Feb 6, 2014
Executives
David A. Roberts - Chairman, Chief Executive Officer and President Steven J.
Ford - Chief Financial Officer, General Counsel, Vice President and Secretary
Analysts
Peter Lisnic - Robert W. Baird & Co.
Incorporated, Research Division Matthew W. McConnell - Citigroup Inc, Research Division Ivan M.
Marcuse - KeyBanc Capital Markets Inc., Research Division Neil Frohnapple - Longbow Research LLC James Kawai - SunTrust Robinson Humphrey, Inc., Research Division Joel Gifford Tiss - BMO Capital Markets U.S. Glenn Wortman - Sidoti & Company, LLC Kevin Hocevar - Northcoast Research Ajay Kejriwal - FBR Capital Markets & Co., Research Division
Operator
Good morning. My name is Jasmine, and I will be your conference operator today.
At this time, I would like to welcome everyone to the Carlisle Fourth Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to David Roberts, Chairman and CEO.
You may begin your conference.
David A. Roberts
Thanks, Jasmine. Good morning, and welcome to Carlisle's Fourth Quarter 2013 Conference Call.
On the phone with me is our CFO, Steven Ford; our Chief Accounting Officer, Kevin Zdimal; and our Treasurer, Julie Chandler. Also with us is our Group Presidents, John Altmeyer from Construction Materials; John Berlin from Interconnect Technologies; and Chris Koch from Brake & Friction and FoodService.
Before I review the details of the fourth quarter and 2013, let me highlight a few of our accomplishments during 2013. On December 31, we completed the sale of Carlisle Transportation Products.
161 days following the announcement that we're going to seek a buyer for the business, we completed the transaction for $375 million and added $370 million in cash to our balance sheet. Combining the $370 million to our cash on hand, we finished 2013 with $752 million.
With an untapped $600 million revolver, we have plenty of capacity to pursue acquisitions. We are out aggressively looking to add a high-margin engineered products business to our portfolio as well as bolt-on acquisitions to our core businesses.
In addition to acquisitions, we expect to be more active in share repurchases this year. We have board authorization to purchase up to 3 million shares, and once the blackout periods expire, we plan to be systematic about our share repurchases.
Throughout 2013, we made excellent progress in reducing our working capital. Working capital as a percent of sales ended the year at 18.7%, a 150-basis-point improvement over 2012.
In the first quarter of 2009, our working capital was 30.2% of sales. With the improvement in 2013 and the plans we have in place to continue reducing our working capital, we are well on our way to reaching our 15% goal over the next couple of years.
Through the hard work and innovation of our CIT sales and engineering teams, we signed a contract to supply cabling and connector systems to a large aircraft manufacturer late in 2013. To manufacture these products, we'll need additional capacity.
We are in the planning stage of a new factory and we'll be building a new Interconnect Technologies plant in Nogales, Mexico. This new plant will allow us to consolidate 4 buildings we have in Nogales into one facility and to take additional work we have contracted with that aircraft manufacturer.
We are targeting to have the construction complete by the end of 2014. The new factory, not only provides the capacity to take on the new work, but it will also allow us to improve margins on our current products produced in Mexico.
We will be incurring approximately $2 million worth of startup cost this year in Interconnect Technologies as we build that plan. While Brake & Friction's revenue was down 8% in the fourth quarter and 22% for the full year, we are starting to see increased order rates for most of our braking products other than those related to mining.
Historically, when we see 5 consecutive months of improving orders, it's been a good indicator that the business is finally recovering. While not a scientific measure, it has been a directionally correct indicator of the braking business.
January was our fifth consecutive month of increasing orders. In addition, most of our customers are indicating that the destocking in their businesses are over.
We didn't think we would see -- we don't think we'll see a dramatic improvement in the first half of the year, but should continue to see improving order rates, which will mean sales and margins will very likely tick up in the second half of 2014. The past 15 months of declining orders has given us time to assess our cost structure in Braking.
