the second quarter of 2021, having appreciated almost 80%.
For each participating employee this meant a gain of over $8000 I'm very pleased to share has performed so well for our employees.
Carlisle success wouldn't be possible without their efforts.
Finally, 1 area, where we have made significant improvement is and our industry, leading safety record our incident rate of approximately 1 quarter of the industry average demonstrates the work that has been done by all employees to ensure a safe workplace.
Staying ahead of the industry is important and the past 6 years, our incident rate has fallen 52%.
All of our track metrics, this is especially meaningful because reducing employee injuries by 50%.
And that a tangible benefit and meaningful impact on People's lives to continue to drive the importance of safety and our operations in early 2020, we announced path to zero, which represents our commitment to creating the safest possible work environment and features the goal of zero accidents and zero industries. This program was launched launch globally and.
The second quarter of this year.
And now Bob will provide operational and financial detail about the second quarter review, our balance sheet and cash flow Bob.
Thanks, Chris.
As Chris mentioned earlier, we had a very solid second quarter, I'm, especially pleased about the margin expansion and CCM.
Coming off market lows and positioned to deliver sequential growth from the next few quarters.
Cft's order book improving.
Our disciplined approach to capital deployment, and a former share repurchase and dividends and continued investment and our high ROIC businesses to drive organic growth.
And our portfolio optimization actions, including divesting CBF and the announced agreement to acquire Henry Company.
Please turn to the revenue bridge on slide 8 of the presentation.
Revenue was up 22% and the second quarter, driven by CCM and CFT offset by the well documented commercial aerospace declines at Cie.
Organic revenue was up 27%.
CCM and CFT, each delivered greater than 25% organic growth and the quarter.
Acquisitions contributed 4 percentage of sales growth for the quarter and FX was a 90 basis point tailwind.
On slide 9 we have provided provided and adjusted EPS Bridge, where you can see second quarter adjusted EPS was $2.16.
And which compares to $1.95 last year.
Volume price and mix combined were $1.30 year over year increase.
Raw material freight and labor costs were 95 headwind.
Interest and tax together were a <unk> <unk> headwind.
Share repurchase contributed <unk> <unk> and.
And Pos contributed an additional 12.
Higher Opex was a 32 cent headwind year over year half of which is related to the may vesting and cash settlement of stock appreciation rights granted to all Carlisle employees outside the U S and 2018.
With the remainder, reflecting the resumption of more normalized expense level versus last year's cost containment measures taken and the depth of the pandemic.
Now, let's turn to slide 10, or your second quarter performance by segment and more detail.
At CCM the team again delivered outstanding results with revenues, increasing 27, 5% driven by volume and price along with 70 basis points of foreign currency translation tailwind.
All of Ccm's product lines delivered 20% growth with particular strength and architectural metals and spray foam insulation.
CCM effectively manage raw material inflation headwinds experienced in the quarter with disciplined pricing proactive sourcing.
And allocating products to strategic customers.
Adjusted EBITDA margin at CCM was 21, 5% and second quarter, a 60 basis point decline from last year, driven by higher raw material prices, partially offset by volumes price and cost savings.
Despite raw materials being a headwind and second quarter, we continue to anticipate.
Net neutral price raws for the full year.
Adjusted EBITDA grew 24% to $201.2 million.
Again, demonstrating the earnings power of our CCM business.
Please turn to slide 11, and <unk> results.
Revenue declined 8.2% and the second quarter.
As has been well publicized this decline was driven by the pandemic continued impact on commercial aerospace markets.
We still anticipate a prolonged recovery and aerospace but are optimistic there will be resumption in growth as we enter the second half of the year.
Cit's medical platform continues to build a robust pipeline of projects with an increasing backlog.
We continue to expect sequential improvement from pent up demand as the impacts of Covid on hospital, Capex and postponed elective surgeries ease.
Cit's adjusted EBITDA margins declined year over year to 8% driven by commercial aerospace volumes.
Partially offset by price Pos and lower expenses.
Given the positive indicators, we are optimistic that <unk> will deliver sequentially improving financial performance into the second half of 2021.
Turning now to slide 12.
Cft's sales grew 54% year over year organic.
Revenue improved 44, 3% and acquisitions added 3.6% and the quarter.
<unk> contributed 6%.
CFT is well positioned and accelerate through the recovery due to continued stabilization and key end markets driven by and improved industrial capital spending outlook and 2021.
Coupled with new product introductions would've included $4.1 million of incremental new product sales and 2021 year to date, along with our continued pricing resolve.
