Q3 2022 Carlisle Companies Inc Earnings Call
Good afternoon, My name is brita and I'll be a conference operator today.
At this time I'd like to welcome everyone to the Carlisle companies that go to 'twenty two earnings couldn't finish cool all lines have been placed on mute to prevent any background noise.
The speaker's remarks, we will conduct a question and answer session.
I would like to turn the call over to Mr. Jim Jaye to tourists card I was vice President of Investor Relations. Jim. Please go ahead.
Thank you good luck.
Afternoon, everyone and welcome to Carlyle's third quarter 2022 earnings Conference call.
We released our third quarter financial results. After the market closed today and you can find both our press release and earnings call Slide presentation in the Investor Relations section of our website Carlisle Dot com on.
On the call with me today are Chris Koch, Chairman, President and Chief Executive Officer, and Kevin Zimmerman, Our Chief Financial Officer.
Today's call will begin with Chris, giving you an update on our progress in achieving our strategic plan vision 2025.
Highlights of our third quarter results and a discussion of current trends.
Kevin will discuss the financial details and our updated outlook following Christian Kevins remarks, we will open up the line for questions.
Before we begin please refer to slide two of our presentation, where we note that comments today will include forward looking statements based on current expectations.
Actual results could differ materially from these statements due to a number of risks and uncertainties, which are discussed in our press release and SEC filings as Carlisle provides non-GAAP financial information, we've provided reconciliations between GAAP and non-GAAP measures in our press release and in the appendix of our presentation materials, which are available on our website.
With that I will turn the call over to Chris.
Thank you Jim Good afternoon, everyone and thank you for joining us on our third quarter 2022 earnings call.
The third quarter of 22 was another superb quarter for Carlyle as our teams across the globe continued to deliver on the Carlisle experience utilized our continuous improvement culture to improve our processes and leveraged our position as a preferred supplier of solutions to our customers from order entry to deliveries to writing specification.
<unk> to the ongoing performance of our products and the building envelope.
We also continue to see positive underlying trends, including positive multi year re roofing needs solid new nonresidential construction demand and increasing interest in energy efficient solutions. Additionally.
Additionally, a much improved supply chain resulted in the emergence of a more orderly and normal operating environment than we have seen during the last two years. One example of this improvement is within our CW tea business, where we have gone from having 50 plus suppliers on our watch list to now having less than 10.
While supply remains tight in many areas, we did see our customers have more confidence in the supply of our product.
Which drives a better and more efficient workplace and ultimately a reduction in the need for building inventory and extending lead times.
As we enter the fourth quarter. Despite the positive underlying trends I. Just mentioned, we continue to operate in a highly uncertain and volatile environment, which has really been the case since March of 2020.
The continued effects of inflation and impact on the American consumer have been significant the decision by the fed to mitigate rising inflation with meaningful increases in interest rates has slowed the housing market due to a rapid increase in mortgage rates, which has raised borrowing cost for buyers and push many perspective buyers out of the market.
In addition, most signs are pointing to a slowdown in U S and global growth, which will likely impact jobs and investments for the near term couple.
Coupling these factors with the coming U S midterm elections, and another potential 75 basis point increase by the fed in November there is no doubt the fourth quarter, we will continue to bring us volatility uncertainty and a more cautious stance by consumers and businesses.
Turning back to the performance of the quarter and a more focused eye on our work here at Carlisle I am very pleased with the outstanding performance of our teams. They continued to show resilience and persevere in their work and have driven record year to date earnings to over $14 of diluted earnings per share on a GAAP basis, well on our way to achieving our <unk>.
<unk> 2025 annual EPS target of $15.
Our accelerated path to achieving vision 2025 is due to our team's on yielding commitment to deliver the Carlisle experience and resilient and continuous improvement culture, all the while focused on delivering results for our stakeholders.
Please turn to slide three our record results continue to demonstrate that vision 2025, which has provided the clarity and consistency of mission since its launch in 2018 has been a guiding beacon and well defined path for Carlyle, particularly given extraordinary volatility in global markets over the past <unk>.
All years.
In addition to our World class teams and proven business model, we've relied on a strong balance sheet and excellent cash flow generation to provide both financial and strategic flexibility to execute on our long term plan and elevate the earnings power of Carlyle a significant portion of our success has been driven by the mulch.
