Q1 2025 Carlisle Companies Inc Earnings Call
John: Good afternoon, my name is John and I will be your operator for today. At this time, I would like to welcome everyone to Carlisle Companies' first quarter 2025 earnings conference call.
John: All lines have been placed on mute to prevent any background noise. After the speakers remarks we will conduct a question and answer session.
Speaker Change: I would like to turn the call over to Mr. Mehul Patel, Carlisle's Vice-President of Investor Relations, Mehul, please go ahead
Speaker Change: We released our first quarter 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.
Speaker Change: On the call with me today are Chris Koch, our board chair president and CEO , along with Kevin Zdimal, our CFO . Today's call will begin with Chris providing key highlights of our first quarter.
Kevin Zdimal: Kevin will follow Chris with an overview of our Q1 financial performance and a reaffirmed Outlook for 2020-25
Kevin Zdimal: Following our prepared remarks, we will open up the line for questions. Before we begin, please refer to slide two of our presentation, where we note that comments today will include forward-looking statements based on our current expectations.
Kevin Zdimal: Actual results could defer materially from these statements due to a number of risks and uncertainties which are discussed in our press release and SEC filings.
Kevin Zdimal: As Carlisle provides a non-GAAP financial information, we provided reconciliation between gap and non-GAAP measures in a press release and in appendix of our presentation materials which are available on our website. With that, I will turn the call over to Chris.
Chris Koch: Thank you Mahole, good afternoon, everyone, and thank you for joining us today.
Chris Koch: Starting with slide three of the presentation where we highlight our first quarter performance in progress I'm pleased to report that the Carlisle team shows superb perseverance in driving our key initiatives in the first quarter of 2025 overcoming significant challenges and post election turmoil to deliver solid results. I'm pleased to report that the Carlisle team shows superb perseverance in driving our key initiatives in the first quarter
Chris Koch: The first quarter of challenges included the continued weakness in the residential construction markets, the negative impact of this winter's weather, especially in January and February , and the significant economic uncertainty and instability created by the ongoing US tariff actions.
Revenue with $1.1 billion was essentially flat year-over-year
Chris Koch: Fortunately, improved weather conditions in March and healthy re-roofing activity helped to offset much of the unfavorable impact experienced in those first two months.
Chris Koch: And our CCM segment, in addition to the strong re-roofing activity, Carlisle also benefited from our 2024 MTL acquisition.
Chris Koch: Both of these factors help offset softer conditions in the new commercial construction activity, challenging prior year weather comps.
Chris Koch: and as anticipated, low single digit price declines in CCM. The ongoing strength in re-roofing demand, which represents 70% of CCM's commercial business, continues to be a key driver of our resilient performance helping to offset the more negative macro environment.
Chris Koch: For CWT we continue to face headwinds in residential and markets due to buyer uncertainty, affordability challenges, higher interest rates, and lower housing turnover.
Chris Koch: As we've discussed previously, these residential market challenges were largely anticipated, impacted most market participants and are well understood.
Chris Koch: While we are optimistic that the underlying drivers of the residential and markets will ultimately bring significant growth and margin expansion in our CWT business, for now we will continue to focus on areas in our control.
Chris Koch: We are making progress on many of our key investments in seeing gains in areas such as new product introductions and factory automation within CWT.
Chris Koch: These efforts are expected to provide $3 to $4 million of incremental adjusted EBITDA per quarter starting this quarter, along with ShareGain initiatives.
Chris Koch: When we look at pricing across both CCM and CWT, we experience modest declines as expected during the quarter with low single digit price declines in both CCM and CWT.
Chris Koch: Based on the announced price increases and the start of the summer season, contractor expectations are that price increases will gain traction in the second quarter, and we expect year-over-year pricing to be neutral for both CCM and CWT in the second quarter.
Turning to the much-discussed subject of tariffs.
Chris Koch: As we alluded to in the Q4 2024 earnings call, over 90% of our raw materials are sourced within North America.
Chris Koch: Additionally, many of our materials that are sourced from Mexico and Canada are covered by USMCA
Chris Koch: Because of Carlisle's predominantly North American sourcing position, we currently expect a negligible direct impact from tariffs in 2025.
Turning to the indirect impact of tariffs.
Chris Koch: The indirect impact is much more difficult to quantify and forecast due to the complexity and many moving parts involved. Nonetheless, the current indirect impact of tariffs is minor for Carlisle overall and should remain so for the rest of 2025.
