Q4 2023 Carlisle Companies Inc Earnings Call

Operator: Good afternoon. My name is JP, and I will be your conference operator today. At this time, I would like to welcome everyone to the Carlisle Companies 4th Quarter 2023 Earnings Conference. All lines have been placed on mute to prevent any background noise.

Good afternoon, My name is JP and I'll be your conference operator today at this time I would like to welcome everyone to the Carlisle companies fourth quarter 2020 earnings Conference call.

JP: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, we will conduct a question and answer session.

Operator: After the speaker's remarks, we will conduct a question and answer session. I would like to turn the call over to Mr. Mehul Patel, Carlisle's Vice President of Investor Relations. Mehul, please go ahead.

JP: I would like to turn the call over to Mr. Mehul Patel, Carlyle's, Vice President of Investor Relations.

Please go ahead.

Mehul Patel: Thank you and good afternoon, everyone. Welcome to Carlisle's fourth quarter 2023 earnings. I'm Mehul Patel, Head of Investor Relations for Carlisle. We released our fourth quarter and full year 2023 financial results today, and you can find both our press release and the presentation for today's call in the investor relations section of our website. On the call with me today are Chris Koch, our Board Chair, President, and CEO, along with Kevin Zimmel, our CFO. Today's call will begin with Chris.

Mehul Patel: Thank you and good afternoon, everyone welcome to Carlyle's fourth quarter 2023 earnings call.

Mehul Patel: Mehul Patel head of Investor Relations for Carlisle, We released our fourth quarter and full year 2023 financial results today and you can find both our press release and the presentation for today's call in the Investor Relations section of our web site.

On the call with me today are Chris Koch, Our board Chair, President and CEO, along with Kevin <unk> our CFO.

Chris Koch: Today's call will begin with Chris who will provide highlights of our results and accomplishments followed by Kevin who will provide an overview on our financial performance and an update on our outlook for 2024.

Mehul Patel: He will provide highlights of our results and accomplishments, followed by Kevin, who will provide an overview of our financial performance and an update on our outlook for 2024. Following our prepared remarks, we will open up the line for questions. Before we begin, please refer to slide 2 of our presentation, where we note that comments today will include forward-looking statements based on current expectations. However, 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 filing. As Carlisle provides non-GAAP financial information, we've provided reconciliations between GAAP and non-GAAP measures in a 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.

Chris Koch: Following our prepared remarks, we will open up the line for questions.

Chris Koch: 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.

Chris Koch: non-GAAP financial information, we 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 <unk>. Good afternoon, everyone and thank you for joining us on Carlyle's fourth quarter 2000.

Chris Koch: Thank you, Mahul. Good afternoon, everyone, and thank you for joining us on Carlisle's fourth quarter 2023 earnings call. Turning to slide three, I would like to start by extending my sincere appreciation to all of our team members for their dedication and commitment in executing our Vision 2025 strategy over the past five years and helping to drive significant progress and value creation during 2023. The past year has represented a challenging and dynamic year for Carlisle.

Chris Koch: 23 earnings call turning.

Chris Koch: Turning to slide three I would like to start by extending my sincere appreciation to all of our team members for their dedication and commitment in executing our vision 2025 strategy over the past five years and helping to drive significant progress and value creation during 2023.

Chris Koch: The past year represented a challenging a dynamic year for Carlyle. The first half of the year was impacted by continued destocking in our markets and the related challenges driven by supply chain constraints for many building products, including ours in 2022.

Chris Koch: The first half of the year was impacted by continued de-stocking in our markets and the related challenges driven by supply chain constraints for many building products, including ours, in 2022. However, despite those first-half challenges, markets began a return to a more normalized order pattern beginning in the third quarter of 2023. This resulted in the second half of 2023 being marked by increasingly positive momentum. In addition to delivering a record fourth quarter, Carlisle finished 2023 with one of the most significant events in our 106-year history, the completion of our well-communicated pivot from a diversified industrial portfolio of businesses to a pure play building products company. Accompanying that strategic pivot was the successful achievement of our goals under Vision 2025 and the much-anticipated release of our Vision 2030 strategy, which builds on Vision 2025, adds new key initiatives such as an increased emphasis on innovation, and further unlocks the full potential of our PurePlay building products portfolio.

Chris Koch: Despite those first half challenges markets began a return to a more normalized order pattern beginning in the third quarter of 2023. This resulted in the second half of 2023 that was marked by increasingly positive momentum in.

Chris Koch: In addition to delivering a record fourth quarter Carlyle finished 2023 with one of the most significant events in our 106 year history. The completion of our well communicated pivot from a diversified industrial portfolio of businesses to a pure play building products company.

Chris Koch: Accompanying that strategic pivot was the successful achievement of our goals under vision 2025, and the much anticipated release of our vision 2030 strategy, which builds on vision 2025, as new key initiatives such as an increased emphasis on innovation and further unlocks the full potential.

Of our pure play building products portfolio. We are very pleased to have finished 2023 on a record note. Despite the very dynamic and uncertain market conditions, we experienced through the year.

Chris Koch: We are very pleased to have finished 2023 on a record note, despite the very dynamic and uncertain market conditions we experienced through the year. Our fourth-quarter results surpassed the expectations we communicated on our last earnings call in October, largely driven by better-than-expected CCM sales and better profitability in CWT. We achieved record fourth-quarter adjusted EPS of $4.17, which was an increase of 30% year-over-year.

Chris Koch: Our fourth quarter results surpassed the expectations, we communicated on our last earnings call in October largely driven by better than expected CCM sales and better profitability and CWT, we achieved record fourth quarter adjusted EPS of $4 17, which was an increase of 30% year over year.

Chris Koch: Our EBITDA margin of 26.4% improved by an impressive 440 basis points year-over-year on 2% lower sales, clearly demonstrating our ability to maintain our margins through economic cycles. In the fourth quarter, we benefited from more favorable weather conditions, solid contractor backlogs, stronger operating efficiencies, and the power of the Carlisle experience to drive favorable price-to-value in our businesses. CCM and CWT continue to produce industry-leading margin and EBITDA results despite lower volumes and continue to deliver consistent value creation. The strength of our building product segment financials is now fully unmasked and on display with the pivot. Looking at our full-year 2023 sales, despite a 16% decline in sales, we maintained an EBITDA margin in excess of 25%. Importantly, most of the lower volumes were mainly attributable to channel destocking, interest rate-driven project delays, and weather headwinds we experienced predominantly in the first nine months of 2023.

Chris Koch: Our EBITDA margin of 26, 4% improved by an impressive 440 basis points year over year on 2% lower sales clearly demonstrating our ability to maintain our margins through economic cycles in the fourth quarter, we benefited from more favorable weather conditions solid contractor backlogs.

Chris Koch: Stronger operating efficiencies and the power of the Carlisle experience to drive favorable price to value and our businesses CCM and CWT continue to produce industry, leading margin and EBITDA results. Despite lower volumes and continued to deliver consistent value creation. The strength of our building products segment financials are now.

Chris Koch: Fully unmask and on display with the pivot looking at our full year 2023 sales. Despite a 16% decline in sales we maintained an EBITDA margin in excess of 25% importantly, most of the lower volumes were mainly attributable to channel Destocking interest rate driven project delays and weather.

Chris Koch: <unk>, we experienced predominantly in the first nine months of 2023, we are very pleased to be entering 2024 on a positive note with destocking behind us and with positive momentum. Furthermore, we achieved a stellar ROIC for the year of 27%, which is aligned with our stated goal under vision 2030 are exceeding two.

Chris Koch: We are very pleased to be entering 2024 on a positive note, with destocking behind us and with positive momentum. Furthermore, we achieved a stellar ROIC for the year of 27%, which is aligned with our stated goal under Vision 2030 of exceeding 25% per year. This performance is a testament to our focused execution at CCM and CWT, the efficiencies derived through the Carlyle operating system, the Carlyle experience, and our ability to price our products consistent with the value they create for our customers, reinforced daily by delivering an innovative and compelling value proposition. Now, let's turn to slides 4 and 5.

Chris Koch: 25% per year. This performance is a testament to our focused execution at CCM and CWT the efficiencies derived through the Carlisle operating system, the Carlisle experience and our ability to price our products consistent with the value they create for our customers reinforced daily by delivering an innovative.

Chris Koch: And compelling value proposition.

Chris Koch: Now, let's turn to slide four and five following the release of our vision 2030 strategy. In December we were pleased to announce in late January that we had reached an agreement to sell our Ci business to amphenol for just over $2 billion. The sale of C. I T represents the final step in our successful strategic pivot.

Chris Koch: Following the release of our Vision 2030 strategy in December, we were pleased to announce in late January that we had reached an agreement to sell our CIT business to Amphenol for just over $2 billion. The sale of CIT represents the final step in our successful strategic pivot from a diversified portfolio of general industrial businesses to a premier pure-play building products company. This sale is an important milestone in that it showcases our financials and allows our building product segment's historical track record of growth and best-in-class returns to be clearly seen. With the expected proceeds from the CIT sale, combined with our 15% plus free cash flow margin, we now have an even stronger capital base that provides exceptional flexibility to execute on our highest-returning capital allocation priorities and supports the investments contemplated in Vision 2030.

Chris Koch: A diversified portfolio of general industrial businesses to a premier pure play building products company.

Chris Koch: This sale is an important milestone in that it showcases our financials and allows our building products segment's historical track record of growth and best in class returns to be clearly seen.