Adjusted EBITDA margins of 15, 9% or over 100 basis point improvement from last year.
This improvement primarily reflects volume price and mix.
On slides 13, and 14, we show selected balance sheet metrics.
Our balance sheet remains strong we ended the quarter with $713 million of cash on hand, and $1 billion of availability under our revolving credit facility.
We continue to approach capital deployment, and a balanced and disciplined manner and investing in organic growth through capital expenditures and Opportunistically repurchase shares while also actively seeking strategic and synergistic acquisitions.
And the quarter, we repurchased 643000 shares for $116 million, bringing our 2021 year to date total to 1.6 million shares for $266 million.
We paid $28 million of dividends and the second quarter, bringing our 2021 total to $56 million.
We invested $32 million of Capex into our high returning businesses to drive organic growth, bringing our 2021 total to $55 million.
Examples of these investments include our new Missouri Polyol facility expansion of our <unk> line, and Carlisle and investment and our spray foam capabilities and Cartersville, Georgia.
In addition, as has been noted we announced an agreement to purchase Henry company for $1.5.75 billion.
Henry generated revenue of $511 million and adjusted EBITDA of $119 million.
Representing a 23% EBITDA.
Additionally, Henry and we expected to deliver $100 million of free cash flow and our first year of ownership.
We also expect meaningful cost synergies.
$30 million by 2025.
And finally, we expect Henry to immediately accretive Carlisle EBITDA margin.
Adding over $1.25 of adjusted EPS in 2022.
Free cash flow for the quarter was $64.6 million or.
54% decline year over year due to increased working capital usage related to our high sales growth of 22%.
Turning to slide 15, you can see the outlook for 2021 and corporate items.
Corporate expenses are now expected to be approximately $125 million up from the previous estimate of 120.
The increase was wholly related to divesting and cash settlement of our stock appreciation rights discussed earlier.
We expect depletion depreciation and amortization expense to be approximately $210 million we.
We still expect free cash flow conversion of approximately 120%.
For the full year, we continue to invest and our business and expect capital expenditures of approximately $150 million.
Net interest expenses still expected to be approximately $75 million for the year and we still expect our tax rate to be approximately 25%.
Finally restructuring is expected in 2021 to be approximately $20 million and with that I'll turn the call back over to Chris. Thanks, Bob.
Entering the third quarter, we continue to be very optimistic about the remainder of 2021 from record backlogs at CCM to supportive trends and CIP aerospace markets to growing strength that CFT, coupled with excellent sourcing and price discipline and significant traction on our ESG journey, we are confident and our ability to deliver solid results.
And for all Carlisle stakeholders for full year 2021, we anticipate the following.
And at CCM as previously mentioned the trends that began in Q3.2020 gained momentum as we moved into 2021, we anticipate this momentum to carry over into the third and fourth quarters of 2021, considering this momentum coupled with record backlogs stemming from project deferrals that occurred in 2020 positive momentum and our newer businesses.
And architectural metals and spray foam and expansion of our European business, we are increasing our anticipated revenue growth to high teens and 2021.
And we are encouraged by leading indicators trending positive, but it remains difficult to gauge when a complete recovery and commercial aerospace will occur given a very difficult year over year comparison, and the first and second quarters. We continue to expect CIP revenue will decline and the mid to high single digit range and full year.
2021.
And CFT with end market strengthening and improvements and the team's execution of our key strategies. We now expect mid teens revenue growth and 2021.
And finally for Carlisle as a whole we are now increasing our expectations to mid teens revenue growth and 2021.
As we pass the midpoint of 2021, we are tracking to deliver our vision 2025 goals of $8 billion and revenues, 20% operating income and 15% ROIC all driving to exceed $15 of earnings per share by 2025.
Despite lingering uncertainties around COVID-19 supply chain constraints, and what we perceive as near term raw material inflation Carlisle employees across the globe remained focused on the execution of the strategies and key actions that support vision 2025, our team continues to embody a positive and entrepreneurial spirit and commitment to continuous improvement.
<unk> and a focus on delivering results for the Carlisle shareholder.
Given our 100 year plus history and the resilience of this company has shown in times of adversity and uncertainty, we remain confident and carlyle's outlook, our strong financial foundation cash generating capabilities unwavering commitment to our vision 2025 strategic plan and to providing products and services essential to the world's needs.
This concludes our formal comments Zen we're now ready for questions.
As a reminder to ask a question you will need to press star 1 on your telephone.
A question press the pound key.