Chris Koch: While the impact from tariffs both direct and indirect may be limited, we do remain concerned that there may be unforeseen indirect consequences of the tariffs for our contractors.
Distributors and Suppliers
Chris Koch: Along with the increased potential for a U.S. recession, the longer these conditions remain unresolved
Chris Koch: and businesses remain uncertain about the future. Nonetheless, we have increased conviction in our well-understood drivers to our businesses and our market intelligence, and we remain committed to our 2025 outlook.
Chris Koch: Additionally, pricing in our non-rezy markets is showing signs of traction and our survey participants expect pricing to improve as the year progresses.
Chris Koch: Consistent with what we experienced starting in the second quarter of 2024, 2025 fully-year residential volumes are expected to be down low single digits due to the continued negative impact of buyer uncertainty, affordability challenges, higher interest rates, and lower housing turnover.
Chris Koch: Comments also suggest that inventory on the channel remains low by historical comparisons due to higher curing costs and economic uncertainty.
Chris Koch: During the quarter, we maintained our commitment to returning capital to our shareholders, repurchasing $1.2 million shares for $400 million, bringing the total share repurchases since 2017 to $5 billion.
Chris Koch: Additionally, following the $1.6 billion in share repurchases in 2024, we now expect to deploy approximately $1 billion into share repurchases in 2025, an increase over our original projected to share repurchases of $800 million [inaudible]
Chris Koch: As a reminder, we also increased our dividend by 17.6% last August , our 48th consecutive year of increasing our dividends to our shareholders.
Chris Koch: These actions underscore our confidence in Carlisle's future growth prospects and our ability to generate significant free cash flow.
Chris Koch: Additionally, we will continue to allocate capital towards strategic M&A to enhance our leadership position within the building envelope. Invest in our key strategic initiatives and invest in significant capital expenditures to support growth, innovation, and further operating efficiencies.
Touching on M&A for a moment.
Our acquisition of MTL continues to exceed our expectations
Chris Koch: Approximately 5.9 million buildings exist in the United States according to the 2018 Commercial Buildings Energy Consumption Survey
Chris Koch: Of those, roughly 70% of U.S. non-residential buildings are now over 25 years old and represent a significant pool of potential buildings requiring re-roofing activity.
Chris Koch: This pool of potential re-roofing demand creates a consistent and somewhat predictable demand pattern. That demand pattern is demonstrated in CCM sales data from 2008 to 2025.
Speaker Change: It is extremely important to remember and I want to emphasize that Carlisle is an imperative business with a leading market share position in North America and what we believe is the world's best market for building products.
Speaker Change: Buildings over 35 years old are 55% of the building footprint in the US and require their second or often third group replacement.
Speaker Change: And as the 30% of buildings under 25 years old steadily roll into our addressable re-roofing market they reinforce the expanding pipeline of recurring revenue for decades to come.
This increased content is driven by several factors.
Speaker Change: Stricter Building Codes, Increasing Energy Efficiency Regulations, More Severe Weather Offence, Leading to Higher Specification Rooms, and the Growing Adoption of 20-Year Warranties, which require more comprehensive systems and materials.
Speaker Change: This trend of increasing content per square foot is not new to Carlisle. In fact, it is directly aligned with one of our key pillars of our Vision 2030 strategy, innovation.
Speaker Change: These products are then designed to create value for our customers. This results in creating a preference for Carlisle's products and solutions and allows us to price to that value and increase the dollar content per square foot when compared to existing products.
Speaker Change: The ability to better address customer needs and wants in turn enables Carl out to capture a greater share of wallet and deliver superior margins.
Speaker Change: Our comprehensive warranties further enhance our ability to drive content growth. Perlal warranties are a highly valued benefit desired by building owners who prefer complete system solutions rather than individual components.
Speaker Change: By developing products that deliver superior energy efficiency, require less labor to install and enable us to sell more value added solutions per square foot, we're directly addressing the key needs of building owners and contractors while driving our own growth and profitability.
Turning to slide 6
Speaker Change: We remain committed to accelerating our innovation efforts to deliver margin-enhancing, energy efficient and labor-saving solutions for our customers.
Speaker Change: We continue to focus our Innovation Pipeline on three key areas.