Chris Koch: With the expected proceeds from the sale combined with our 15% plus free cash flow margin. We now have an even stronger capital base that provides exceptional flexibility to execute on our highest returning capital allocation priorities and supports the investments contemplated envision 2030 and two.

Chris Koch: In 2018, we embarked on our Vision 2025 journey with the goal of being superior capital allocators while seeking to drive 5 plus percent organic growth, leveraging that growth into earnings, making synergistic acquisitions, driving efficiencies through the Carlisle operating system, investing in talented people, returning capital to our shareholders, and ultimately creating value for all our shareholders. During 2021, to further demonstrate our desire to be a superior capital allocator, we made the decision to pivot our portfolio to our highest-returning building products businesses. Since the introduction of Vision 2025, we have nearly doubled revenue in our building products segment, more than doubled EBITDA on those segments, and increased free cash flow by over 200%. Furthermore, we exceeded our earnings target of over $15 per share, three years ahead of our commitment in our Vision 2025 plan.

Chris Koch: 18, we embarked on our vision 2025 journey with the goal of being superior capital Allocators, while seeking to drive five plus percent organic growth leveraging that growth into earnings, making synergistic acquisitions driving efficiencies through the Carlisle operating system investing in talented people rich.

Chris Koch: Turning capital to our shareholders and ultimately creating value for all our shareholders. During 2021 to further demonstrate our desire to be a superior capital allocator, we made the decision to pivot our portfolio to our highest returning building products businesses. Since the introduction of vision 2025, we have nearly doubled revenue in our building products.

Chris Koch: <unk> more than doubled EBITDA in those segments and increased free cash flow by over 200%. Furthermore, we exceeded our earnings target of over $15 per share three years ahead of our commitment and our vision 2025 plan. We are proud of these accomplishments, which we view as significant milestones that validate our strategy.

Chris Koch: We are proud of these accomplishments, which we view as significant milestones that validate our strategies and actions over the last six years and clearly demonstrate our commitment to an ROIC-focused capital allocation strategy. One of our key drivers of success is our ability to offer a compelling value proposition through what we call the Carlisle experience. The Carlisle experience can be defined simply as getting the right product to the right place at the right time.

Chris Koch: <unk> and actions over the last six years and clearly demonstrate our commitment to an ROI see focused capital allocation strategy. One of our key drivers of success is our ability to offer a compelling value proposition through what we call. The Carlisle experience. The Carlisle experience can be defined simply as getting the right product to the right place at the.

Chris Koch: In other words, delivering on our commitments to our customers. We complement the Carlisle experience with a strong focus on innovation, and specifically innovation that delivers energy-efficient and labor-saving solutions. This focus has aligned well with the increasing demand for green buildings and products, the increasing need of customers to reduce GHG emissions and conserve energy, and the need for our customers to address the forecasted significant labor constraints through improved jobsite productivity. As we move on from the success of Vision 2025, we now turn our attention to Vision 2030 and our emphasis on our building products portfolio of businesses. As we stated in our Vision 2030 video released in December, we plan to continue to deliver on our foundational strategies that have produced such positive results these last few years under Vision 2025. Coupled with major secular tailwinds, we are committed to delivering innovative building envelope solutions, driving above-market growth, and unlocking additional value for shareholders in this next important phase of Carlisle's growth journey. The key pillars of Vision 2030 include enhanced levels of innovation, a continued emphasis on synergistic M&A, attracting and retaining top talent, and holding steadfast to our sustainability commitment.

Chris Koch: Right time in other words, delivering on our commitments to our customers. We complement the Carlisle experience with a strong focus on innovation and specifically innovation that delivers energy efficient and labor saving solutions. This focus is aligned well with the increasing demand for green buildings and products, the increasing needs of customers to reduce.

Chris Koch: G H G emissions and to conserve energy and the need for our customers to address the forecasted significant labor constraints through improved job site productivity as we move on from the success of vision 2025, we now turn our attention Division 2030, and our emphasis on our building products portfolio of business.

Chris Koch: As we stated in our vision 2030 video released in December we plan to continue to deliver on our foundational strategies that produce such positive results. These last few years under vision 2025.

Chris Koch: Coupled with major secular tailwind, we are committed to delivering innovative building envelope solutions driving above market growth and unlocking additional value for shareholders. In this next important phase of carlyle's growth journey. The key pillars of vision 2030 include enhanced levels of innovation, our continued emphasis on synergistic M&A.

Speaker Change: Hey, <unk>.

Speaker Change: Tracking and retaining top talent and holding steadfast to our sustainability commitments.

Chris Koch: As we look to fulfilling our commitments under Vision 2030, a key lever in our pursuit of higher margins will be increased spending on innovation. As such, Carlisle is differentiating itself with a goal of investing 3% of sales to drive the creation of new products and solutions that add value through advancements in sustainability, energy, and labor efficiency. Additionally, we aim to continue to enhance our customer relationships through continued investments in the Carlisle experience. This includes advancing our digital experience for customers and is exemplified by our recently released mobile-friendly Customer Success Portal at CCM. This portal provides Carlisle customers with a unified and mobile platform for real-time engagement, including access to product catalogs, personalized pricing, order status, delivery tracking, and enhanced communication with our customer service and operations teams.

Speaker Change: As we look to fulfilling our commitments under vision 2030, a key lever in our pursuit of higher margins will be increased spending on innovation as such Carlyle is differentiating itself with a goal of investing 3% of sales to drive the creation of new products and solutions that add value through advancements in sustainability.

Speaker Change: Energy and labor efficiency.

Speaker Change: Additionally, we aim to continue to enhance our customer relationships through continued investments in the Carlisle experience. This includes advancing our digital experience for customers and as exemplified by our recently released mobile friendly customer success portal at CCM. This portal provides carlisle customers with a unified and more.

Speaker Change: <unk> platform for real time engagement, including access to product catalogs personalized pricing order status delivery tracking and enhance communication with our customer service and operations teams overall, we delivered a strong finish to 'twenty twenty-three maintained our historically strong margins and exited the year.

Chris Koch: Overall, we delivered a strong finish to 2023, maintained our historically strong margins, and exited the year on an extremely positive note. Our Vision 2030 strategy is in place, and we are now a focused and simplified building products company. We are motivated to leverage the industry megatrends, drive innovation, and demonstrate margin resiliency through economic cycles to deliver superior ROIC and compounding EPS growth. With our solid foundation and a strong team in place, we are confident in achieving our goals set under Vision 2030.

Speaker Change: <unk> on an extremely positive note. Our vision 2030 strategy is in place and we are now a focused and simplified building products company. We are motivated to leverage the industry Megatrends drive innovation and demonstrate margin resiliency through economic cycles to deliver superior Rois C and compounding EPS growth.

Speaker Change: With our solid foundation and a strong team in place we are confident in achieving our goals set under vision 2030, as we begin 2024, we are optimistic about the positive momentum building in our end markets. The inventory destocking headwinds, we faced over the past year largely in commercial roofing are now behind us setting the stage for a more normalized.

Chris Koch: As we begin 2024, we are optimistic about the positive momentum building in our end markets. The inventory destocking headwinds we faced over the past year, largely in commercial roofing, are now behind us, setting the stage for a more normalized buying profile in 2024. We expect combined benefits from the tailwind of prior year customer destocking and a strong backlog of re-roofing projects due, in part, to constrained labor, to collectively mitigate potential risks in the year ahead. As such, we have a positive growth outlook for 2024 that we believe is reasonable, achievable, and fully supported by our Vision 2030 strategic objectives. Kevin will touch further on our 2024 growth expectations and outlook later in the call. Now, please turn to slide 6 as I share some updates on our progress with Carlisle's sustainability initiatives.

Speaker Change: Buying profile in 'twenty 'twenty four we expect combined benefits from the tailwind of prior year customer Destocking and a strong backlog of re roofing projects due in part to constrained labor to collectively mitigate potential risks in the year ahead as such we have a positive growth outlook for 2024 that we believe is reasonable.

Speaker Change: Achievable and fully supported by our vision 2030 strategic objectives, Kevin will touch further on our 'twenty 'twenty four growth expectations and outlook later in the call.

Speaker Change: Now please turn to slide six as I share some updates on our progress with carlyle's sustainability initiatives sustainability is a core focus for our organization, we seek to positively impact the environment, while creating value for all our stakeholders through our three pillars sustainability strategy.

Speaker Change: The three pillars are manufacturing energy efficient products minimizing our value chain greenhouse gas emissions.

Speaker Change: And diverting waste and end of life materials from landfills under our first pillar. We provide end users access to solutions that drive energy efficiency in their buildings as an example, adding one inch a poly I saw installation to a 50000 square foot roof can save building owners as much as $110000 and avoided energy call.

Chris Koch: Sustainability is a core focus for our organization. We seek to positively impact the environment while creating value for all our stakeholders through our three-pillar sustainability strategy. The three pillars are manufacturing energy efficient products, minimizing our value chain greenhouse gas emissions, and diverting waste and end-of-life materials from landfills. Through our first pillar, we provide end-users access to solutions that drive energy efficiency in their buildings. As an example, adding 1 inch of polyiso insulation to a 50,000 square foot roof can save building owners as much as $110,000 in avoided energy costs over the service life of the building.

Speaker Change: Costs over the service life of the building.