Your first question comes from the line of Bryan Blair of Oppenheimer.
Thanks, Good afternoon guys.
Yes, Brian and Brian.
Great performance and and CCM actually.
And we're flirting with normal seasonality sequential seasonality, which I didn't think was possible.
Yeah.
Given the the supply chain constraints.
And you've called out and that are <unk>.
And then.
And what extent did raw material availability freights.
Or are there other constraints impact ccm's ability to meet demand and the quarter.
Well as we discussed the team did a great job managing it and I don't think it really.
Impacted their ability to meet the demand that was present in the quarter, obviously the surge in orders.
Makes into accounts from orders that are for the third quarter and fourth quarter and we continue to work to fulfill all of those but the team did a great job and meeting all the demand that was put to it and the second quarter.
Understood.
And.
Thinking about the third quarter and are there any incremental watch items in terms of.
Yes.
Adjusted constraints that we should think about in terms of ccm's ability to meet demand and.
And extension of that what kind of growth rates and are you assuming.
As we bridge to the high teens guide.
Yes, Brian we don't see Amy again, Theres, a lot going on and the world with Delta variant and everything else, but we don't see a lot of chain.
Changes from what happened and the second quarter going into the third.
We would expect raw materials to I'm going to say loosen up a little they have been loosening up since the beginning.
And beginning of the year more and more since the problems and Texas and the freeze and everything so we can we see that continuing slightly.
So we don't see a lot of.
A lot of watch out items on our list and more billing and today.
We'd expect I'm going to say normal growth you expect third quarter to be.
Somewhat higher than the second quarter.
So I think the growth rate will continue going into the third.
Normal like you said normal seasonality, where third quarter is larger than the second and then shrinking a bit and the fourth is always happens into the winter months, Yes, and Brian I would just add 1 thing that I think we.
And the results were encouraging and it's interesting to talk about normal seasonality, but we really are still in the midst of and extraordinary time, just as impactful as going down was last year into the declines we had I think coming back has been something that is non normal and I think the CCM team has done a superb job of managing through all of that like you said and getting.
And the normal seasonality, but we still want to communicate the fact that it's a very difficult environment throughout the business from supply chain, all the way to order entry and we discussed.
Completely understood.
1 last 1 from me.
And the revised high teens sales growth sales growth guidance for <unk> and how should we think about volume versus price contribution for the year.
Yes, Brian that's mostly going to be price, but there is some some volume increase and there as well.
Okay. So the step up from low low double digits to high teens is mostly price.
Yes, mostly price as raws continue to increase we as discussed needed to continue to increase price to keep up with that.
Got it okay. Thanks again guys.
Thanks, Brian.
Your next question comes from the line of being wise.
Baird equity research.
Good afternoon.
Good afternoon, Tim.
Nice work.
I guess.
First question could you just talk a little bit about how you're managing the backlog.
And just there's there's chatter that like people are double ordering and trying to get products from anybody. They can so how are you kind of controlling that just to make sure that you actually have real backlog.
Well.
Certainly we can't we don't know because we don't have the customer's mind as to what's a real order and what's not a real order we treat all orders the same and then what we're really doing is just prioritizing them.
Just on the necessity of shipping and in addition to that obviously customer and existing customer that's been a long time customer for Carlisle as he is going to be prioritized over someone thats being opportunistic and so I think again, we're doing a very rational way.
And we're attempting to maintain that Carlisle experience and ensuring that the contract because it needed to have that product there.
And making sure that we're not having any inventory or products sit around somewhere on a job site or in a warehouse with good people that need the product put on the roof are getting it done and I think the team is doing a good job of that but obviously that involves a lot of heavy lifting and the part of the sales force on the part of customer service and coordinate a lot of work there. So.
As we to your point on the on the extra ordering as we as we get through the year, we don't see and impacting the projections that we've made that.
And that will sort itself out.
As we begin to continue to fulfill these orders and then I'd say, just we'll check and as we get closer to the winter and and.
We'll know where we are so as I mentioned to Brian.
<unk>.
Evolving environment and this recovery has been so rapid and the demand has been and.
And a lot of industry. So strong that I think if you just focus on the near term and make sure again that we're delivering on the Carlisle experience for the contractor that needs. It today.
Okay, Great and then I think you guys are definitely taking share where would you kind of pegged the market at relative to.
Youre high teens sales growth and I guess, what's your confidence that.
And once some of these supply chain issues settled down and that you can hang on to some of that share gain longer term.
Well I'll take the last 1 first I think.
We view these.