The year process of reshaping our portfolio to pivot from a diversified industrial products company to a building products focus setting the stage for more focus more simplification and a better understood path to accelerated and sustainable value creation.
The pillars of vision 2025 remain core to our strategy going forward. These include first drive mid single digit organic growth and in the third quarter, we delivered 28% organic revenue growth.
Utilize the Carlisle operating system, where C O S to drive leverage we use C O S to consistently drive efficiencies and enhance operating leverage by targeting cost savings of 1% to 2% of sales annually in the third quarter adjusted EBITDA grew 75% nicely leveraging our sales growth.
Third build scale with synergistic accretive acquisitions.
Under vision 2025, we have streamlined and optimized our portfolio through acquisitions and divestitures to build scale in our highest returning building products businesses CWT leadership continues to execute extremely well on delivering a smooth and efficient integration of Henry and is on pace to exceed our initial synergy target.
It's a $30 million the.
The CW T team is doing an excellent job working both incremental cost synergy opportunities and seeking to drive revenue synergies given it's now broader set of products.
We remain excited about acquisition prospects within the building envelope and were working an active pipeline of opportunities to broaden our suite of energy efficient solutions.
And fourth our returns focused capital allocation strategy that includes deploying over $3 billion into capital expenditures share repurchases and dividends.
Since the launch of vision 2025, we have deployed over $2.8 billion into these areas.
Turning to our 2022 year to date actions.
We've made capital investments of over $130 million into our businesses to drive innovation and the Carlisle experience as exemplified by the third quarter launch of our first industry, leading 16 foot T. P. O line in Carlisle P E and.
And we remain on track to deploy $175 million in capital expenditures this year.
We've also made share repurchases totaling more than $200 million and paid approximately $96 million in dividends in 2022.
To that point, we were very proud to raise our dividend 39% to $3 in the third quarter, which continues our 46 year trend of annual dividend increases this 39% increase as carlyle's largest in the past 25 years and reflects our strong sustainable financial position and <unk>.
Confidence in continued growth of carlyle's earnings and cash flow.
While the pillars of our soon to be achieve vision 2025 have proven to be sound I want to reiterate that these are core to carlyle.
With these cultural and strategic pillars in place we are proud of our accelerated execution of vision 2025, and remain committed to our approach to sustainable value creation for all stakeholders.
Please turn to slide four let's look at the drivers of our record performance in third quarter and year to date sales and earnings.
First U S. Nonresidential construction demand remains strong and we are optimistic that the underlying trends will overcome well known pressures seen in the global economy.
Roofing demand also continues to be a reliable significant and sustainable driver for growth and new construction is still a tailwind notably.
Notably we are on track for double digit volume growth at CCM for the second straight year.
Fortunately material availability has improved meaningfully in the past few months and as such we are seeing a normalization of buying patterns by our customers.
Additionally, the need for energy efficient building solutions to help mitigate rising energy costs and collectively help reduce the planet's carbon footprint will continue to be a driver.
Second pricing at all of our businesses continues to be positive as we focus on earning price for the value we create for our customers through the Carlisle experience.
Our continued and growing investment in new product innovation World class manufacturing capabilities and best in class customer service encompassed the value proposition that our partners have come to rely on from Carlile and architects and building owners know they'll benefit from our innovative energy efficient building solutions that the market increasingly demands.
Third residential markets are facing increased pressure due to interest rate hikes significant inflation and at the consumer level of reduction in building products expenditures.
While impactful in the short term, we believe that longer term fundamentals in residential markets remain attractive given the under supply of homes in the U S and growing demand for energy efficient building solutions, particularly given recent supporting legislation and rising energy costs.
Fourth aerospace markets continue their recovery driving record backlogs at C. I T and increased profitability on the back of restructuring actions taken over the past few years.
We're very optimistic about the prospects for continued recovery in the aerospace markets supported by a shortage of aircraft, which has caused the U S Airlines to cutback on flights as they struggled to cope with the rebound in passenger travel both domestic and international.
Finally, we remain firmly committed to sustainability, please turn to slide five.
The recent publication of our third corporate sustainability report is another milestone in our ESG journey Carlyle's three pillars of environmental sustainability energy efficient products and solutions the reduction of greenhouse gas emissions in our manufacturing operations and the reduction of waste entering landfills are central to our efforts to achieve.