Speaker Change: Our second pillar, reducing our operational and value chain emissions helps carlisle reduce our carbon footprint and the negative environmental impacts as an example lets take our blowing agents in our spray foam operations. We finished the year converting over 50% of our H F. C legacy spray foam products to a more.

Speaker Change: Italy friendly H F O formulation amounting to over 250000 metric tons of greenhouse gases avoided a compelling achievement as a reminder, H F. CS are 1000 times more carbon intensive than H F. O's Carlyle also obtained five additional ISO 14001 certifications through.

Chris Koch: Our second pillar, reducing our operational and value chain emissions, helps Carlisle reduce our carbon footprint and negative environmental impacts. As an example, let's take our blowing agents and our spray foam operations. We finished the year converting over 50% of our HFC legacy spray foam products to a more environmentally friendly HFO formulation, amounting to over 250,000 metric tons of greenhouse gases avoided, a compelling achievement. As a reminder, HFCs are 1,000 times more carbon intensive than HFOs.

Speaker Change: <unk>, 20th twenty-three, bringing our enterprise wide total to 26.

Speaker Change: Additionally, our Montgomery Poly Isopleth recently obtained I S. C C plus certification clearing the plant to run Biobased M. D. I M. Polyol on a mass balanced approach. This is a pivotal achievement in carlyle's ability to manufacture and extend the credits of Biobased poly ISO to its customers.

Chris Koch: Carlisle also obtained five additional ISO 14001 certifications through 2023, bringing our enterprise-wide total to 26. Additionally, our Montgomery Poly Iso plant recently obtained ISCC Plus certification, clearing the plant to run bio-based MDI and polyol on a mass-balanced approach. This is a pivotal achievement in Carlisle's ability to manufacture and extend the benefits of bio-based poly iso to its customers. Lastly, our third pillar focuses on the reduction of construction waste entering landfills. As an update here, Carlisle's rooftop take-off program diverted over 1 million square feet or 120 metric tons of reclaimed insulation and membrane materials from landfills throughout 2023. We have also expanded incentives for the program, which we believe will further expedite its growth and adoption amongst our customers. I personally take great pride in Carlisle's sustainability legacy spanning over 100 years.

Speaker Change: Lastly, our third pillar focuses on the reduction of construction wastes entering landfills as an update here carlyle's rooftop takeoff program diverted over 1 million square feet or 120 metric tons of reclaimed installation and membrane materials from landfills throughout 'twenty twenty-three. We've also expanded incentives for the program, which we believe.

Speaker Change: We will further expedite its growth and adoption amongst our customers I personally take great pride in Carlisle sustainability legacy spanning over 100 years carlyle's commitment to operating efficiently minimizing waste and offering solutions to empower and users and reducing energy consumption has been ingrained in our culture.

Speaker Change: And will be essential to our success in the future.

Speaker Change: And with that I'll turn it over to Kevin to provide additional financial details as well as our 'twenty 'twenty four outlook, Kevin. Thank you, Chris looking at our fourth quarter results on slide seven despite a 1.9% decline in revenue we were able to expand our EBITDA margins by 400 and <unk>.

Kevin: Carlisle's commitment to operating efficiently, minimizing waste, and offering solutions to empower end-users to reduce energy consumption has been ingrained in our culture and will be essential to our success in the future. And with that, I'll turn it over to Kevin to provide additional financial details, as well as our 2024 outlook.

Kevin: Eight basis points to 26.4%. Furthermore, we achieved record fourth quarter earnings with an adjusted EPS of $4.17, an increase of 30% year over year looking at our segment highlights starting with CCM on slide eight.

Kevin: CCM delivered fourth quarter revenues of $816 million up 1.9% from the fourth quarter of 2022.

Kevin: Thank you, Chris. Looking at our fourth-quarter results on slide 7, despite a 1.9% decline in revenue, we were able to expand our EBITDA margins by 440 basis points to 26.4%. Furthermore, we achieved record 4th quarter earnings with an adjusted EPS of $4.17, an increase of 30% year-over-year. Looking at our segment highlights, starting with CCM on slide 8, CCM delivered 4th quarter revenues of $816 million, up 1.9% from the 4th quarter of 2022. The increase was driven by favorable weather and the return to normalization of order patterns, including the end of destocking in the channel. CCM EBITDA increased 12% to $255 million, with EBITDA margin up 270 basis points to 31.2%. This was driven by a combination of leveraging higher volume growth, favorable input costs, and realizing cost savings through the Carlisle operating system. Moving to slide nine.

Kevin: The increase was driven by favorable weather and the return to normalization of order patterns, including the end of Destocking in the channel CCM EBIT increased 12% to $255 million with EBITDA margin up 270 basis.

Kevin: Since 231.2% this was driven by a combination of leveraging higher volume growth favorable input cost and realizing cost savings through the Carlisle operating system moving to slide nine revenues as CWT decreased the.

Kevin: 11% year over year, primarily due to the well known declines in residential demand and the exit of a noncore business in the first quarter of 'twenty twenty-three. However, despite the revenue decline, we were able to drive EBIT Dag growth of 54% to 69 million.

Kevin: Revenues at CWT decreased by 11% year-over-year, primarily due to the well-known declines in residential demand and the exit of a non-core business in the first quarter of 2023. However, despite the revenue decline, we were able to drive EBITDA growth of 54% to $69 million. This represented an EBITDA margin of 22.2%, expanding an impressive 940 basis points from the fourth quarter of 2022. The margin improvement was bolstered by operational efficiencies gained through targeted restructuring actions, strategic sourcing, and the realization of synergies from the Henry Acquisition. Synergies now exceed $50 million, significantly above our deal model estimate of $30 million. Slide 10 provides a year-over-year fourth quarter adjusted EPS bridge items for your reference. Moving to slides 11 through 13, Carlisle ended the fourth quarter of 2023 with $577 million of cash on hand. We had $1 billion of availability under a revolving credit facility. We generated operating cash flow from continuing operations of $1 billion, and invested $142 million in capital expenditures.

Kevin: In dollars. This represented an EBITDA margin of 22.2% expanding and an impressive 940 basis points from the fourth quarter of 2022 the margin improvement was bolstered by operational efficiencies gained through targeted restructuring actions.

Kevin: Strategic sourcing and the realization of synergies from the Henry acquisition synergies now exceed $50 million significantly above our deal model estimate of $30 million Slide 10 provides a year over year fourth quarter adjusted EPS bridge items for.

Kevin: For your reference moving to slides 11 through 13 Carlyle ended the fourth quarter of 2023 with $577 million of cash on hand, we had $1 billion of availability under our revolving credit facility, we generated operating cash flow from continuing operations of <unk>.

Kevin: $1 billion and invested $142 million and capital expenditures, our free cash flow margin was 20% in 2023, and we ended the year with a solid net leverage of 1.6 times comfortably below our two to three times long.

Kevin: Our free cash flow margin was 20% in 2023, and we ended the year with a solid net leverage of 1.6 times, comfortably below our 2-3 times long-term target. Our disciplined capital allocation framework remains focused on delivering ROIC in excess of 25%. As stated in Vision 2030, we continue to focus on being a superior capital allocator by investing in our high ROIC building products business, making synergistic acquisitions that deliver significant opportunities for value creation, and repurchasing shares given our attractive valuation. We deployed 900 million dollars toward share repurchases during 2023 and paid 160 million dollars in dividends. This represents our 47th straight year of dividend increases. Expanding on share repurchases, at the end of the fourth quarter, we had 7.4 million shares available under our share repurchase program.

Kevin: Term target our disciplined capital allocation framework remains focused on delivering ROI see in excess of 25% as stated envision 2030, we continue to focus on being a superior capital allocator by investing in our high Rois see building products business.

Says, making synergistic acquisitions that deliver significant opportunities for value creation and repurchasing shares given our attractive valuation, we deployed $900 million towards share repurchases during 2023 and paid $160 million.

Kevin: And dividends. This represented our 47th straight year of dividend increases expanding on share repurchases at the end of the fourth quarter. We have 7.4 million shares available under our share repurchase program, notably the $2 billion of expected proceeds from this.

Kevin: Notably, the $2 billion of expected proceeds from the CIT sale provides us with additional dollars and flexibility to execute further share repurchases and fund our high-returning capital allocation priorities. Overall, we believe our pristine balance sheet, conservative leverage profile, and ample liquidity position us to drive additional value creation in 2024 and beyond. Turn to slide 14 to see our full year 2024 financial outlook. We expect 2024 revenues to increase by approximately 5% versus 2023 and EBITDA margins to expand by 50 basis points. We remain focused on disciplined pricing as we leverage greater operational efficiencies and effectively manage costs through our continuous improvement efforts. Additionally, we expect to deliver free cash flow margins of 15% and ROIC in excess of 25%.

Kevin: The I T cell provides us with additional dollars and flexibility to execute further share repurchases and fund our high returning capital allocation priorities overall, we believe our pristine balance sheet conservative leverage profile and ample liquidity positions.

Kevin: US to drive additional value creation in 'twenty, 'twenty, four and beyond turning to slide 14 to see our full year 'twenty 'twenty four financial outlook, we expect 'twenty 'twenty four revenues to increase by approximately 5% versus 2023 and EBIT margins to.

Kevin: Span by 50 basis points, we remain focused on disciplined pricing as we leverage greater operational efficiencies and effectively manage cost through our continuous improvement efforts. Additionally, we expect to deliver free cash flow margins of 15% and ROIC C.