Last year and this year these disturbances these.
These really trying times as opportunities and probably the best opportunity for contractors distributors.
And users architects to see they are really true Carlisle experience and the work that our team does when everything is going smoothly.
And I understand that how powerful that experiences and so what I would hope is that as we are introduced to new customers as people that are with other suppliers decide to try and Carlisle that they are overwhelmed by the experience and decided to make that permanent shift does that always occur and I can't tell you what level of <unk>.
People.
Or what percentage of the people that.
Materials from us for the first time stay with us, but my my guess is that it has contributed to our.
And growth over the last few years and will contribute and will continue to do that so thats. Our goal continue to perform well and continue to perform better than anyone else and make sure that.
And people see that and we want to be part of that team.
And.
And the other on the other side the growth side and Bob May have some comments on that.
And I think that the industry right now and the recovery probably.
Market share as have not moved much relative to overall demand just because demand has been so heavy so again, what I would look for us to run through the year, let's sort out those orders you talked about that there may be some over ordering and then get into 2022, hopefully it will have a more normal year and then we'll be able to assess.
And our progress versus the industry and versus our competitors.
Bob you want to add anything.
Chris.
Okay, good well I'll hop back in queue. Thanks, guys.
And thanks, Tim.
Next question comes from the line of Joe O'dea.
From bank of Montreal.
Hey, guys How's it going.
Hey, Julien.
Alright.
And now switch gears a little bit.
Wonder kind of and off the wall question, but do you think it would make any sense for you guys to think about like spinning out everything and thats not CCM.
What kind of accelerate your move to 2025, maybe not on the revenue side, but certainly on the margin side.
Well I don't think it would make any sense right now and the only reason I say that is I think that.
And certainly valuations.
It'd be very hard to find evaluation from purely pragmatic perspective on on any business given.
And <unk> declines and given the fact that CFT is not probably reached its full potential after years of work, we put into it but theres still more to come.
So what I would yes.
Yes, I would just say, that's probably not a thorough talent and our mind I mean, we want to continue to boost the building products.
A portion of our business around CCM, adding Henry does that that gives us a lot to digest and to focus on and I think we wait till things get through the sustainable.
Gross recovery that and runway that we see and CIT and CFT and then Joel as we've always done we just assess the portfolio and I think that's something that's gone back long as I've been at Carlisle everything from divesting of Carlisle tire and wheel motion control foodservice and.
And making additions like a seller Peterson and that we're always looking at the portfolio and obviously.
Obviously, we make all our decisions based on what's best for the Carlisle shareholders. So it's something we always look at but I don't see any actions and the near term.
And then as you build out your building envelope and it's starting to get pretty serious is there any any way or to team up with like a carrier or train or someone who is doing sort of building assessments to help the buildings get get more efficient and lower their cost and all of that is there any weighted.
I'm up with those guys to get like specced into to being part of that of that.
Energy audit and helping them get to their goals.
Sure and I think I don't know about those 2 companies in particular, but I do know that every day are our teams and CCM through their connections with the industry organizations through there.
And connections to architects through large building owners.
People, who are putting in.
Warehousing.
Data centers things like that you can't help but think that as ESG is energy efficiency becomes a bigger priority for all of those end users and building owners that theyre going to almost drive cooperation so that we're getting we're making sure that as we're putting on that building envelope and ensuring that it's a it's.
Scott Great installation vapor water air barriers and things like that that they're also asking.
And provider of that energy units, it's either heating and cooling to participate and have some coordination and I think a lot of that occurs at the design level with architects and start as far as and as we mentioned, both with Carlisle and with our Henry team, they're going to spend a lot of time.
With those organizations. So I think youre on the right track I, just I can't comment on carrier training, because I, just don't know, but and I would imagine those conversations are being had.
Well that's great. Thank you very much.
Thank you.
Next question comes from the line of Saree <unk> of Jefferies.
Hi, good afternoon.
Good afternoon.
Could you talk about why you saw in the quarter from medical versus D. And then how do those growth rates.
But it looks for the remainder of the year and then any color as you start to think about 2000 companies.
Yeah I'll take the last 1 first sorry, I mean, I don't think we're ready to talk about 2022, yet now certainly we expect growth at CIT and continued.
Ramp and our profitability.
But we're a long way from what's going to happen with aerospace getting into 2022 at this point and time.
Medical versus aerospace and the quarter.
We're almost the same decline and thats largely due to the the massive orders our MSA revenue, we saw last second quarter and remember we talked about a big spike and orders when Covid hit and.