Cheese, our sustainability goals.
We also announced on October 17th the special stock option Grant to all eligible employees, representing Carlyle's third broad based stock option or cash equivalent grant to employees in the last 12 years.
We believe that it is beneficial for all employees to have ownership and participate in the success of the company.
This grant provides a significant incentive for the team to drive actions that will help carlyle achieve its long term objectives.
Additionally, through the inflation reduction act that was signed into law in August the building industry can take advantage of extended and expanded incentives through energy efficient building practices more than $300 billion will be invested in energy and climate reform through energy tax incentives investments in clean energy production and tax.
Credits aimed at reducing carbon emissions.
These increased incentives for U S builders installers homeowners and commercial building owners, who demonstrate reduced energy use should drive increased demand for Carlisle building products and energy efficient solutions.
Lastly, we continue to make significant strides towards aligning our greenhouse gas reduction strategy with the science based targets initiative. Our S. E T I, which defines and promote best practices and science based targets that help provide companies with a clearly defined path to reduce emissions in line with the Paris agreement.
<unk>, we are on pace to submit or alignment goals for approval by the end of 2022.
Please turn to slide six where we highlight our record performance in the third quarter of 2022.
Revenue increased 36% year over year with organic revenue up 28% all segments contributed to this record growth.
Adjusted diluted EPS increased 89% year over year to $5.66 driven by higher volumes price Henry's contribution and C O S initiatives, which more than offset inflation and supply chain disruptions.
And with that I'll turn it over to Kevin to provide more detail about the businesses additional financial details and our updated outlook for the remainder of 2022 Kevin.
Thank you Chris for segment highlights please turn to slide seven CCM drove revenue growth of 39% with excellent leverage.
This performance was driven by continued strong demand in U S. Commercial roofing, capturing price earned by delivering the Carlisle experience and new product sales, partially offset by what we consider near term softness in our architectural metals business potentially more persistent challenges in our European.
<unk> business due to the effects of a recession and ongoing energy crisis and unfavorable impact from changes in foreign exchange rates.
Adjusted EBITDA margin of 32, 5% a record performance in the third quarter by our CCM team was driven by volume price and COF, and partially offset by raw material and labor inflation and unfavorable mix.
Moving to slide eight sales at CWT increased 44% year over year.
This growth was achieved despite ongoing but improving supply constraints and pockets of incremental softness in demand, namely in residential market.
As we passed the one year Mark of our Henry acquisition, the largest acquisition in Carlyle's history, we continue to execute on our synergy strategies drive the principles of the Carlisle experience and are in the process of rolling out COF throughout CWT to drive further leverage.
And our operations.
Moving to slide nine revenue increased 25% year over year in the third quarter of 2022 with balanced growth in its commercial aerospace and medical technology platforms.
We continue to see domestic travel approach pre pandemic levels and as a result have seen the I T experience record backlog.
We expect to see continued rising demand for narrow body aircraft and eventually wide bodies as domestic and international travel continues to recover leveraging these positives our team delivered a nice lift in profitability in the third quarter versus the first half of 2022 aided by <unk>.
Previous restructuring effort.
Turning to CFT on slide 10.
CFT generated organic revenue of 10% year over year, partially offset by a 7% year over year FX headwind.
With over half of CFT sales being international we expect a strong U S. Dollar to continue to be a headwind to sales growth near term, but fundamentals remain intact. We remain confident that commercial and operational improvements combined with a strong backlog will deliver revenue growth and incremental.
Margins in the mid 40% range.
Slides 11, and 12 provide details about our record third quarter consolidated results for revenue and adjusted EPS.
Moving to slides 13, and 14 Carlyle ended the third quarter of 2022 with $625 million of cash on hand, with cash generated from continuing operations totaling $366 million capital expenditures of $48 million share repurchase.
<unk> of $26 million and dividends paid of $39 million during the quarter.
We currently have $4 2 million shares remaining in our share repurchase authorization.
Our net debt to EBITDA ratio is one six times down from three times at the end of 2020, one which is a result of Henry acquisition was elevated compared to our target net debt to EBITDA range of one to two times give.
Given the repayment of our $350 million senior notes on October 17th and our expected EBIT Dag growth for the balance of this year, we expect to maintain our net debt to EBITDA ratio within this target range on slide 15, we have our updated 2022 financial outlook at CCM.