Kevin: In excess of 25% as such we expect double digit EPS growth in 2024. This is directly aligned with the objectives outlined in our vision 2030 strategy and a positive first step towards a 40 dollar plus EPS target looking at the components of the outlook.

Kevin: As such, we expect double-digit EPS growth in 2024. This is directly aligned with the objectives outlined in our Vision 2030 strategy and a positive first step towards a $40 plus EPS target. Looking at the components of the outlook, for CCM, we expect year-over-year revenue to grow approximately 6% in 2024. The primary drivers are the tailwinds from the return to normalization and order patterns that were absent during 2023 due to destocking. For CWT, we expect year-over-year revenue to grow approximately 4% in 2024. Strong sales execution on key growth initiatives and stronger trends in residential should more than offset any headwinds posed by non-residential markets. With that, I turn it over to Chris for his closing remarks. Thanks, Kevin.

Kevin: For CCM, we expect year over year revenue to grow approximately 6% and 2024. The primary drivers are the tailwind from the return to normalization and order patterns that was absent during 'twenty twenty-three due to destocking for CWT, we expect year over year revenue.

Kevin: <unk> to grow approximately 4% in 'twenty 'twenty four.

Kevin: Strong sales execution on key growth initiatives and stronger trends in residential should more than offset any headwinds posed by nonresidential markets with that I turn it over to Chris for closing remarks, thanks, Kevin in closing I am grateful for the hard work and dedication of carlyle's employees that was them.

Chris Koch: In closing, I am grateful for the hard work and dedication of Carlisle's employees that was demonstrated throughout 2023. As they have in the past, our teams demonstrated their resilience, perseverance, and commitment to excellence in delivering value in a difficult environment. I would also like to specifically call out and thank John Berlin and the entire team at CIT for their many years of significant contributions to Carlisle. CIT was one of the longest-owned assets in the Carlisle portfolio and began with our acquisition of the Tensolight Company in 1959.

Chris Koch: Construction throughout 'twenty twenty-three as they have in the past our teams demonstrated their resilience perseverance and a commitment to excellence and delivering value in a difficult environment I would also like to specifically call out and thank John Berlin, and the entire team at C. I T for their many years of significant contributions to Carlyle.

Chris Koch: The I T was one of the longest owned assets and the Carlile portfolio and began with our acquisition of the tensile Ike company in 1959 three.

Operator: Through a commitment to innovation, industry-leading operations, and a unique combination of organic growth and synergistic acquisitions, CIT embodied the key tenets of value creation at Carlisle. We wish John and the entire team the best as they become part of the Amphenol family. Turning to 2024, we have entered the year with significant positive momentum and a clear focus on the goals outlined in our recently launched Vision 2030 growth strategy. We are confident that our ability to innovate with a focus on energy efficiency and labor saving solutions puts us on the right path to drive above market growth and, in turn, drive superior financial results. The improved profitability of our simplified building products portfolio, a robust free cash flow engine, and the expected proceeds from the sale of CIT leave us well positioned to achieve significant value creation for shareholders and deliver another year of industry-leading ROIC in excess of 25%.

Chris Koch: Through a commitment to innovation industry, leading operations and a unique combination of organic growth and synergistic acquisitions C. I T embodied the key tenants of value creation at Carlisle.

Chris Koch: We wish John and the entire team the best as they become part of the Amphenol family turning to 'twenty 'twenty four we have entered the year with significant positive momentum and a clear focus on the goals outlined in our recently launched vision 2030 growth strategy. We are confident that our ability to innovate with a focus on energy efficiency and labor saving solution.

Chris Koch: <unk> puts us on the right path to drive above market growth and in return drive superior financial results. The improved profitability by our simplified building products portfolio, a robust free cash flow engine and the expected proceeds from the sale of C. I T leave us well positioned to achieve significant.

Chris Koch: All you creation for shareholders and deliver another year of industry, leading ROIC see in excess of 25%.

That concludes our formal comments operator, we're now ready for questions.

Operator: That concludes our formal comments. Operator, we are now ready for questions. Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you have a question, please press star followed by the number 1 on your touchtone. You will hear a three-tone prompt acknowledging your request. If you would like to cancel your request, please press start. Please ensure you lift the handset if you're using a speakerphone before pressing any key.

Speaker Change: Thank you, ladies and gentlemen, we will now conduct the question and answer session. If you have a question. These press star followed by the number one on your Touchtone phone, you'll hear at Raytheon prompt acknowledging your request.

Speaker Change: If you would like to cancel your request please press star two.

Speaker Change: And sure you lift the handset if you're using a speaker phone before pressing any keys.

Speaker Change: One moment. Please for your first question.

theme Weiss: Your first question comes from the line of theme Weiss from Baird. Your line is now open.

Team Wise: One moment, please, for your first question. Your first question comes from the line of Team Wise from Baird. Your line is now open.

Tina Weiss: Hey, guys good.

theme Weiss: Good afternoon, Jim Michelle.

theme Weiss:

theme Weiss: Maybe just to to start on CCM.

Team Wise: Hey guys, good afternoon. Maybe just to start on CCM. Is there a way to maybe bridge some of the underlying assumptions on the 6% revenue growth? So, really kind of interested in, you know, how much you're kind of baking in for the lapping of the stocking, you know, kind of what the underlying implied, you know, kind of volume growth is, you know, what would kind of be on the roof or roof or cell, And then how are you thinking about price? Yeah, Tim.

theme Weiss: Is there a way to maybe bridge some of the underlying assumptions on the 6% revenue growth. So.

theme Weiss: Really kind of interested in how much you're kind of baking in for the lapping of Destocking.

theme Weiss: What the underlying implied vol.

theme Weiss: Volume growth is you know what.

theme Weiss: What would kind of be on the roof route for sell through and then how are you thinking about pricing as well.

Speaker Change: So overall expecting CCM to be up about 6% in 2024, we have the destock benefit that's about a 11% benefit.

Team Wise: So overall, I'm expecting CCM to be up about 6% in 2024. We have the destock benefit, that's about a 11% benefit. And then pricing, we expect to be down really from the carryover from 2023, which is about two to 3%. And then the overall end market is also down about two to 3%. And then I guess on pricing.

Speaker Change: And then pricing, we expect to be down really from the carryover from 2023, which was about 2% to 3% and then the overall end market also down about 2% to 3%.

Speaker Change: Okay.

Speaker Change: Okay. Good.

Speaker Change: And then I guess.

Speaker Change: Yes on pricing.

Team Wise: Where do you think the industry kind of stands there? I guess we've heard mixed anecdotes around what kind of pricing stands. I'm just kind of curious how you'd see it. I mean, you said carryover price.

Speaker Change: Where do you think the industry kind of stands there I.

Speaker Change: I guess, we've heard mixed anecdotes around more kind of pricing stands and just kind of curious how you see I mean, you said carryover pricing, which I would assume that maybe things have stabilized, but just kind of curious on your comments on price.

Team Wise: I sort of assume that maybe things have stabilized. I'm curious about your comments on... Yeah, I think, Tim, we thought 2023, given the, you know, the significant sales declines, we thought pricing held up really well. Through most of the year, it fluctuated, but I would say it was stable.

Speaker Change: Yeah, I think Tim we thought 2023, given the you know the.

Speaker Change: Significant sales declines, we thought pricing held up really well.

Speaker Change: Through most of the year.

Speaker Change: <unk>, but I.

Speaker Change: I would say was stable.

Team Wise: When we look back, you know, we've got a couple components in there, too. We've got the core roofing, we've got the, you know, cam, we've got Europe, and we've got some mix. And so I think, overall, I'd characterize it as stable.

When we look back you know we've got a couple of components in there too we've got core roofing we've got.

Speaker Change: And we've got Europe, and we've got some mix and so I think overall I'd characterize it as stable and we go into.

Speaker Change: This year thinking it'll be pretty much the same thing as what Kevin was talking about with the 2% to 3%.

Team Wise: And we go into this year, I think it'll be pretty much the same thing. That's what Kevin's talking about with the 2 to 3%. But again, it's early, it's Q1, it's January.

But again, it's early it's Q1, it's January but I think.

Speaker Change: Definitely given all the declines last year I thought the pricing Delta there and maybe that gets to some of this pricing to value and the and what we're providing and others are providing.

Speaker Change: Okay. Okay. Good.

Speaker Change: And then just on.

Speaker Change: I guess re roofing.

Team Wise: But I think, you know, definitely given all the declines last year, I thought the pricing held in there. And, you know, maybe that gets to some of this pricing based on value and what we're providing and others are providing. Go to Beadaholique.com for all of your beading supply needs!

Speaker Change: How much visibility do you see you kind of walk into a year with on the re roofing side I'm just trying to kind of think through you know the ability of a building owner or a contract that kind of pushed out around.

Based on.

Speaker Change: Other dynamics, but how would you kind of think about kind of the underlying re roofing backlog and just your visibility to that is as you go into 'twenty four.

Team Wise: And then just on. I guess I'll be re-roofing. How much visibility do you kind of walk into a year with on the reroofing side? I'm just trying to kind of think through the ability of a building owner or a contractor to kind of push that around, you know, based on, you know, you know, other dynamics, but how would you think about kind of the underlying re-roofing backlog and just your visibility to that? Well, I think it's still, you know, there's a good backlog. Obviously, when new construction was going on there, we, you know, had some backlog. We've got the labor constraints. You know, we tend to look at a macro level. We've gone through the chart with, you know, looking back 20 years and what's coming due. We know we have our share of the market that when it is warranty, we also know when those roofs are coming due. We think that the average roof in the industry is a 20-year roof based on our warranties. I mean, there are longer warranties you can buy, but on average, about 20 years.