Speaker Change: Evolutionary improvements to existing products, transformational new solutions, and business life cycle innovations that enhance efficiency and reduce costs.
Speaker Change: Our product development efforts are yielding positive results across both CCM and CWT segments with new products gaining traction in the market.
Speaker Change: In prior calls, we've highlighted several recent product introductions, including Seamshield, Blue Skin VP Tech, and Ultra Touch. All three rollouts are resonating with customers, responding to their VOC stated needs, meeting our price-to-value objectives, and our margin-accretive to our portfolio.
Speaker Change: As we continue to work with customers to grow our pipeline of innovation opportunities, we remain disciplined in our approach.
Speaker Change: Our rigorous underwriting process ensures that every R&D investment is aligned with our financial and strategic objectives to drive profitable growth and maximize returns.
Speaker Change: And with that, I'll turn it over to Kevin to provide additional financial details and color on our outlook for 2025. Kevin? Thank you, Chris. Starting with Slide 7, I'll review our first quarter 2025 financial results.
Kevin Zdimal: In the first quarter, we delivered revenue of $1.1 billion, essentially flat compared to the first quarter of 2024.
Kevin Zdimal: Un favorable weather in 2025 compared to favorable weather in 2024 as well as lower pricing in the first quarter from carry over pricing from 2024.
Kevin Zdimal: Adjusted EBITDA margin for the quarter was 21.8%, down 240 basis points from the first quarter of 2024.
Kevin Zdimal: Adjusted EPS was $3.61, a 3% decrease from the prior year. The margin and EPS decline was due to a combination of lower volume and the quarter, negative price cost, and investments in the business.
Kevin Zdimal: Turning to our segment performance, starting with CCM on slide 8, first quarter revenues were $799 million, up 2% year over year. The contribution from MTL was partially offset by a 1% decline in organic revenue.
Kevin Zdimal: Revenue in the quarter was supported by recurring, re-roofing activity and customers accelerating approximately $15 million of orders to get ahead of anticipated, tariff-related price increases.
Kevin Zdimal: CCM's adjusted EBITDA was $217 million, down 5% compared to the first quarter of 2024 with an adjusted EBITDA margin of 27.1%.
A decrease of 180 basis points year-over-year [inaudible]
Kevin Zdimal: This margin compression was primarily due to lower-cury overpricing and targeted investments in innovation and enhancement to the Carlisle experience. However, we continue to realize synergies from the MTL acquisition which partially offset
Kevin Zdimal: Moving to Slide 9 and our CWT segment, first quarter revenues were $297 million, down 5% compared to the prior year, with organic revenue declining by 12%.
Kevin Zdimal: CWT's adjusted EBITDA was $46 million, down 28% year-over-year with an adjusted EBITDA margin of 15.6%, a decrease of 510 basis points.
Kevin Zdimal: They should deliver benefits starting in a second quarter and accelerate into the second half of 2025 positioning CWT for improved performance going forward. Slide 10 provides our first quarter 2025 adjusted EPS bridge for your reference.
Kevin Zdimal: We ended a quarter with $220 million in cash and $1 billion of Al Woll under our Revolving Credit Facility. The strong liquidity position provides us with ample flexibility to continue investing in our businesses while also returning capital to shareholders.
Kevin Zdimal: We maintain a balanced debt maturity schedule with a weighted average interest rate at 2.9% and a weighted average maturity of 4.8 years.
Kevin Zdimal: Our EBITDA to interest ratio stands at 19.5 times, reflecting our strong cash flow generation and modest debt levels.
Turning to Slide 12 and our Casual Performance
Kevin Zdimal: The first quarter is typically our lightest cash generating quarter, as we pay down liabilities that grow throughout the year, like accrued customer rebates and employee incentive compensation, and we temporarily deploy more cash into working capital to prepare for the construction season.
Kevin Zdimal: Cash generation this year was lighter than usual due to first quarter payments for higher year-end liabilities, as well as the dynamics of the first quarter shipping pattern.
Kevin Zdimal: This will correct itself in the second quarter. We expect to generate full-year free cash flow of approximately $1 billion for 2025, providing us with the financial flexibility to pursue our balanced capital deployment strategy. [inaudible]
Kevin Zdimal: While we continue to monitor the potential impacts of terrorists, interest rate movements, and consumer behavior, we remain focused on executing Vision 2030 and delivering on our full-year guidance.