We expect to deliver a record full year in 2022 and expect year over year revenue growth in the 35% to 40% range at CWT, we continue to expect revenue to grow approximately 60% year over year.
It's C. A T. We now expect revenues to exceed 20% in 2022 at.
At CFT, we now expect mid single digit revenue growth in 2022 due to foreign translation headwinds finally on a consolidated basis for Carlyle. Despite the significant headwinds and volatility the economy has experienced since September we expect to deliver a record year in 2022.
With our full year revenue growth in the 35% to 40% range.
Given strong fundamentals across our businesses staying ahead of inflation with proactive pricing actions and driving strong leverage through Seo as we maintain our expectations for total Carlisle adjusted EBITA margins to expand approximately 650 basis points with that.
I turn it over to Chris for closing remarks.
In closing I want to express again, how pleased I am with the hard work and perseverance of Carlisle employees their resilience and experience will continue to provide carlyle with a competitive advantage as we navigate in this highly complex environment.
Despite numerous macroeconomic challenges the Carlyle team continues to live our culture of continuous improvement focused on delivering solid results.
Our outstanding third quarter demonstrates carlyle's progress towards achieving our goals as laid out in vision 2025, including delivering $15 of GAAP earnings per share three years earlier than originally contemplated while we will be vigilant and monitor the macroeconomic environment and the drivers of each business we.
Continue to be optimistic about the direction of Carlisle and as Kevin mentioned, we expect a record fourth quarter and a record 2022.
This concludes our formal comments we.
We are now ready for questions.
Thank you.
If you'd like to ask a question. Please press star followed by one.
Pat if.
Have you changed your mind.
Marco.
The first question, we have from the phone lines today comes from Kevin Marsh.
Paul Please go ahead.
Yeah, Hey, guys good afternoon.
Good afternoon, Tim.
Maybe just to kind of start on on the market.
I guess when you look at the rest of the nonresidential parts of your business. I mean have you have you seen any changes.
Within within order rates or backlogs or anything like that over the last 60 to 90 days and then I guess on the residential side could you kind of quantify.
What your exposure is on the resi side and kind of what your assumptions within that market or for the next few quarters, yes.
Yes, Tim I'll start off and then Jim and Kevin can weigh in on the non resin you know, we really start to see things improve on the materials side as I as I talked about supply chain and in fact, our MSP program, which was really in the non resi commercial.
Businesses that we had had to put in place due to the significant demand and and the need to allocate due to lack of capacity across the industry started to unwind in September as things started to improve and obviously when that happens people get more secure and the ability to source product and so we started to see.
Some changes in the buying patterns in the sense of.
The fact that we know could bring things in and people didnt have to look so far out remember when we think we talked on the last call or it might've been sometime in the third quarter second quarter, we mentioned that.
We were taking orders out into 'twenty three so there was an extremely long view from contractors I think really because of the improvements.
In the supply chain, we've started to see people get back to normal more normal cadence, which which is a definite change it's a good change though.
On the non res. He said you know the mix there for Carlyle.
Is about 80 515, when we look at the two businesses CWT I'm thinking it's around 50 50 with the addition of Henry There and then on the CCM side, we're at about 90 10.
So Jeff you want to add anything to that.
Yes.
Remind or two in the fourth quarter piece as we normalize that as compared to last year, where things were not normal and we had a very busy fourth quarter last year. So seasonality will start returning more to what it has been historically.
Okay.
Okay, and then as you kind of get back to normal seasonality I mean does that does that have any implications in terms of.
How are you guys have kind of moved to a pricing upon shipment type.
Type strategy or do you.
How do you kind of think of that kind of unfolding over the next call. It 12 months.
Yes, I don't think it changes anything in pricing Tim as we said pricing has continued to be strong we don't see any changes in actual pricing.
I mean.
As far as we can see forward.
We did have the actions in September there were increases in and we've had other actions that are going to start to lap in 2023, but no real changes in pricing I think the only thing is that that comment you mentioned the.
The detail around at time of shipment.
With MSP unwinding in that allocation process, yet will be relaxing that and going back to more normal.
Terms and conditions for our nonresidential customers.
Okay and then one last question just on the EBITDA guidance for the year has has anything really changed there I'm just trying to.
I think Kevin you said that it wasn't changed but there is some squiggly lines and classes and thanks, I'm just trying to understand if that if that changed at all.