Speaker Change: Well I think it's still you know theres a theres a good backlog, obviously when new construction was cooking there we.

Speaker Change: Had some backlog we've got the labor constraints.

Speaker Change: You know we tend to look at a macro level. We've gone through the chart with you know looking back 20 years and what's coming due we know we have our share of the market. When it is warranty. We also know when those groups are coming due we think that the average route for the industry as a 20 year roof based upon our warranties I mean, there are longer warranties you can.

Speaker Change: But on average would be about 20 years. So we track all that I think the thing is you're talking about a very.

Speaker Change: A dispersed.

Speaker Change: You know.

Speaker Change: Demand palette as across each of our United States and this re roofing and you've got some things in there where you can patch and some people will repair and replace early others may delay.

Speaker Change: A variety of functions, but I think overall, we try to get a sense through.

Speaker Change: As you know we talked about two surveys we did last year with about 600 contractors talking about what was happening in their markets around the country and then obviously, Steve sure Frank Greg and their sales teams are are out there every day talking to them. So we think the visibility is pretty good I think those other things just create.

Team Wise: So we track all that. I think the thing is, you're talking about a very, dispersed, you know, Demand Palette across the entire United States of this re-roofing, and you've got some things in there where you can patch, and some people will repair and replace early, while others may delay a variety of functions.

Speaker Change: Some difficulty and pinning it down so as we go and as Kevin said, you know, we're looking at that 11% on the tailwind from Destocking and I think if we looked at the industry in general we're back at that mid single digits that we've been at historically the combination between re roofing or new construction.

Team Wise: But I think overall, we try to get a sense through surveys. You know, we talked about two surveys we did last year with about 600 contractors talking about what was happening in their markets around the country. And then obviously, Steve Schwer, Frank Grady, and their sales teams are out there every day talking to them. So we think the visibility is pretty good. I think those other things just create some difficulty in pinning it down.

Speaker Change: We think we're roofing is holding up well.

Speaker Change: Okay. So then just to confirm if if volumes should be down 2% to 3%.

Speaker Change: And then just based on your mix I mean, you probably have re roofing flat to up sell them and then new construction.

Speaker Change: Down in the high single digits or something like that yeah, Yeah, I think going into the year. That's how we're thinking about it a little pressure on new construction from interest rates.

Team Wise: So as we go in, as Kevin said, you know, we're looking at that 11% on the tailwind from the stocking. And I think if we looked at the industry in general, we're back at that mid-single digits that we've been at historically. You know, the combination between re-roofing and new construction, and we think re-roofing is holding up well. Okay, so then just to confirm, if volumes should be down two to three percent. And then just based on your mix, I mean, you probably have, you know, re-roofing, up some, and then new construction, down. Yeah, yeah, I think going into the year, that's how we're thinking about it, a little pressure on new construction for magistrates and, you know, the economy, and then re-roofing, picking that up with the backlogs. Yeah, exactly. Thanks for the time, guys. We'll talk soon. Yeah, you guys. Your next question comes from the line of Bryan Blair from Oppenheimer. Your line is now open.

Speaker Change: The economy, and then re roofing picking that up with the backlogs.

Speaker Change: Yes exactly.

Speaker Change: Awesome. Thanks for the time guys.

Speaker Change: You bet.

Speaker Change: Thanks, Tim.

Speaker Change: Your next question comes from the line of Bryan Blair from Oppenheimer. Your line is now open.

Bryan F. Blair: Yes, good afternoon, yes, nice finish to the year, Hey, Brad Thanks.

Bryan F. Blair: Thanks.

Bryan F. Blair:

Bryan F. Blair: Our guidance strikes us as a touch conservative, especially given the momentum you have.

Bryan F. Blair: Coming through Q4, and knowing the comps that you say aspect, it's early and bleeding some uncertainty to the to the upside is certainly fine.

Bryan F. Blair: But to level set on the framework.

Bryan F. Blair: And maybe walk us through how you're thinking about the cadence of sales.

Bryan F. Blair: And margins throughout the year and if you can speak to those dynamics by segment that would be extremely helpful.

Speaker Change: Yes, so let's start with sales in how we're looking at sales is really what our historical seasonality has been so if you go back pre COVID-19. The three year average on sales at CCM. The first quarter is typically about 20% of full year sales.

Bryan F. Blair: Thanks. Good afternoon, guys. Let's finish to the end. Hey, Bryan.

Bryan F. Blair: Thanks. Your guidance strikes us as a touch conservative, especially given the momentum you have coming through Q4 and knowing the comps that you face, but it's early and leads with some uncertainty to the upside. It's certainly fine.

Speaker Change: Then the second quarter is about 29%.

Speaker Change: Third quarter was 27%.

Speaker Change: Fourth quarter was 24% and those were to historical averages and we think 'twenty four is gonna be a more normal year and that's what we're expecting on the CCM side.

Bryan F. Blair: But the level set on the framework, and maybe walk us through thinking about the cadence of sales and margins throughout the year. And if you can speak to those dynamics by segment, that would be extremely helpful. Yeah, so let's start with sales, and how we're looking at sales is really what our historical seasonality has been. So if you go back before COVID, the three-year average for sales at CCM, the first quarter is typically about 20% of full year sales. Then the second quarter was about 29%, the third quarter was 27%, and the fourth quarter was 24%. And those were the historical averages.

Speaker Change: For CWT.

Speaker Change: They're pretty much the same on the quarterly the only difference is the first half of the year, where CWT historically has been a little bit stronger in the first quarter, so about 22% of sales.

Speaker Change: And then 27% of sales in the second quarter and then the second half of the year was the same as CCM.

Speaker Change: And then if you look at the EBITDA margins overall.

Speaker Change: Overall, we would expect.

Speaker Change: Really the Incrementals that we've talked about the drop through based on those sales numbers that C. C. M. It's about 40% Incrementals CW teas low to mid thirties, and the Incrementals only different set of all of that is the first quarter for CWT.

Bryan F. Blair: And we think 24 is going to be a more normal year, and that's what we're expecting on the CCM side. For CWT, they're pretty much the same on the quarterly basis. The only difference is the first half of the year, where CWT historically has been a little bit stronger in the first quarter. So about 22% of sales, and then 27% of sales in the second quarter. And then the second half of the year was about the same as CCM.

Speaker Change: That one just based on just how the numbers are playing out if you look at it CWT should increase a couple hundred basis points in Q1, so that that's one exception to what I just talked about and that improvement is really from the carryover of all the synergies that they picked up in 'twenty three.

Bryan F. Blair: Then if you look at the EBITDA margins, overall, we would expect the really the incrementals that we've talked about to drop through based on those sales numbers. At CCM, it's about 40% incrementals. CWT's low to mid-30s, and the only difference between all of that is the first quarter for CWT.

Speaker Change: Okay I appreciate the detailed answer helpful.

Speaker Change: How does the price cost shake out for C. C. N N CWC in 2023, and then what have you baked into.

Bryan F. Blair: That one, just based on just how the numbers are playing out, if you look at it, CWT should increase by a couple hundred basis points in Q1. So that's one exception to what I just talked about. And that improvement is really from the carryover of all the synergies that they picked up in 23.

Speaker Change: Guidance on that tranche and just running the simple math, we assume that all of us of growth is volume based and thinking about the normalized incrementals that you just referenced.

Speaker Change: The 50 basis points.

Bryan F. Blair: Okay, appreciate the detail there. That's very helpful. How did price and cost shake out for CCMN, and CWT in 2023? And then what have you baked into it?

Speaker Change: It seems to come exclusively from.

Speaker Change: From growth and that drops through.

Speaker Change: I suspect Chris cost remains a good guy for you guys coming into the year and it's certainly a.

Speaker Change: It typically a lever.

Speaker Change: For the Carlisle story, so just curious how youre thinking about that.

Bryan F. Blair: www.youtube.com.au The 50 basis points, you know, seems to come exclusively from, you know, growth and that drop-through. But I suspect price-cost remains a good guy for you guys coming into the year, and it certainly is. I'm just curious how you're thinking about that, but starting with, you know, how price costs should go. Yeah, for 2023, we had given a range in the third quarter, and we hit the top end of that range, where we came in for CCM at $80 million benefit. That's for the full year. CWT for the full year was a $40 million benefit.

Speaker Change: But starting with how are how price cost shook out of Alaska.

Speaker Change: Yes for 2023, we had given a range in the third quarter and we hit the top end of that range, where we came in for CCM 80 million benefit.

Speaker Change: That's for the full year CWT for the full year was $40 million benefit as we get into 2024.

Speaker Change: As you said, maybe a little other numbers. We're a conservative this is one where we're pretty much looking at price.

Bryan F. Blair: As we get into 2024... As you said, maybe a little of the numbers were conservative. This is one where we're pretty much looking at price rises to be flat for both segments. And that's offsetting that 2% price, 2% to 3% price down. So obviously, there's a benefit of the ROAS to make that a flat number. Okay, understood. Appreciate the clarification.

Speaker Change: <unk> to be flat for both segments.

Speaker Change: And that's upsetting that 2% right, 2% to 3% price down. So obviously, there's a benefit other raws to make that a flat number.