And shipments in the quarter so.
And medical so.
And that's why it was relatively flat, but we expect acceleration faster acceleration and medical.
<unk> to the end of the year than we do and aerospace, but we expect some growth and aerospace.
Got it and then you raise Allison and CMT could you just talk about the outlook for industrial Capex projects. What are you hearing from customers and again I will just ask you now.
So does it continue as you think about next year.
And I think we see.
The industrial space continuing to improve out of.
The depths of 2020 and improvement and production and and that I think the other thing that I would remind you as you know CFT. We did have some difficulties when we first bought that business and there were share losses, and I think part of the gains are getting back what is what I would call their rightful share.
Through their innovation and.
And new products and and really good work by the teams and communicating the value proposition. So I think it's a combination of that the markets are improving industrial markets are improving we think they'll continue to improve globally. As we go throughout the year and then I think theres a piece of that to that is just CFT.
Getting its stride back and becoming a solid Carlisle company, Bob you want to add anything.
Got it.
Thanks for taking my questions and I'll pass along thanks.
Thanks, Gary.
Next question comes from Kevin Hocevar Northcoast research.
Hey afternoon, everybody nice nice.
Job there.
Chris.
And I'm trying to wrap my head around 1 of the comments you made.
And your prepared remarks, I think you had mentioned and the CCM business. You had received 65000 orders and the quarter, which is double the usual amount and so I guess I'm just trying to understand what that means.
And I mean is that again, a sign that there is some double ordering going on that.
And maybe distributors trying to.
Build some inventory, even maybe contractors get some product on the job site, even if they don't need it yet just because.
Things are so tight that backlog building and a pretty material way I get them and.
And does that mean there'll be less orders and the third and fourth quarter is it and panic buying I guess I'm just trying to understand because it seems like a pretty interesting stat.
Yes.
And my head around so curious if you can just elaborate on that a bit yes, well I think 1 of the things that we probably will need to do later is give the reference point in 2019, because without that reference point.
Double the previous period, you don't have a good reference for where we were in 2019 to gauge that I think the other thing is on the double ordering I'd be careful about that because as we know last year people were not ordering we talked at length about how distribution going into the season had cut back on orders people were concerned about whether they be on the <unk>.
Job I mean, it was only a year ago.
<unk> like Pennsylvania, and in cities, like Boston, where and allowing contractors on the job site and certain cases, they were increasing the PPE and the other protocols and making them more difficult and we were having.
Inspections occurring virtually it was hard to get permits pull because governmental agencies, where we're shut down so and.
And we think that now we're in the second quarter, but you have to remember that was some of that stuff. There is still concern and the first quarter non.
And the things were happening and we did get ahead of it and production as we mentioned we got ahead of it and our pricing, but there are still some lag there on the market until the confidence came back that the contractor and the.
Distributors that would be able to function and somewhat normally so I think there is a surge there and I think a lot of those orders.
No reason to believe that most of them actually that occurred in the quarter aren't real.
Because I do think there is pent up demand people were waiting and.
That's what we talked about as demand and continue to build and if you think about even non.
<unk>.
Including <unk> 25 per cent of the orders and a year and letting them build and the back half of 2020, and then the first quarter of 2021, 1 would expect a pretty substantial surge and.
And the second quarter of this year and then we'll just need to monitor and when we get to the third quarter of this year it'll be a we can do that same check and then have a comparison because we've been through the heavy and last part of the season getting into the winter months, so when read too much into it.
Other than demand is strong and we are coming out of this.
This pandemic strong and people are gaining confidence and they are placing orders and they're getting back on the roof and they got a lot of backlog to make up.
Yeah, Yeah, Okay. That's helpful.
And in terms of the increased guidance just 1 quick question. There so the low double digit to high teens increase and DCM and it sounds like the <unk>.
Juruti of that pricing is that pricing.
And increased based on what you've currently kind of realize between price increases that have already taken effect or I know there is also like in August and products you have out there for for a lot of roofing products, Inc. Is there some assumption of future pricing.
As well baked into that.
That guidance.
No that includes obviously the announced price for August, but no nothing beyond that at this point.
Okay got you and then just last question what was in terms of the price cost dynamics, what was that and the second quarter and it sounds like the expectation is continuation of neutral for.
For the year. So so is there any change and the expectation to 3.
And there's been a lot of moving pieces and 3 months ago and <unk>.
And the inflation expectations and the pricing expectations, but maybe.
And is the kind of the trajectory sounds like it might not be.