Kevin Zdimal: For CCM, we expect mid-single-digit revenue growth driven by continued strength and re-roofing activity and the full-year benefit from the MTL acquisition.
Kevin Zdimal: We anticipate expanding margins through price increases, volume leverage, and operationally efficiencies through the car law operating system.
Kevin Zdimal: The second quarter for CCM will reflect a negative impact of the estimated 15 million of revenue that positively impacted the first quarter from accelerated purchases ahead of anticipated tariff-related price increases.
Kevin Zdimal: For CWT, we expect high single-digit revenue growth, primarily driven by share gains and the full year impact of the PLACIFAB and Thermophone acquisitions.
Kevin Zdimal: We anticipate margin improvements from acquisition synergies and the continued focus on the Carlisle operating system, including the automation initiatives that we mentioned earlier.
Kevin Zdimal: We expect total corporate and unallocated expenses of approximately $110 million for the full year.
Kevin Zdimal: Capital expenditures are projected to be approximately $150 million, with depreciation and amortization of around $200 million, and that interest expense of approximately $50 million.
Kevin Zdimal: Overall, we remain on track to deliver record-adjusted EPS for the full year 2025 with growth expected to exceed 10% year-over-year.
and free cash flow margin above 15%.
Kevin Zdimal: Moving to Slide 14, I want to emphasize that our Vision 2030 adjusted EPS target of $40 plus remains firmly on track.
Kevin Zdimal: We have multiple paths to achieve an adjusted EPS Girl 3 in the mid-teens through 2030. Back by our target, organic revenue cater of over 5%, consistent free cash flow margin above 15% and discipline capital deployment.
Kevin Zdimal: Based on our Vision 2030 financial targets introduced in late 2023, we expect to generate cumulative free cash flow of more than $6 billion through 2030.
Kevin Zdimal: This provides significant flexibility for Saree purchases and a creative M&A representing a combination of organic and energetic paths to achieve our EPS target.
Kevin Zdimal: We have a proven track record of effectively deploying capital to drive shareholder value.
Kevin Zdimal: as evidenced by a robust year repurchase program and successful M&A playbook. In summary, while the first quarter presented some weather and market related challenges, our underlying business fundamentals remain strong. We're confident and our ability to navigate the current market environment and continue delivering solid results for our shareholders in 2025 and beyond.
Chris Koch: With that, I'll turn a call back to Chris for closing remarks.
Chris Koch: Thank you, Kevin. In conclusion, we remain confident in our full-year outlook and our progress towards our Vision 2030 goal of $40 of EPS and exceeding 25% ROIC.
Speaker Change: I would once again like to take this opportunity to thank all of our Carlisle employees for their exceptional efforts and perseverance throughout this complex quarter. Your dedication has been instrumental in delivering resilient results. Thank you very much.
Speaker Change: And thank you to all of you who are listening as well for your continued support and interesting Carlisle. That concludes our formal comments, operator, we are now ready for questions.
Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question? Please press star followed by the number one on your touchstone phone. You will hear a prompt if your hand has been raised.
Speaker Change: Should you wish to decline from the polling process, please press star followed by the number two.
Speaker Change: If you're using a speaker phone, please leave the handset before pressing any keys
One moment please for your first question
Speaker Change: Your first question comes from the line of theme edges from Beard, the line is now open
Thank you.
Speaker Change: Hey guys, good afternoon. Good afternoon. Hey, maybe just, you know, kind of kind of first on maybe the volume cadence.
Kevin Zdimal.
Speaker Change: Hey, Tim. Thanks. Interesting question. We had our car lawn market survey. We've tried to publish as much as we could about that to let you know what's happening there. I think we look at that. There's a good tone out the market of optimism despite what we. Thank you.
Speaker Change: Pretty optimistic, and the volumes seem to be building when I was just in with about 125 contractors.
Speaker Change: You know, Optimus Thieropp, Less Optimus about that, but I think we know the reasons why there, but the regrouping is strong.
Speaker Change: Well, yet in January and February started slow. Those were both challenged by weather was the biggest challenge in both those months but then once we got the march it really picked up. Part of that was making up for some of that weather.
Speaker Change: Days that were lost in the first couple of months of the year so that picked up in March and it continues in April . We're seeing favorable order patterns as we are three weeks into the second quarter so that's been favorable.
Speaker Change: Okay, and then I guess just on the cost basket has anything changed in terms of the composition of that? I think last quarter you had kind of outlined that.