We have taken steps to streamline our Braking operations with the last remaining step being the closure of our Akron stamping plant. We continue to make progress closing this facility and moving the production to our Tulsa, Oklahoma facility.
Our target is to be out of the Akron plant by mid-2014, and the remaining relocation and closing costs will be approximately $2 million spread over the first 2 quarters of the year. We continue to make our investments in organic growth activities at Construction Materials, spending the vast majority of the company's 2013 $111 million capital investment on new plants and facilities at CCM.
Construction Materials has always been a good place to invest capital for organic growth, as can be witnessed from our approximate ROI of 40%. The vast majority of our growth at CCM has come from organic growth initiatives and the significant investment we made in new factories in 2013 prepares the business to handle the forecasted volume as non-res construction continues to recover.
In 2013, we completed 2 polyiso insulation plants and continued the construction of our PVC roofing plant in Greenville, Illinois. We also began the construction of our fifth TPO line.
This one's going into Carlisle, Pennsylvania. The PVC plant will be producing standard roofing membrane products late in the second quarter and the TPO line will be producing products for the 2015 construction season.
We made excellent progress at FoodService in 2013, as year-over-year margins improved from 5.1% to 11.3%. Our margins improved throughout the year because of cost reductions and process improvements.
We also saw a small recovery in sales in the fourth quarter, with December being up nearly 10%. If the volume continues to increase, margins will be further enhanced.
Let's turn to the slide presentation that is available on our website. Before we begin to review fourth quarter financial performance, let's turn to Slide 2 and review the forward-looking statement.
I strongly urge that you read the statement and review the documents that we filed with the SEC. Both will detail the risks associated with investing in Carlisle.
As we begin our review, please be reminded that the results of CTP are excluded with the exception of the cash flow. Turning to Slide 3 is a summary of total company performance in the fourth quarter.
Company sales increased 5.9% to $724 million. We experienced organic growth in Construction Materials and FoodService Products.
Interconnect Technologies sales were flat and Brake & Friction was down 8% compared to the fourth quarter 2012. EBIT increased 27% as we earned $92.4 million, yielding an operating margin of 12.8%.
Margins were up year-over-year on a comparison of 220 basis points. We experienced strong quarterly margin performance at CIT with 16.8% margin, CCM with 15.2% margin and CFS with 12.7% margins.
We continue to be margin-challenged at CBF with 6.1% margins, driven by volume shortfalls and restructuring activities. Our tax rate in the fourth quarter was 28.3%, compared to 33.4% last year.
Our cash conversion rate for the full year was 110%. In the fourth quarter, we generated $66.1 million of free cash flow, ending the year with $755 million worth of cash on hand.
Turning to Slide 4, we see our sales bridge. This slide details the negative and positive impacts on revenue.
Reviewing it, you'll see that price had a negative impact of 0.7%, driven mainly by pricing pressure at CCM. Positively impacting sales in the quarter was 3.5% volume and mix change, 2.9% from acquisitions, primarily the Thermax acquisition in 2012, while FX had a 0.2% impact on sales.
Organically, CCM grew 6%, CFS 3%, CIT was flat and CBF declined 8% in the fourth quarter. Let's turn to Slide 5, which details our margin bridge.
Our quarterly operating earnings increased $19.9 million, or 27%. Price negatively impacted profitability by 0.5%, volume positively impacted margin by 0.3%, COS had a 0.9% positive impact, acquisitions added 0.2% and other added 1.3% to margin.
We finished the quarter with operating margins at 12.8%. Slide 6 begins our review of the individual businesses starting with Construction Materials.
After a strong start in October and the first half of November, winter weather hit the U.S. mid-November reducing our roofing days.
Despite the difficult weather conditions and pricing pressure, CCM sales increased 6%. While sales were up slightly in roofing membrane, solid growth in insulation and waterproofing had the greatest impact on our revenue growth.
Insulation and waterproofing are key indicators of recovering in non-res construction market. Price was negative 1%, while volume was up 7%.