Yes, we remain confident on the year over year improvement 650 basis points. So no change from the previous guidance there.
Okay.
Thanks, very much guys.
Okay.
Thank you.
We now have.
Wow.
Please go ahead. Your line is now open.
Thank you good afternoon guys.
Hey, good afternoon, Brian .
I was hoping you could parse out quantify if possible.
Top line and margin impact of the headwinds in architectural metals and Europe in Q3, or I guess, equivalently isolate U S commercial roofing performance in the quarter.
Just curious how how Q3 looked relative to Q2 for that of course cycles like this.
Yes, so we don't breakout the individual business units within the segment and Ken.
Overall, obviously, though the third quarter for CCM in court roofing is that majority of that segment. I mean, we had significant improvement year over year over 750 basis points improvement for the quarter.
Yes, I think it's safe to say, Brian that the European.
Situation is not one that anybody would say has improved over the last quarter I would just add that.
Okay fair enough.
And kind of nuanced point can you just called out unfavorable mix within.
CCM EBITA margin and Thats, obviously relative to very strong year on year expansion I would think with <unk>.
Single ply outgrowing.
The other business lines, but that would be.
Currently favorable so within that what is the unfavorable mix call. It.
Yes, so we have mixed on certainly theres different pieces. Besides the membrane insulation. There's also assess reef. So that's a piece of it.
Driving that mix change.
Okay.
Okay, that's fair.
And I guess.
Any any early stage feedback you can offer on the commercial rollout of your it 16 foot <unk> line.
We are early days, there, but there is quite a bit of excitement around that so I'm just curious what youre hearing from the channel.
I mean, a lot of good things you know we did a lot of work to understand how we handle the job site not a problem we have rolled it out obviously there is still.
<unk>.
Very good demand for <unk> in the marketplace.
Team is in the process of educating contractors talking about how to use it on the job site people are getting used to using it thats the rollout, but the demand certainly is there and I think it's just a great example, Brian I'm glad you asked it of of one of these ways that we're going to seek to to maintain that Carlisle experience and obviously the.
The margins that come with it where we're pricing the value because that 16 foot line is taking labor off the roof, it's allowing contractors to get their jobs done faster and move on to other jobs and we know the same things are holding true today that held true three months ago six months ago labor is constrained so.
We can do to get contractors to put down a high quality.
Carlisle roof, and then move on and get more jobs done we know that means obviously good things for us both in terms of sales and in margin. So, yes, it's going well and obviously as with anything it takes time to spool up and get rolling.
Makes sense I appreciate the color. Thanks.
You bet.
Yes.
Thank you. Your next question comes from the line of Scott.
Okay.
Please go ahead.
Oh, Hi, Thank you just wanted to follow up on the full year revenue guidance.
I think you will have 40 per second for 35, 40% just to be clear.
Mostly.
Part of the business.
Okay.
A bigger component of that.
Fine tuning.
Goodbye.
Assuming Europe metals.
Yeah, I'll take that one Gary.
Jim Yes.
More to do with just <unk>.
Capsulate, what's going to happen in <unk>.
And reflecting the buying pattern normalization that we're that we're seeing in the marketplace right. So 40% is still in play.
We thought it prudent to expand it to 35% to 40% just because there is that the timing variance that we're seeing currently in the second half and then obviously as Kevin pointed out seasonality is.
<unk> is coming into play and we haven't had to talk about seasonality for several quarters now.
Got it okay.
And then just lastly, just on inflation.
Sean what youre seeing there and if any of them.
The cost basket changed.
Last quarter.
Yes, I'll take that I think we look at inflation out of the marketplace and obviously its continuing we have had a.
I think Eric as you know relatively consistent price increases now for however long.
Dealing with those raw material that raw material inflation and we've also tried to separate out the.
The value from the.
The costs and put that down I think.
The thing we are going to see those things normalize and supply.
Becomes more available and we mentioned the CDW reduction from 50 to 10.
There is pressure now I think on the supply chain too.
We reduced costs in general.
Which is the intent of the fed actions and other things is to reduce inflation and we are seeing signs of that so we do anticipate that.
Really beginning here in Q4 and carrying over into 2023.
Got it okay. Thanks a lot.
You bet.
Yes.
Thanks, Gary.