Call it Neutralish, Foster Minus
Speaker Change: I guess you've got some sourcing of maybe MDIs from China. Is that a headwind? How about like kind of TPO polymers, those types of things? I guess if some of that underlying basket has changed at all and kind of what you're expecting now for the full year.
Q2.
Kevin Zdimal
Speaker Change: There really wasn't any impact in the change in the pricing basket in Q1. That gets locked in for 90 days. You know, we had that, let's call it an RFP in Q4 and that was for the first quarter.
Speaker Change: Locked in, you know, Locked in Q1, or excuse me, Q2 at the end of March, slight increase is low single digit, and then Q3 gets Locked in in June . One of the impacts on MBI that I think we have to take a look at those there.
They're in addition to the tariffs.
Speaker Change: and you know one of the major producers of Chinese there. There's also an antidumping case that BASF, I believe, and Dow brought against the import. So we're getting a little bit of upward pricing pressure and I would think that you know the
Speaker Change: All the industry participants would use that and we would see some up repricing pressures we get through the air but for us through Q2 maybe a little impact on single digits.
Timeless Kevin, on the...
Speaker Change: We're on materials for the year. We still expect them exclusive of any further tariff increases. We expect raw materials to be neutral for the year. First half we'd say slightly positive in the first half of the year and then slightly negative in the second half of the year.
Okay.
Great. I'll hop back in queue. Thanks, guys.
Thanks, Tim.
Speaker Change: Your next question comes from the line of Susan Maklari from Goldman Sachs. Your line is now open.
Now, good afternoon, everybody.
Good afternoon.
Hi, Chris.
Speaker Change: If you're in the queue to get a roof done and you've been planning it and speccing it and getting everything arranged for, let's say, you know, many months of not a year, to delay it or to jump out of the queue might put you back so far that it's not.
Speaker Change: It's not really viable, so I think that bleeds into innovation and what we're seeing and that is we're seeing a lot of people talking about labor efficiency, right? How can you get off the roof faster? How can we get more jobs done with the existing labor? And that manifests itself, and I think it helps us to gain share and maintain share with the things we've done. Now arguably most of our innovation has been [inaudible]
Speaker Change: around the Carlisle experience in delivering the right product, the right place, right time.
We've also had a lot of...
Speaker Change: You know, you need half the people that you have on a job site to take it up. But I think right now people are concentrating on that. They're looking at AI solutions. I think contractors are looking at ways they can interface with their manufacturers quicker and back office operations. And so...
Speaker Change: It's all out there. I think what we talk about most of all is on the product side and we tend to neglect all the improvements we've made on the customer experience side and on the operational side but they're all meaningful.
Speaker Change: Yeah, okay, that's really helpful. And then maybe switching to the cash generation of the business.
When you think about...
Speaker Change: The changes that have come through in the profile and the businesses that you're in today. How do you think about your ability to generate really strong cash and positive free cashflow? Even if the macro does further weaken in there? I know you're reiterated your guide for this year, but can you just talk about some of those levers that you can pull and how we should think about what this business can do even if things don't turn out as we currently anticipate?
Speaker Change: Yeah, so what we've seen, you know, in past years when we've had any Gibson revenue, we end up having really good cash flow years. If you go back, you can go back to 2008 and see when the dip in the revenue was then. And we had excellent cash flow generation lot of it because we're bringing them working capital and get that benefit. So not something we're looking to. Yeah.
Have happened, but if it did happen, that's where... [inaudible]
Speaker Change: We're pretty strong and a cast low side. Our business hasn't changed that much from 2008 to now when you take out.
Speaker Change: The Non-Building Products Company, so just talking about where we are today with building products.
Speaker Change: And really don't have concerns on that even if there was that tip and revenue because of what we can do on the working capital side. Longer term when we look at vision 2030. So through that period, we're expecting to generate $6 billion of free cash flow between now and then.
Speaker Change: Yeah, okay, that's great color. Thank you both and good luck with everything.
Thanks, sir. Thank you.
Speaker Change: Your next question comes from the line of Bryan Blair from Openheimer. Your line is now open.
Thank you. Have a new guest.
Afternoon, Bryan.
Speaker Change: You mentioned pricing being roughly neutral for Q2 and the full-year cost being...