Margins were down 80 basis points compared to 2012, primarily due to raw material inflation and lower selling prices. Despite those pressures, we generated 15.2% operating margins in the fourth quarter.
CCM new plant startup costs were $1 million in the fourth quarter. For all of 2013, startup costs were $7.3 million.
Startup of the new Greenville PVC plant and the construction of the new Carlisle Pennsylvania TPO plant continue. We will have 2014 startup costs for these plants of approximately $5 million spread throughout the year.
Slide 7 details CTI's (sic) [CIT] performance in the fourth quarter. Interconnect Technologies grew at 16.5%, nearly all of that growth coming from the Thermax acquisition.
Organic sales were basically flat in the quarter. Aerospace was up 4%, test & measurement was up 7%.
Continuing to decline was our military business, which was off 19%; and our industrial business, which was off 10%. Our industrial business is comprised of many of the same customers as our braking business.
In the third quarter, the business was down 21%, so we're starting to see a slowing of the decline in this product category. Medical, which is a very small segment today, grew 1400% driven by new products that have been developed and introduced during the past 12 months.
EBIT growth for the quarter was 47%, as we earned $24 million compared to $16.3 million last year. The Thermax acquisition contributed $3.4 million of margin, with margins of 17%.
Thermax is a prototypical acquisition that we are seeking to replicate in 2014. It was integrated into our existing business in a very short period of time and immediately was contributing at a high level.
We acquired Thermax on December 17, 2012, so its results would no longer be broken out in our quarterly reports. Margin was up 350 basis points, largely due to COS savings.
2013 was a record sales and earnings year for CIT. We also made dramatic improvement in working capital as we reduced it 330 basis points during the year.
We expect CIT to have another record year in sales, earnings and working capital in 2014. Slide 8 details the performance of our Braking business.
We continue to suffer from lower sales, as our customers worldwide sell off their finished goods inventory, but the decline slowed in the fourth quarter. Sales were down 8%.
By market, ag was up 17%, construction equipment was up 2%. Mining equipment is still a drag on sales, being down 28% in the quarter.
The majority of the growth in our ag business continues to come from our European operations. In the fourth quarter, EBIT was down 45% as we earned $4.9 million, compared to $8.9 million last year.
Reduced volume, selling prices and restructuring costs drove our margin down to 6.1% in the quarter. We incurred $1 million of restructuring charges as we continue to phase down the Akron plant and move that work to Tulsa, Oklahoma facility.
Akron will be closed at the end of the second quarter of 2014. We will incur another $2 million in charges in the first half of this year for the Akron plant relocation.
Turning to Slide 9, you'll see that FoodService revenue grew 3% in the quarter driven by pricing, lower rebates and allowances. Overall, volume was flat in the quarter but late in November and in December, we saw a sales volumes increase growing in domestic FoodService Products, health care and Jan/San equipment.
This was offset by a decline in global sales and products that we exited due to low or negative margins. During our third quarter call, I mentioned that we had lower volume based on our inability to deliver.
That has since improved and our domestic volume late in the quarter benefited from product availability. Over the past 12 months, we've seen a steady improvement in our EBIT margins and in the fourth quarter, it was no exception.
Our margins were up 380 -- 870 basis points to 12.7%. Overall, our EBIT dollars were up 230% from $2.3 million in the fourth quarter of 2012 to $7.6 million in the fourth quarter of this year.
The FoodService management team has done an excellent job improving profitability and I expect this performance to continue in 2014. Shifting gears, let's take a look at Carlisle's overall performance for 2013.
You'll find that detailed on Slide 10. 2013 was the second consecutive year of record sales and record net earnings.
Sales were up 3% from $2,851,000,000 to $2,943,000,000. Our growth was driven mainly by Construction Materials and Interconnect Technologies, while Brake & Friction and FoodService had negative sales growth for the full year.
EBIT margin was 12.5%, slightly down from 2012. We earned $366.8 million in 2013 compared to $371.9 million in 2012.