Hello, Hi.
Got it okay.
With credit Suisse. Please go ahead, when you're ready.
Okay.
Thank you very much I guess.
I'm wondering in terms of <unk>, given the strong backlog in Aero and medicine wondering.
How do you think about the opportunity to boost margins from that in terms of that strength for revenue and such what it translates into margins as you look ahead into 2003 and such.
Yes, I'll just take it a general thing in the gym or Kevin can give a little more specific but I think it's very positive for <unk> moving forward I mean, one of the biggest issues for US has been right getting back playing certified in back up and flying we know the demand is there.
We know that the restructuring actions that city has taken over the last two years are taking effect, but one of the big issues for US is the production of say the 787.
It's been a significant contributor on the sales and profitability line, and obviously with that plane not delivering.
The type of output from Boeing.
What we've seen in the past that mix is suppressing margin. So I would anticipate as we roll into 'twenty three that we'll get some of that 787 mixed back is that plane.
And I'm optimistic for that but I believe this will happen, we will be back certified and flying in and there'll be producing at a good rate and that should change the mix and enhance the profitability as well. So obviously volume they've done a good job on price they've taken restructuring actions and then we get back to a more normal mix and I think 2023 looks pretty good for <unk>.
Okay.
Great and I guess, then secondly, just wondering given the comment about the optimism about non res overcoming.
The recent pressure, that's more sort of an expectation over time rather than.
I'm wondering if there's anything you've seen more recently that sort of reinforced that in terms of.
Improvement, but sort of my sense would be that's more sort of weakness as the quarter went on but just curious if there is anything that sort of supports the optimism right now.
Yes, we think contractors are busy I talked about labor constraints. We also look at Abi we look at Dodge we look at the reports that we see.
One data point, we're seeing now.
Basically nine months of contracted backlog I think we were at seven or eight when we came into 2022. So that's a positive I think this thing in the first quarter really is we had the big dip in the spring of 'twenty, where Covid hit. We then progress through that came back with some pretty high demand and obviously as we got back to work and we see this every.
Where we see people coming back into the workplace, we serve well back to football games and all of this stuff. We see this return to normalization and obviously, there's going to be a period, where some of that gets balanced out and thats. What I think we're seeing in the fourth quarter. So the underlying demand in the contractor work and obviously, we've we've talked about re roofing being a big driver for Carlyle over over time.
And none of that re roofing slowed up while we were.
While we were pursuing a lot of new construction in 2022 and 2021 so.
Yes, I think I don't think really anything has changed on the demand side.
And we're just having this kind of.
Return to normalization that everyone is seeing and working through it in the fourth quarter.
Okay.
Great. Thank you.
Yes.
We now have Tom Joyner with BMO. Please go ahead when you're ready.
Hey, good afternoon.
Congrats on a good quarter.
Thank you.
My guess is that.
Alright excellent.
You would actually welcome some normalization and ultimately getting away from carrying such a large backlog but in.
And maybe you mentioned this but.
How much visibility do you have going into next year, and then kind of in the same vein how do you see the delta between the price increases that you.
And then put that you've put in place.
Horses oil prices.
They have moderated but kind of stabilize business roughly $90 level.
Hey, John I'll, let Jim talk about visibility I think he is going to have some favorable comments, there but on that oil.
Got that.
We've done and I think we've said this before and I don't think we have done in the last couple of years because of what we've been through but we did a lot of work on the correlation between oil and actually the end products that we buy from suppliers and while it can be I guess, a general guide and what can be happening, we don't see a lot of connectivity or correlation.
It actually was pretty low surprisingly when we looked at it.
Due to some of the processing and when we are cracking something depending on what demand is another in the automotive industry or things like that for different parts of the petroleum.
Distillate that we're buying.
<unk>.
I don't think the oil pricing is going to have as big an impact as <unk>.
Maybe the general indicator of oil pricing in the economy I think what's more important is to really look at what's happening in places like the ports of long beach with trucking.
With statements like CWT coming from 50, plus suppliers on a watch list of 10 and in our ability to access product in.
Be more normal there I think it just when people can plan.
More rationally and can level load their factories and can plan for shipping on time and these things you tend to decrease the extra cost for labor you decrease the extra costs for overtime freight things like that so.
Yes, I would just say I don't think that oil is going to be a big driver on that price.