Speaker Change: Neutral-ish. Given our reads a bit more accommodative than that, I was curious how Peter came thinking about Q2 price cost and then the phasing for the full year.
Speaker Change: Yes, we look at Q2. We think both price and cost will basically be neutral and then second half of the year consistent with what we're thinking on our year end call is that we see pricing up low single digits in the second half of the year and that and with the raw material costs being neutral. We're seeing a positive, you know, 1% on the year from price cost.
Speaker Change: Okay, fair enough. MTL updates have been very consistently positive. We knew that was a really good asset that you guys acquired and clearly synergistic with.
Speaker Change: your metal platform with the updates have been, you know, I guess exceedingly positive. I'm just curious if you're going to speak to revenue and run rates, you know, current margin, where you now see that business over the next couple of years in terms of financial contribution.
Speaker Change: and then quick follow-up, just how the M&A pipeline is looking, given the uncertainty of the macro backdrop, how that is played out for them.
Speaker Change: Tony Mounder, who ran MTL before us taking over the metal business, so we have that change. We've had some people from within Carlisle, some experts in both the market side, customer service side.
Speaker Change: and Operations side come in and augment Tony's already good team so we're doing things like spreading COS.
Speaker Change: into the culture and it's being well received. We got a safety culture that, you know, we take great pride in and you know the results there, I think we're...
Speaker Change: and the upper, you know, probably 15%, 10% of manufacturing companies, and we're spreading that in there. Again, we'll receive what's been really neat to see is the collaboration. We've got a couple of projects recently that...
Speaker Change: Tony Steam has led where they're bringing in other car law products, both Henry and CCM products and we're putting packages together that are...
Speaker Change: We're also seeing MTL continually increase their integration with CCM so you know one of the things we did not have in our portfolio is what we would put on our roof's CCM, the edge metal was...
Speaker Change: Well, it might have been MTL, but it wasn't ours. Now MTL is working with CCM to get them in the spec. We're making good progress on that, obviously.
Speaker Change: We can do it pretty easily with the architect. We have to make sure our contractors are pulled along as well and it works for them but making great strides in there. The MTL team continues to innovate. That was one of the big.
Speaker Change: Strengths of MTL was something like 30 plus patents which we hadn't seen in the metal business before so that's going well and we're leveraging our Peterson and Drexel metal businesses that started this off you know Drexel and Bryan Particles business started all off a couple years ago and so
Speaker Change: that we can, you know, especially on the commercial side and to sides, insulated metal building panels.
some at various stages but
Speaker Change: I would say that the month's certainty created by some of the actions taken over the last few months has...
Speaker Change: Made it a little bit more difficult to make things progress. I think there's obviously some disks connected there on risk.
Speaker Change: that buyers probably don't want to include in their offer or may reduce it, that sellers don't want to have happened, so that happens. And then there's just the whole idea of how to project.
Kevin Zdimal, www.kevinzdimal.com
Speaker Change: Yana, a very helpful color on MTL, and also on the field environments and understood on that front. Thank you.
Yeah, keep that bright.
Garrick Schmoy: Your next question comes from the line of Garik Shmoi from Loop Capital Markets, your line is now open.
Garrick Schmoy: Oh, hi, thanks. Just wanted to follow up with the comment around the 15 million of pre-bying that you saw.
Speaker Change: in the first quarter. I just want to get your observation of whether or not you consider that a normal level of pre-bying or you seeing anything unusual just given the strength in March and April this far, then maybe some color on how inventories are at distribution. So, I just want to get your observation.
Thank you.
Speaker Change: I don't think it'll be a meaningful impact as we go forward. It might be a little bit of an impact, you know, a couple pennies or something in Q2, but it's not going to disturb anything, you know, happening.
It's in a major way.
Speaker Change: Yeah, I can't remember your second part of your question. I apologize. You asked me about...
Speaker Change: Yeah, it was just on inventories. Yeah, of course, you're seeing it in here.
Speaker Change: and our Carole Market Survey, we thought inventors were still fairly light. That had been an assumption we'd had coming to the year, I think one of the things we communicated was.
Speaker Change: You know, the seats and to make sure we could address what we thought was going to be a pretty decent season which is turning out, you know, as we march in April or during that to be pretty good. So I would say there's still some...
You know, the big-
Hey.