Speaker Change: Okay understood I appreciate the clarification.

Speaker Change: And then last one staying on the margin bridge, how much of a step up in R&D expense are you factoring in for this year, we know the 3% target kind of medium to long term.

Bryan F. Blair: And then that last one, staying on the margin bridge, how much of a step up in R&D expense are you factoring in for this year? We know the 3% target, you know, kind of medium to long term. How's that being phased in? And what's the near-term focus for the team? We've, you know, kind of come to the conclusion that, um, you know, a more evolutionary focus in terms of product development for the time being, and perhaps more revolutionary. Over time,

Speaker Change: How is that being phased in and.

Speaker Change: What's the near term focus for the team.

Speaker Change: Kind of come to the conclusion that it's.

Speaker Change:

Speaker Change: No more evolutionary focus in terms of product development for the time being and perhaps more revolutionary.

Speaker Change: Over time, yes.

Speaker Change: Curious about the same.

Speaker Change: Yes, so R&D expense overall is about 80 basis points as a percent of sales and we're looking to nearly double that in 2024.

Bryan F. Blair: Curious about the future. Yeah, so R&D expense overall is about 80 basis points as a percent of sales, and we're looking to nearly double that in 2024. Okay, I understand. Thank you. Yeah, thanks. Operator. Thank you. But everyone can hear the operator was dropped from the call.

Speaker Change: Okay I understand thanks, guys.

Speaker Change: Yes, Thanks, Brian.

Speaker Change: Operator.

Speaker Change: Yeah.

Thank you.

Speaker Change: Everyone can hear the operator was dropped from the call. So we are just waiting.

Speaker Change: Let's have the operator rejoin and then we will.

Speaker Change: Presume the questions.

Operator: So we're just waiting. I'd have the operator rejoin, and then we'll resume the questions. So, if you can hear, please be patient, and we will get this technical issue resolved momentarily. Thank you. Thank you. And your next question comes from the line of Sari, for you.

Speaker Change: So if you can hear please be patient and we will get this segment bill issue resolved momentarily. Thank you.

Thank you and your next question comes from the line of Savi <unk> from Jefferies. Please go ahead.

Sari: Hi, glad we got the technical issues fixed. So, I guess I want to talk a little bit about cash. You're about to receive almost $2 billion in proceeds, and you did a lot of share buybacks already, but what's the appetite this year for share repurchases? And then what are you seeing from an M&A pipeline perspective? And then, just ultimately, how are you thinking about the optimal capital structure for your business?

Speaker Change: Go ahead and other technical issues.

Sure.

Speaker Change: Yes.

Savi: A little bit about cash youre about to receive almost 2 billion in proceeds so just and you get a lot of share buybacks hi, Ravi.

Savi: This year for share repurchases and then what are you seeing from an M&A pipeline perspective, and then just ultimately how are you thinking about the optimal capital capital structure for your business.

Kevin: Yes, so from the cash, one piece we do have in 2024 is $400 million of debt coming due in the fourth quarter. So we'll use some of the cash there. We have dividends, that's about $160 million.

Ravi: Yes, so from the cash one piece, we do have in 2024 is $400 million of debt coming due in the fourth quarter. So we'll use some of the cash there.

Ravi: David and that's about $160 million and then at that point, we will.

Kevin: And then at that point, we'll invest in R&D and some of the capital expenditures. Capital expenditures, we put out $160 to $180. And then it comes down to sheer buybacks versus acquisitions. We've been doing about $400 million a year in sheer buybacks; we'd expect to do that. Plus, we're allocating right now about half of the CIT proceeds to put that also towards sheer buybacks this year. I can talk about the pipeline if you want. Did you want to ask any more about the share repurchases? We got you. You had three things there.

Ravi: And best in the R&D and some of the capital expenditures capital expenditures, we put out 160 to 180.

David: And then it comes down to share buybacks versus acquisitions, we've been doing about $400 million a year in share buybacks, we would expect to do that plus.

David: We're allocating right now is about a half of the proceeds to put that also towards share buybacks. This year.

Speaker Change: Thanks, you talk about the pipeline.

Speaker Change: Did you want to ask anymore about the share repurchases you had three things that I think maybe just pause and make sure you get everything you need to share repurchases.

Chris Koch: I think maybe we just pause and make sure you got everything you need on share repurchases. Nope, that's good. M&A pipeline next would be great. Thanks. Yeah, and then we'll get this optimal capital structure. Yeah, the M&A pipeline has been a little bit slow. You know, we are seeing deals. We'd like to see more.

Speaker Change: That's good M&A pipeline next would be great. Thanks.

Speaker Change: Yes.

Speaker Change: Then we'll get this optimal capital structure.

Speaker Change: Yes, the M&A the M&A pipeline has been a little bit I think all the way around slow.

Speaker Change: We.

Speaker Change: We are seeing deals we'd like to see more hopefully we.

Chris Koch: Hopefully, we'll see things free up a little bit more as spring gets here, interest rates change a little bit, but I think we're following kind of the same pattern you're seeing with everyone else, that just 23 was not, you know, a great year for M&A and probably not a great year for people selling their businesses. So we're still optimistic. There are things out there we can add to the building products portfolio and the envelope. I mean, as a reminder, as we said in Vision 2030, we're going to be really, we have some really specific hurdles for them.

Speaker Change: We see.

Speaker Change: Free up a little bit more as the spring gets here interest rates changed a little bit, but I think we're following kind of the same pattern, you're seeing with everyone else to just 23 was not.

Speaker Change: A great year for M&A, and probably not a great year for <unk>.

Speaker Change: For people selling their businesses. So we're still optimistic things out there we can add to the building products portfolio in the envelope I mean, as a reminder, and as we said in vision 2030, we're going to be.

Speaker Change: Really we have some really specific hurdles four of them.

Chris Koch: You know, we want to have an organic growth story within the asset that we're buying. We want to make sure that there are really hard synergies like we had with Henry, not just sales synergies and things that are hoped for, but real raw material savings and plant savings like we did with Henry. We want to have a really good management team.

Speaker Change: Organic growth story within the asset that we're buying we want to make sure that they are really hard synergies like we had with Henry not just sales synergies and things that are are hoped for but real raw material savings and plant savings like we did with Henry.

Speaker Change: We want to have a really good management team and this is the one that I think in the Henry acquisition has been the hardest in the past is to get that type of management team that we had coming in with Henry that just right off the bat picks up the integration playbook, which is number four.

Chris Koch: And this is the one that I think in the Henry acquisition has been the hardest in the past, to get that type of management team that we had coming in with Henry that just right off the bat picks up the integration playbook, which is number four. And then they run with it, and we get, you know, I don't know if you've heard recently, but the synergies we estimated at 30 million with the Henry deal have now exceeded 50 million. And a lot of that really is due to that great management team, that great integration playbook, and no pause once they were acquired. So when you layer those things on, I think we're a little bit more picky than most, but I think Henry is a great example of what we want to do with M&A. And I think there are more out there like that, just harder to find.

Speaker Change: And then they run with it and we get I don't know if you've heard recently, but the synergies we estimated a $30 million with the Henry deal now we've exceeded $50 million on a lot of that really is to that great management team that great integration playbook and no pause once they were acquired so when you layer those things on I think we're a little bit more.

Speaker Change: The most but.

Speaker Change: But I think Henry is a great example of what we want to do with M&A and I think there are more out there like that just started to slide and then Kevin I'll pick up on the capital structure capital structure. We're looking to have net debt to EBITDA in the range of one to two times.

Kevin: And then Kevin will pick up on the capital structure. Yeah, capital structure. We're looking to have net debt to EBITDA in the range of one to two times, and the times will flex above that if it's the right acquisition like we did with Henry, and then our plan is to pay that back within 18 to 24 months to get us back in that one to two times net debt debit ratio. And so I guess given where the M&A pipeline is, you talked about half of the proceeds for buybacks. So within your guidance, you have about $20 million of net interest expense, but given that you're expecting to hold on to some of those cash proceeds, should you not realize some interest income on that, and how do you think about earning interest income within your guidance?

Speaker Change: And at times, it looks likes above that if it's the right acquisition like we did with Henry and then our plan is to pay that back within 18 to 24 months to get us back in that one to two times.

Speaker Change: Net debt to EBITDA ratio.

Speaker Change: Yes.

Kevin: And I guess, given kind of the M&A pipeline is and you talked about half the proceeds for buybacks. So within your guidance you have about $20 million of net interest expense, but given that you're expecting to hold onto some of the cash proceeds.

Kevin: I realize in interest income on that and how do you think that range interest income within your guidance. Thanks.

Sari: Thanks. Yeah, so interest expense is around 70 million. And then, yeah, we have about 50 million of interest income. So 70 50, and then the next 20 million, Okay, thanks for the questions. All right. Thanks, Rui. Your next question comes from the line of Garik Shmois from Loop Capital. Your line is now open. Hi, great. Thanks for having me on.

Speaker Change: Yeah. So interest expense is around $70 million and then yes, we have about 50 million of interest income.

Speaker Change: 70, 50, and then Thats $20 million.

Speaker Change: Yes.

Speaker Change: Okay. Thanks for the question.

Speaker Change: Alright, Thanks Gerry.

Your next question comes from the line of Gary <unk> from Loop capital. Your line is now open.

Gary: Hi, great.

Gary: Thanks for having me on.

Gary: Just wondering.

Gary: If you could just speak to a little bit more of your view of the market.