Jimmy wanted to handle that.
Yes, John .
So, yes as far as the visibility obviously.
Our view on visit.
It's tied to demand what are contractors.
Asking for in that nine months of <unk>.
Backlog that Chris alluded to I mean that that is what we focus on right and so when you come into a year. We thought we were going to grow 5% to 10% volumes. This year, we're coming in at the high end of that if not in excess of that for the year, it's directly tied to that customer demand and so when you think about going into 2023.
Similar view as far as the visibility the visibility doesn't really extend beyond the summer, but certainly as we.
Or in this in this period of adjustment and normalizing.
Buying patterns.
The view going into 2023 is still.
Volume strength, but that's basically where.
We kind of hang our hat on.
What we think volumes are going to be in the coming quarters.
Okay got it got it. Thank you and then just one more so.
<unk> recently seen.
16 foot wide.
Yes.
Membrane mine and the innovation center in Carlisle I think many people would be surprised honestly by the advancements in.
In roofing and related products that are that are occurring so I guess what are some of the other products that may be target labor savings are or other areas.
If you could highlight that you're excited about and that could be ultimately additive to organic growth.
Sure I think you look at a couple of them that came out recently that I'm still excited about it I guess the recent enough that we can talk.
Talk about them and the impact obviously margin of sales as we've talked about our appeal product I still think thats, a great reward adding that clear.
Clear layer of.
Product onto the Tpa as sheet and when we're done with the job people are peeling it away and having a exceptionally clean brand new roof with none of the traffic on it.
Where before you would have had people walking on dirt things like this and then you'd have to bring pressure washing equipment up you'd have to haul it up on the review risk puncturing the roof with the equipment, you've got people cleaning at water flowing up and it just takes time and it takes labor and we don't have either one of those we want our our contractors moving onto the <unk>.
Job not washing the previous job in using that labor to apply.
<unk> and PVC membrane, so I like that one we've had a lot of good response to on our Velcro systems believe it or not they are incredibly robust and we've seen that in some of the recent weather events. They performed very well and that's one that that.
It takes out some of the adhesives and other things and saves time.
And still produces a great.
Membrane and adherence that we can use in a variety of situations. So I kind of like the innovation. There I think it's all really around that idea that we've got to get this labor force.
Working more efficiently for our contractors and so I think when you look at it you look at what are things. Our teams are working on youre going to see things like that it's going to be.
Mostly evolutionary which I get excited about it but we are working on longer term revolutionary things like new membranes in that but I think.
The real power for us comes in connecting with the contractor understanding the voice of that customer.
And for products.
Getting the job done with better quality faster. So they can go on be assured of a high quality warranty roof that they can pass on to the building owner and Thats going to last I have confidence in that and then get onto other jobs and get them done faster. So.
I'm glad you visited that I think it is amazing when you look within the factory. There are things that are going to help us with really creating more capacity in this space, we have with ideas around the internet of things better.
And more robust sensing on pieces of equipment to produce a higher quality product with less defects and things like that so all the way around it benefits US and then you didn't mention this but the Carlisle experience of the customer experience works excited to have a more direct connection.
With the contractor through some technologies, we have that hopefully will bring out in the next year or so that will help them do a better job of tracking shipments will help them do a better job of understanding what what they have ordering.
Doing things like that creating bills of materials. So that they can again work more efficiently and use our labor more effectively so I'm glad you mentioned it and that's our goal and Thats, where you create value and Thats. What we want to do is create value for everyone in the channel Thats the best interest of Carlyle.
Alright excellent yeah. Thank you it sounds exciting.
I appreciate it.
Thank you John we now have Adam <unk>.
Martin <unk> from Goldman.
Hey, good afternoon, everyone.
CWT.
Maintained total revenue guidance for the year.
I know last quarter, you were calling for 20% organic revenue growth has that changed at all given the third quarter.
We're still in the range of that I mean, those are approximate numbers, but yes, that's what we're still striving to hit for the fourth quarter and full year.
Okay got it and then just on some of the resident residential softness and CWT that you say that just a couple of things curious.
Was there any difference in maybe the level of weakness between maybe the repair and remodel market or the home center market and new construction and then as well was there any level of Destocking.
Any of the channels during the quarter that may have impacted growth.
Yeah.
I don't think we saw any destocking in fact in some of our retail channels were actually in the process of gaining shelf space and share as we take some from other competitors.