Speaker Change: The thing that no one has really talked about at least is its impact on Empory is the QXODL and Beacon. Beacon is a major distributor in the country and I can't imagine that during
Speaker Change: Lead up to an acquisition. If you're building inventory, I think you're trying to probably keep it as clean as you can and then we'll see what happens after the deal closes. But I would say in general, inventory is...
Speaker Change: You know, probably where it was in the first quarter, fourth quarter, people are wary and they're thinking about the carrying cost of working capital associated with higher levels of inventory. And certainly you don't want to sit on it if the season doesn't turn out to be what you thought it was.
Speaker Change: Okay, that's, that's super helpful. Um, just my follow-up questions just on...
Speaker Change: The cost basket is specifically related to non-North America and costs in the NDI specifically. You know, we're getting just a ton of questions on NDI and just wondering how you're thinking about.
Speaker Change: sourcing and if you're looking to move your supplier base away from China and just kind of any mitigation efforts that you're planning on putting in place.
Thank you.
Speaker Change: Yeah, I don't think our strategy is changing much. I mean, we've always had a pretty, I would say competitive.
Speaker Change: Well, you know, RFP process. Our purchasing team does a great job. We've been a big supply, our big, excuse me, purchase of MBI for a long time.
Speaker Change: They do move around from time to time, but I would also say, you know...
Speaker Change: You get a certain formulation embedded in what you're producing in the factory and there is some stickiness there that you're not inclined to change. It doesn't mean we can't change and we do what we need to, but I think the team does a good job of balancing that. So as I explained earlier, you know, really because we're doing this in 90 day blocks.
Speaker Change: For us, I'd say with what we're seeing in terms of potential price increases, we'll probably stick to our strategy.
Speaker Change: But that doesn't mean that if things change, we won't take action there. You know, we always think of...
Speaker Change: Three ways. When you have this happen, is it temporary? Could you pass it through or do you to not do anything and just absorb it in margin or three do you you know make a transition to a new supplier move it around so we have those options and I think we're in a good position like I said I think our team's always done a good job of.
Understood. No, thanks for that. That's a look.
Yes. Thank you.
Speaker Change: Your next question comes from the line of Adam Baumgarten from Zeldman & Associates. Your line is now open.
Approximately 50 basis points of improvement on EBITDA is we went into the year we were
Speaker Change: Probably on the higher end of those ranges, and now we're probably at the lower end of those ranges, but we're still confident in those numbers overall as we look at the individual businesses.
Speaker Change: Yeah, we see CCM, for sure, at that 50 basis points of improvement they do need the pricing in the second half of the year to happen.
Speaker Change: Your next question comes from the line of David MacGregor from Longbow Research. Your line is now open
David McGregor: Good afternoon everyone. Just to stay on that live question, hey, I hope everything's going well with you guys.
I didn't want to say on that last question.
David McGregor: and specifically with respect to CWT, you're writing up high single digits. When we talked last quarter's call, you were expecting the residential markets, which from moderate second half recovery. Is that still the expectation or what's changing in terms of the composition of the expectations that leaves the guidance unchanged?
Speaker Change: Yes, we look at the business overall. We have new first half of the year. We would have you on the resi site down mid single digits and second half of the year, obviously much harder to produce on it, flat to off the low single digits.
Speaker Change: Overall, down those digits for the new Rezzi, R&R, when we look at that under Rezzi's side, down those single digits first half of the year.
Speaker Change: We have that up in the second half of the year, the little single digits, which makes it flat for the year. So R&R looking flat, new being down. As we look at commercial on the re-roof inside on commercial, this is...
Speaker Change: Up mid-single digits for the full year, each of the quarters.
Speaker Change: Then on commercial, we have that download single digits first half of the year and upload singles in a second half of the year. And David, I think there's a couple other things that should help us as we move through the year, you know, ultra touch, which we've been talking about continues to expand its presence across the nation or relationship with a, you know, major retailer. And.
Speaker Change: You know, labor-reducing and more I would call efficient from an ROIC perspective, that's been good. We continue to make some channel gains as the team expands the EPS, it's been a polystyrene footprint. We've got obviously the addition to plastic fat and thermofome that once we get through the integration.
Speaker Change: They should pick up speed and they have some sales energies. There are some things in Canada that the blast-fab think a team can work on. I hopefully show some results as the North is the US team.
Speaker Change: helps them with their relationships up there. So we've got some good things. There are weather's another one, you know, Mehul.