Garik S. Shmois: I'm just wondering if you could just speak a little bit more of your view of the market, www.youtube.com or the link in the video description, to that market outlook, would it be more www.youtube.com or the link in the video description, or different around the market? Yeah, I think, Garik, the biggest thing for me is this idea that this interest rate environment that we've been facing in the economy, I mean, we're not unique in this idea that we're going into the year, and first we hear there are going to be three interest rate cuts. Okay, that's super positive. We like that. Then we hear no, we're going to pull back on that. I think Neil Kashkari came out in Minneapolis and said, maybe it's too soon to talk about that.

Gary: <unk> being down 2% to three points.

Gary: I appreciate that the view is that the repair side could be flat to slightly up.

Gary: And then new down high single good nature, So just curious.

Gary: Where are you seeing maybe some upside or downside risk to that market outlook would it be more.

Gary: Repair.

Gary: Versus view.

Gary: Or anything you could add ins J&J, how youre assessing.

Gary: This dosing will be variance around the market outlook.

Gary: Yes, I think the biggest thing for me is this idea that.

Gary: Of this interest rate environment.

Gary: Environment that we've been facing the economy, we're not unique in this idea that we're going into the year.

Gary: First we hear there is going to be three interest rate cuts. Okay. That's super positive. We like that then we here now we're going to pull back on that I think Neel Kashkari came at Minneapolis said and said maybe it's too soon to talk about that so we've got that we've got the economy that everybody's on pins and needles about with.

Chris Koch: So we've got that. We've got the economy that everybody's on pins and needles about with, you know, obviously employment and other things like that. So I think as we sit here, the hard thing for us to do is to be sitting in January, which is, you know, in the first quarter, our lightest, as Kevin mentioned, 20% of overall sales, and trying to forecast that with the real construction season going to be in the spring and summer. So right now, you know, we're saying, as we did in the 2030 video, that things are relatively stable, and they're moving along as we expect And so we're kind of looking at historical averages, we're looking at what we get from the market, what our sales teams are telling us, what we're seeing in the project pipeline. We also get things like the Dodge Report.

Gary: Obviously employment and other things like that so I think as we sit here the the hard thing for us to do is to be sitting in January which as you know in the first quarter, our lightest as Kevin mentioned, 20% of overall sales.

In trying to forecast out what the real construction season is going to be in the spring and summer so right now.

Gary: We're saying as we did.

Gary: On the 2030 video.

Gary: Things are relatively stable and theyre moving along as we expect.

Gary: And so we're kind of looking at historical averages were looking at what we get from the market. What our sales teams are telling us what we're seeing and project pipeline. We also get the things like Dodge before we actually read your reports when you do your surveys and your pulse checks and those kind of things that take into account. So I think the biggest thing for us is just.

Chris Koch: We actually read your reports, you know, when you do your surveys and your pulse checks and those kind of things and take all that into account. So I think the biggest thing for us is just that it all feels optimistic right now, and we like that. But when we get down to granularity, what could the economy be the biggest variable?

Gary: It all feels optimistic right now and we like that but when we get down the granularity and looking at the economy would be the biggest variable and then when we look at specifically into some of the verticals.

Chris Koch: And then we look specifically at some of the verticals. And when you look at 24, you know, we see that continued pressure on warehouses specifically. If I had to call out one that seems to be the biggest decliner, it would probably be warehouses. I think Dodge has it somewhere in the high teens or low 20s forecast for 24.

Gary: And when you look at 'twenty four.

Gary: We see that continued I would say pressure on warehouses, specifically, if I had to call out one that seems to be the biggest decliner, we'd probably be warehouses I think Dodge has it somewhere in the high teens low twenty's forecast for 24.

Chris Koch: You know, education looks pretty good. Retail stores, health care, we still think there's a trend there. And it seems to be happening with an aging population that we'll see more long-term care. Medical care seems to be good.

Gary: Education looks pretty good retail stores health care, we still think Theres a trend there and it seems to be happening with an aging population that we'll see more long term care medical seems to be go there seems to be a lot of money in medical and then we get the re shoring of manufacturing, which thank God, you estimated with somewhere around 8%.

Chris Koch: There seems to be a lot of money in healthcare. And then we get the reshoring of manufacturing, which I think Dodge estimated was somewhere around 8% in the, you know, in 23. And then I think the last one really is the office buildings, and we don't deal in the tall buildings that we had in the city cores, and there was a lot of distress there with the work from home. But, you know, we're more in the low 3, 4 story buildings, and we think that's good. Suburban office buildings have been pretty good so far.

Gary: In the.

Gary: In 2003.

Gary: And then I think the last one really is the office buildings, we don't deal on the tall buildings.

Gary: We had citicorp.

Gary: There was a lot of <unk>.

Gary: Stress there with the work from home.

Gary: But we're more in the low three <unk>.

Three buildings, and we think thats, good and suburban office buildings have been pretty good. So that's kind of how we see the verticals and then I think we just layer in the re roofing on top of that and obviously thats a little bit less <unk>.

Chris Koch: So that's kind of how we see the verticals. And then I think we just layer in the new roofing on top of that. And obviously, that's a little bit less vertically dependent and more dependent on the age of the roof.

Gary: Vertical dependent and more dependent on the age of the roof.

Garik S. Shmois: So, again, optimistic about 24. I think specifically, if we continue to see the economy perform as it is, and we do get a couple of cuts, it could be a pretty good year going forward, especially with the fact that I would say that there's been, you know, we had to be stocking. We haven't really had, in this winter period, a return to restocking, which typically, back, you know, four or five years ago before COVID, there was always a load in in the spring, in the March-April time frame. So there may be some of that too if the economy turns around and things look good. Yeah, thanks for all that. I appreciate the plug.

Gary: So again optimistic about 24, I think specifically if we are continue to see the economy for them as it is and we do get a couple of cuts it could be.

Gary: Pretty good youre going forward, especially with the fact that I would say that there has been.

Gary: We had the destocking, but we haven't really had in this winter period, a return to restocking, which typically back.

Gary: Four or five years ago before Covid, there was always a load in in the spring in the March April timeframe. So there may be some some of that too.

Gary: If the economy turns around and things like that.

Speaker Change: Well, thanks for all that and I appreciate the plug.

Garik S. Shmois: Um, I guess the follow-up question is just on CWP. Maybe, you know, similar, you touched on some of these things in your prior answer, but coming down to 3Q, you specifically indicated that there were some more projects, and CWT, and certainly there's more on the commercial side than residential, but just curious, has that, you know, maybe pacing continued, or, you know, maybe from the sounds of it, you're seeing some stabilization. The Bulletproof Executive 2013, addressed some of those project delays in CWT and what occurred in the forecast. Yeah, take Eric Smigel here. I'll take that one.

Speaker Change: Follow up question is just on CWT, maybe similarly, you touched on some of these things.

Speaker Change: The prior answer but coming out of the three Q, specifically indicated that there were some more project delays than you anticipated.

Speaker Change: CWT shortly is more on the commercial side and residential but just curious.

Speaker Change: Maybe pacing continued or maybe from the sounds of it youre seeing some stabilization, but just wondering if you could address some of those project delays and CWT.

Speaker Change: What occurred in the fourth quarter.

Speaker Change: Yeah, Hey, Gary Nagle here I'll take that one so overall to your point 2023 was very challenging given the dynamic nature of the macro environment impacted the <unk>.

Eric Smigel: So overall, to your point, 2023 was very challenging, given the dynamic nature of the macro environment. That's what impacted the project delays in 2023. The way we see it now, it's basically stabilized. I think, more or less, the economy is kind of what it is around higher interest rates and what's going on with non-residential. So I characterize it as being stable. And then overall, on the CWT side, specifically on the commercial side, we're mainly focused on institutions, medical, education, and government. So those tend to be a little bit more stable as well. Thanks for that. Thanks, Garik. Your next question comes from the line of David McGregor from Longbow Research. Yes, good afternoon.

Gary Nagle: Project delays in 2023, the way we see it now it's basically stabilized maybe more or less the economy is kind of what it is around higher interest rates and what's going on with nonresidential.

Gary Nagle: Characterize it as being stable and overall on the.

Gary Nagle: CWT side, specifically on the commercial side, we're mainly focused around the institutions medical education and government. So those tend to be a little bit more stable as well.

Speaker Change: Understood Thanks for that and I'll pass it on.

Speaker Change: Thanks Garik.

Speaker Change: Your next question comes from the line of David Macgregor from Longbow Research. Your line is now open.

David McGregor: And thanks for taking my questions. I'll start off with a quick one. Hey, Any sense of what benefit the extended days in December may have? Yeah, we think it picked up probably about two days of positive weather. Secondly, I wanted to ask you about market share and CCM. Clearly, during the pandemic, you guys want to share. And so I guess the question is: If the market is stabilizing now, how do you defend that share now that, you know, they want it back, and they're likely prepared to use price? And then, maybe within the context of the answer, you can just talk about what you think.

David Macgregor: Yes, good afternoon, and thanks for taking my questions.

David Macgregor: A quick one.

David Macgregor: Hey, Chris.

Any sense of.

David Macgregor: What benefit.

Extended days in December may have represented this quarter.

Chris Koch: Yes, we think it picked up probably about two days of positive weather.

Chris Koch: Okay.

Chris Koch: Today's.

Speaker Change: Secondly, I wanted to ask you about market share in CCM clearly during the pandemic you guys won share and so I guess the question is.