But Jimmy we're going to answer the address the first question.
I was just going to say that on the repair remodel side thats more resilient on the new obviously things are tightening up on the resi side right, Adam So that's where we see.
The relative softness and we we were seeing that through <unk> and we anticipate that will extend into <unk>, hence Kevin is alluding to being within that range of call. It that 60% total we not enough for us to come off of that previous guidance and I think the other thing is we've got a pretty significant percentage of that.
Residential.
Home owner that is dedicated to fixing leaks to making repairs and that kind of thing and so I think there is some stickiness there that will we will see and maybe even some improvement as people are a little bit more restrained on their incomes. They might go to more of a henry product to apparel lakes and things like that.
No.
Okay, great. Thank you you bet.
Thank you.
We now have the next question on the line from.
David Macgregor.
No.
Please go ahead when you're ready.
Hey, good afternoon, everyone.
Good afternoon.
I can speak firsthand about the strike I can speak firsthand about the strength of the Henry products fixing leaks.
Working on that last weekend here so excellent.
Thank you.
I wanted to ask you about.
Carryover pricing into 2023 and CCM just how much benefit do you think 2023 pricing gets from 2022 pricing actions that carryover.
Yes, I mean, it's Jim again, Hey, David.
Yes, I mean, if you look at the there were several price increases throughout the year with the last one being in early September . So if you just flat line that you could back into some math in that.
Mid single digit plus tailwind into into 2023, if you just flatline that and gave us that benefit throughout the throughout 2023.
Okay.
Okay. Okay. Thanks for that.
Just on the CCM, what can you say about the.
Size of the jobs that you are seeing the size of the tickets.
Are you seeing any meaningful change there or things pretty much.
Continuing on trend.
Yes things are continuing on trend Havent had that called out that there's been any change in the.
The size of the projects.
Okay.
Henry can you just talk about being above target in terms of your synergies and stronger accretion.
What do you think might be driving that you mentioned a moment ago gaining share.
In retail we want to.
A contributing factor, but anything else that you can call it.
Yes, I think the teams did a good job I'd go back and I think this is probably one of our Best Act acquisition integrations, we ever did I think the team.
We look back over the past and when they went into this.
Integration had a very good playbook, we've actually taken that playbook and we've standardized and we're using it for.
Oliver integrations now and it was really a cooperative.
Effort between both the Henry team coming in and the CCM team I think the team has worked together I think was very helpful that we.
Had frank ready on as the leader from Henry leading as part of the integration driving that Theres a lot of accountability on it we had a.
Person in charge of the acquisition integration as well as some outside resources to help with those things. So I think it was really about.
A good job of identifying upfront, what what we could really attain and being reasonable and then having a plan envisioned to execute it so I really I.
Thats the key and a lot of the savings are coming from places that I would say are not directly volume dependent obviously you have to have volume there to run your business, but when you look at back office operations. When you look at supply chain consolidation things like that I think they were things that just were identified and it really came down to the team executing on the work they have done so I'm Super pleased with.
That they are ahead of the synergies and we will finish the year ahead of the.
Pathway to $30 million and then on the accretion obviously that.
That comes in doing the kind of things that we were counting on from the Andrew team, which is like having a great brand name a great relationship with some major retailers that.
Offered them the opportunity to go in and and showcase.
Carlisle support and the additional capital and additional resources in that that we have to enable them to take on projects to apply capital and I think the Henry team's done a really good job of leveraging carlyle as well as their own position to make the case that they are one of the premium.
If not the premium.
Plier of their type of product to these major retailers and homeowners. So I think the only downside on.
That on the accretion is just this impact on the homeowner with rising interest rates and people having to come back to normal and perhaps spending.
Changing their spending habits from.
Maybe what they were spending on in their home to now more services going out to eat and things like that but I mean, there's not much I think the Andrew team can do to overcome that so.
Okay.
Great great. Thanks for that and congratulations on the progress thank.
Thank you very much.
Yes.
Thank you no further questions from the lines.
I would like to hand.
Well, thanks very much that concludes our 2022 Q3 call. We appreciate everyone's attendance, they're great questions. We look forward to talking to you at the end of the fourth quarter and.
Have a good end of the year. Thank you.
Thank you that does conclude today's call you may now.
Now disconnect your lines.