Speaker Change: In the factories, we've got projects like the Kingman Project. I talk about this a full factory automation project underway right now that will also have some impact on margin. And so...
Speaker Change: Pretty remarkably in a lot of ways with negative energy in the brezzy markets. The teams are pretty resilient. They keep making a lot of progress on new product development and other things. So hopefully their initiatives will pay off and we think they game momentum through the year.
Speaker Change: Thanks for that detail. That's helpful. And then I guess follow a question. I was hoping it was in the context of that mid-single-digit growth guide that you're providing for the year. You can just talk about membrane versus poly iso and what you're seeing in terms of, you know, market dynamics and how you're expecting each of those to contribute to that mid-single-digit number.
Speaker Change: Yeah, we don't really break that out, David, going through it. I mean, we do polyiso has been growing faster than the membrane has just from the more energy-efficient buildings and putting more...
Speaker Change: Polly Isle on each of the jobs and that's when we look at price per square foot on the content for each of our jobs, that's been going up and that's really been driven by a Polly Isle piece of it, but breaking out the individual revenue growth numbers, we haven't put that part
Speaker Change: Anyway, you can talk about part of the editions there, any kind of general commentary.
Speaker Change: Yeah, I would just say we've even seen some positive growth there here in Q1. TBL continues to be a big solution of choice for people. It's reflective. We get a lot of positive share, you know, and it gains against modified bentonat in the south.
Speaker Change: where you get the reflectivity and obviously the insulation properties from the poly-ISO. Kevin mentioned how poly-ISO is growing. TVC has been a nice grower for us. It serves a certain part of the market.
Speaker Change: When we look at our architectural metals business, again, that is growing in a nice clip. I think people like the recyclability of metal. The ability to use colors, the ability to produce a different architectural look to this.
Speaker Change: and you know our job here on innovation is to continue to innovate and add to that category. We think what we really like to see is in five years, we have another roofing membrane, we can talk about with some pretty remarkable benefits, whether they be labor savings or energy efficiency and obviously polyiso is something that is a great.
Speaker Change: The R-value polyasone asthma that benefits with it, whether it's...
Kevin Zdimal, www.kevinzdimal.com
Speaker Change: Yeah, I think we got all this. We're just trying to get, yeah, I think we got all this. We're just trying to get some color on market conditions and
& Company.
Speaker Change: continues show positives. I mean, really, in the resin markets, I mean, you know what it is, but not.
Speaker Change: Remodeling your building new houses, it's pretty direct correlation between how market conditions are and I think that's been pretty...
Speaker Change: Well stated, but if you have something specific, and I'm sorry, I took you on a while, you stayed there, but if you have something really specific you want to answer, we could try to answer it. I would say we're a little bit hesitant to give up what we could do, confidential information considering we've had.
Speaker Change: Well, in that case, maybe I'll take it up with you offline. But maybe just last quick question. You could just talk about the cadence on the tax line over the bounce of the year to get to the 2324.
Speaker Change: That's pretty steady throughout the year. I wouldn't say it'd be anything different than the first quarter that that continued through with each of the next three quarters.
Thanks, John.
Okay. Thank you.
Speaker Change: Your next question comes from the line of Kate Hughes from Threwis. Your line is now open.
Thank you.
It was down that just about 1%
Speaker Change: Yeah, your spot on. It is this spray foam product line that is down in the first quarter.
Speaker Change: Okay, I'm, I, you're talking a lot of price increases there, particularly with some increases in the fire retardant, I guess, do you think that will turn back around positive in the second quarter or will it take more of the second and apple to do?
Speaker Change: I think on the ATO that we've got, I think we'll continue to see it into the second quarter. I think we'll also continue to see
Speaker Change: The fasteners and plates that we mentioned that those were significant industry impact. That was across the board for everybody. I think it's putting on a roof, at least our type of roof. And then, yeah, so that'll go through to the second quarter.
Okay. Thank you.
Speaker Change: There are no further questions at this time. I'll hand the call over to Chris Koch for closing remarks. Please go ahead.
Chris Koch: Well, thank you. And thanks everybody on this first quarter earnings call. We really appreciate all the questions. Hopefully we've provided substantial details to help with the understanding Carlisle. Again, thank you for your participation. I look forward to speaking on the next earnings call. Thanks very much.
Chris Koch: Ladies and gentlemen, this concludes this conference call. Thank you for your participation. You may now disconnect.