Speaker Change: If the market is stabilizing how do you defend that share now.

Speaker Change: Wanted back and Theyre likely prepared use price to get it and then maybe within the <unk>.

Speaker Change: So to answer you can just talk about what you're expecting in terms of CCM market share in 2024.

David McGregor: PCM Marketing. Yeah, I think for market share, I don't know, I don't want to get into a fight, but I would say that during COVID, I would say there were a couple of phases to it. And maybe in the first phase, when we came out, if you might recall, we had actually built inventory going into COVID when others were declining, and when we came out, we captured a lot of share. So, you know, there was demand, we had it; others weren't able to provide. And that was part of, you know, attributed to our belief that the Carlyle experience provided a lot of value to our contractors: right place, right product, right time, right. So we picked up a share then. Then we did get through, and that was the time, went on.

Speaker Change: Yes, I think for market share I don't know I don't want to get contentious I would say that during COVID-19 I would say there were a couple of phases to it and maybe in the first phase when we came out if you might recall, we had actually built inventory going into COVID-19 when others are declining and when we came out we captured a lot of share so.

Speaker Change: There was demand we had at others weren't able to provide and that was attributed to our belief that the Carlisle experience, providing a lot of value to our contracts in the right place right product right time right. So we picked up share then than we did get through and as the time line.

Chris Koch: We had others that implemented different types of techniques to get out into the market and sell things. They handled their approach to direct sales contractors differently, or they, you know, funded distribution in a different way. And I think you're right, as we chose a path under, I think we call it, our MSP program, we made some decisions. And one decision was that we felt it was better to, I would say, be more democratic in our approach to funding distributors. We didn't put all the eggs with the biggest distributors or contractors.

Speaker Change: Went on.

Speaker Change: We had others implemented different types of techniques to get out into the market and to sell things.

Speaker Change: They handle their approach to direct sales to contract or maybe different or are they.

Speaker Change: Funded distribution in a different way and I think youre right as we.

Speaker Change: Chose a path under I think we call. It our MSP program. We made some decisions. One decision was we felt it was better to.

Speaker Change: I would say be more democratic and our approach to funding distributors. We didn't put all the eggs was the biggest distributors a contract because we made sure that all of our longstanding customers got a little bit so that everybody can survive. So we may have suffered a little bit there and then I think there was some pricing as we came out into 'twenty three.

Chris Koch: We made sure that all of our longstanding customers got a little bit so that everybody could survive. So we may have suffered a little bit there. And then I think there was some pricing as we came out into 23, some attempts to gain share through that in the first quarter or the first, you know, quarter of the year, which exacerbated the destocking, but ultimately, as we've already touched on, it was a very stable year for pricing, so things came back. And so really, when I look at the time I'd been at, you know, COO to now, 2014 to 24, I There's ebbs and flows, you know, and each segment is very specific. PPO is different than EPDM, and EPDM is different than PVC.

Speaker Change: Some attempts to.

Speaker Change: To gain share through that in the first quarter or the first quarter of the year, which exacerbated the destocking, but ultimately things guide as we've already touched on it was very stable year for pricing. Some things came back and so really when I look at the time I've been at Cielo to now 2014 to 24.

Speaker Change: I would say that overall market shares have remained relatively stable theres ebbs and flows.

Speaker Change: Each segue.

Speaker Change: Segment is very.

Speaker Change: Specific team feels different than <unk> in PBC, but but on the whole I think one of the reasons. It stays relatively stable for US is our great network of architects specifications distributors and then this warranty.

Chris Koch: But on the whole, I think one of the reasons it stays relatively stable for us is our great network of architect specifications, distributors, and then this warranty, and specifying these things and viewing the whole thing as a system, which is what Mahal talks a lot about with Henry as well, and this idea that we're having a specified system. So, I don't think 24 will be any different.

Speaker Change: Instead of saying these things and viewing the whole thing is a system, which is what my whole talks a lot about with Henry as well no.

Speaker Change: Idea that we're having a specified system. So I don't think 24 will be any different I think 24 will probably play out.

David McGregor: I think 24 will probably play out in a similar way, and market share will be relatively consistent around the big buckets of our business. You know, the three roofing membranes, the insulation, so the accessories, adhesives, and seals and that. Thank you for that. And then the last question I have for you is just with regard to the backlog that you referenced in your prepared remarks. Can you size that roofing backlog for us? And what would it normally be? To what extent are you above normalized?

Speaker Change: A similar way of market share will be relatively consistent are the big buckets of our business you know the three roofing membranes. The installation so that accessories adhesives and sealants of that.

Speaker Change: Great. Thank you for that.

Speaker Change: And then last question I had for you was just with regard to the backlog that you referenced in your prepared remarks can you size that roofing backlog for us in what would normally be to what extent are you above normalized levels.

David McGregor: And how how are you thinking about the burden rate on that? I guess I don't want to share too much, and I would go back to maybe more of a public figure, and I think it's ABI, I think, has ABC, sorry, Contractor, so that 8.6 that Kevin references is pretty similar to what we've seen for the last few years, 9.1 I think was there for a while, I don't think it's really dipped below 8.5, so I think backlog has Thanks very much. You bet! Thank you. Your next question comes from the line of Adam Baumgarten from Zeldman. Your line is, Hey, good afternoon. Just looking at the margin, the margin expanding overall by 50 bps, is that a bit more weighted or higher than the total company at CWT given the stronger starters, or relatively balanced across both businesses for the year? That's relatively balanced across both CCM and CWT. Okay, I got it. And then just a couple of others.

Speaker Change: How are you thinking about apparel I think right on that.

And I guess without I don't want to share too much and I would go back and maybe more of a public figure and I think it's Abi Thank has MVC commentary.

Speaker Change: Trickier Bank six so thats that eight six that Kevin referenced is pretty similar to what we've seen for the last year's nine one I think was there for a while I don't think its really dipped below eight five so I think backlog has remained relatively consistent which is kind of what we talked about with labor constraints that.

Speaker Change: People are putting roussin, but there is a healthy backlog of demand there.

Speaker Change: Got it thanks very much.

Speaker Change: You bet. Thank you.

Speaker Change: Your next question comes from the line of Adam Baumgarten from Zelman. Your line is now open.

Adam Michael Baumgarten: Hey, good afternoon, just looking at the margin guidance.

Adam Michael Baumgarten: The EBITDA margin expanding overall 50 bps is that a bit more weighted or higher than the total company at CWC given the stronger start or is it relatively balanced across both businesses for the year.

Adam Michael Baumgarten: That's relatively balanced across both CCM and CWT.

Speaker Change: Okay got it.

Adam Michael Baumgarten: One, you mentioned the positive weather and 4Q just a moment ago. Was weather a headwind perhaps in January? And then also just on CapEx, you know, kind of coming up a good amount. And then you guys noted some growth investments. Can you give maybe some more specifics on where you're spending that incremental CapEx? Yeah, CapEx is going to be a couple key areas. One, R&D; we're going to continue to invest in innovation and expansion there. We certainly have with COS; there's always cost reduction programs, whether it's through automation and those types of investments.

Speaker Change: And then just a couple of others. One you mentioned the positive weather.

<unk> just a moment ago was weather headwind perhaps in January.

Speaker Change: And then also just on Capex kind of coming up with a good amount.

Speaker Change: Noted some growth investments.

Speaker Change: Can you give maybe some more specifics on where youre spending that incremental capex.

Speaker Change: Yes, the Capex is going to be a couple of key areas. One the R&D, we're going to continue to invest in innovation and doing expansion there.

Speaker Change: Have certainly would pass there's always cost reduction programs, whether it's through automation and those types of investments and we also for future growth there will be some capacity not new lines or anything like that but additional investments that will enhance some of our growth.

Adam Michael Baumgarten: And we also for future growth, there will be some capacity, not new lines or anything like that, but additional investments that will enhance some of our growth overall. Okay, I just thought of the January weather if that was anything notable. Uh, not really, I would say, not that we've heard from the division. I think one thing is this rain in California and this atmospheric river that they talk about.

Speaker Change: Overall.

Speaker Change: Okay and just on the January weather, if that was anything notable.

Speaker Change: Not really I would say that we've heard from the division I think one thing is this rain in California.

Speaker Change: And the SaaS atmospheric river that they talk about I know, Frank and the C WT team.

Adam Michael Baumgarten: I know Frank and the CWT team do a lot there on the retail side. Once those kind of things hit, obviously leaks appear and things like that, and that tends to be something that gets stocked up. So it probably will have more of an impact here as we get into February a little bit further.

Do a lot there on the retail side.

Speaker Change: Once those kind of things hit obviously leaks and things like that and that tends to be something that gets stocked up so probably would have more of an impact here as we get into February.

Adam Michael Baumgarten: Thanks. Yep. There are no further questions at this time. Thanks, operator. Well, that concludes our fourth quarter 23 conference call. I appreciate all the questions and the interest and look forward to talking to everyone soon. Thanks very much. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation.

Speaker Change: Further.

Speaker Change: Got it thanks.

Speaker Change: Yes.

Speaker Change: There are no further questions at this time please continue.

Speaker Change: Thanks, Operator that concludes our fourth quarter 23 conference call I appreciate all the questions and the interest and we look forward to talking to everyone. Soon thanks very much.

Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: Okay.

Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Thank you David.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Okay.

Okay.

Speaker Change: Thanks.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].