The expectation of the net of that might not be all that different but I'm curious what it was in the quarter and then kind of how you see that playing out the balance of the year.
And certainly the net not different but certainly with our increase in revenue based on price, we've gotten a lot more cost pressure and have seemed a lot more price traction over the last 3 months as you know.
Costs have continued to rise and be up there were a lot more confident that we need to price to cover it.
Q2 was about $25 million negative as we expected.
And we expect to make that up and the second half of the year more and in the fourth quarter and the third quarter, but.
Positive and both those quarters to make up for what we're short this quarter.
Okay, all right. Thank you very much.
Thanks, Kevin and Kevin.
Next question comes from the line of day choice of loop capital.
Thanks for taking my question and I'll say.
Chris just curious you made a comment in your prepared remarks around allocating products to strategic customers.
Just wondering if you could expand on that is it really more of a function that because youre effectively at full capacity you can be selective and servicer.
It's higher margin higher quality customers or any.
And kind of additional color on that comment would be helpful.
Yes, I think.
And our customers we have some a lot of very loyal customers that work very hard to make sure Carlisle are specified.
And chosen.
Throughout the world actually and.
And we don't want to make decisions and a quarter and we want to have share gains and we want to make sure that the work we're doing with people because it is pretty extensive we spent a lot of time working with our contractors on things like warranty inspections and on helping prepare quotes and that that we always want to strategically.
Give our efforts to those of us those.
Distributors contracts and those that are with us and for the long run and have invested significantly and the Carlisle brand. So I don't think its anything while we stated that I don't think its anything other than our normal practice there that.
We expect a lot out of our partners and they would expect a lot out of us in terms of loyalty as well.
Okay. Thanks, and just on the building envelope business, you called out spray foam and metal roofing growing over 40% and the quarter sounds like that the entire building envelope business was up over 20% and the quarter.
And what's the outlook there I guess, what I'm asking given that business has been more exposure to housing.
Is there any pause that you might be seeing at all of this.
And the pause in new housing just given the inflation and the market.
Oliver is pulling back a bit.
And any help on day, 1 building envelope side, there would be helpful.
And I think on the metal side Peterson is it pretty much a commercial metal business and I think there.
We're seeing a lot of moving into metal as it becomes architectural and more attractive as it has some renewable and recyclable aspects to it. We're just signing it's gaining traction and theres. Some very positive trends there and Peterson has done an excellent job.
Adopting the Carlisle experience, which they probably call it the Peterson and experienced before and but it's a great brand with great coverage and good relationships and that of Drexel side, which is a little bit more on the residential side again.
We're seeing people are.
Choosing metal roofing and a lot of cases, there is more interest and Drexel has a very unique value proposition, where they are actually preparing that work right on site and driving a lot of value. So as that team gets out and demonstrates the value proposition and are gaining a lot of traction on the spray foam side. When we originally bought a cell and we talked about that.
High single digit industry growth rate as.
People would adopt foam is far superior.
Later, and some and in certain cases vapor barrier components to it and what we're really just seeing is that continued traction versus other forms of installation and certainly here in the southwest with the heat and even in the north I know being from Minnesota and living in Arizona.
Spray foam insulation, just provides a superior solution for the space and the wall cavity and.
And just drives great performance and we see it just continuing to gain share and the marketplace. So I think the trends are positive for both and then on top of that we are adding very positive unique value propositions with each business and I'd be remiss and I didn't say that the partnership between CFT with their newly launched spray foam equipment, which provides.
Superior on ratio performance, it's got better heating capabilities and the competition.
And much better performing products, coupled with our spray foam coming out of CCM has also created a lot of interest with with end users and is helping us drive a preference for our brands. So actually we're excited about all of those businesses and what they've done.
Okay, and it gets up and follow up.
And the guide you took share.
<unk> guidance off largely on price and was there any change to the underlying assumptions.
An audio book slightly CCM.
No guarantee that they are mostly in line and those are up and price as well.
Right.
<unk> does that go into metal roofing and and the spray foam or are just as volatile as the flat roofing commodity so we need to get price and those as well to keep up with our flat price cost.
Okay Fair point, thanks for that.
Yes, Thank you Gary.
There are no further questions at this time I would now like to turn the call back to Pete. Please go ahead.
Thanks, and and thanks, everybody. This concludes our second quarter 2020 earnings call. Our 2021 excuse me and thanks for your participation and look forward to speaking with you and our next earnings call.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Yes.
Yes.
Okay.
Yes.
Thanks.
And.
Okay.