Our tax rate was 29.4% compared to 33.7% in 2012. EPS for the year was $3.61, a record for Carlisle.
Slide 11 provides you the detail of each segment. It's important to note that we had record sales and earnings in Interconnect Technologies, record sales in Construction Materials and record earnings in FoodService.
Slide 12 and 13 are sales and margin bridges for 2013. These sales are self-explanatory, so I will leave you to review them on your own.
This concludes my review of the business segments. Steve will now review our balance sheet, cash flow and working capital slides.
Steve?
Steven J. Ford
Thanks, Dave. Good morning.
Please turn to Slide 14 of the presentation. As Dave stated, we ended the year with $755 million of cash on hand, which includes approximately $370 million of cash from our sale of the Transportation Products business on December 31.
We began the year with $113 million of cash. We also have all $600 million of availability under our credit facility.
Our balance sheet remains extremely strong as we have no debt -- or no net debt following the CTP sale. We are very well positioned for future growth and expect to be more active with share repurchases in 2014.
Turning to Slide 15, our free cash flow from operations for the quarter was $66.1 million as compared to $116 million for the fourth quarter 2012. The decline was primarily attributable to the timing of certain tax payments.
For the full year, we generated $304 million of free cash flow resulting in a 110% conversion rate. The decline from last year's free cash flow of $345.5 million is primarily attributable to taxes and other positive contributions from prepaid expenses that did not recur in 2013.
Turning to Slide 16, our average working capital as a percent of sales for 2013 was 18.7%, a 150 basis point improvement from the 20.2% reported for 2012 as we improved inventory turns. Turns for this year, 6.9 compared to last year 6.3, and we reduced days sales outstanding for 2013, 53.7 days, compared to last year, 58.1 days.
We continue to make progress toward achieving our long-term goal of 15% of sales. And with those remarks, I turn the call back over to Dave.
David A. Roberts
Thanks, Steve. Before I open the floor to comments, let me give you a brief summary of what we think 2014 is going to look like.
We expect sales for 2014 to grow high single digits, reflecting a continued recovery in Construction Materials. That can be seen on Slide 18 of your presentation.
We expect a normalized reroofing market, a build rate of 10 787s a month, which Boeing ramped to in January, a return of growth in FoodService and flat sales in Brake & Friction in the first half of 2014. Sales in the first quarter at CCM could be a bit lower than we originally planned due to severe weather throughout the U.S.
As in 2013, these sales aren't lost, but rather postponed until the weather improves. We also expect to leverage the revenue growth in both EBIT dollars and EBIT margins.
We expect to see high single-digit growth at CIT as the 787 build schedule has ramped up and the introduction of the 350 is on the horizon with corresponding margin improvements. We are starting to see signs that the declines in sales at Brake & Friction are ending, margins in CBS should be in the 10% range for the first half 2014, slightly lower than the first quarter in 2013, then trending up in the second quarter.
We still have $2 million of restructuring charges to incur in the first half of 2014 related to the consolidation of Akron and Tulsa. FoodService should see sales growth in 2014, but, as a reminder, the first quarter is generally soft in CPS due to the seasonality of the business.
We expect the margins to continue to trend upward toward the year -- the end of the year moving to 13%. To get to 15%, we'll need volume growth.
And if the trend we saw late in the fourth quarter continues, 15% margins could be attainable late in 2014. We expect corporate expenses to be $48 million, depreciation and amortization to be $107 million, capital expenditures to be $118 million, as we complete our PVC plant, the TPO line and the Nogales CIT plant.
Interest expense is projected to be $34 million and our plants have been built using a 34% tax rate. We expect to see our cash conversion rate to be 100% as we continue to work toward improving our working capital goals.
Jasmine, with that, I'd like to open up the floor to questions.
Operator
[Operator Instructions] Your first question comes from the line of Peter Lisnic.
Peter Lisnic - Robert W. Baird & Co. Incorporated, Research Division
Dave, I guess, can I start up with the CCM business? I'm sorry if I missed this.
But the pricing impact -- the price/cost impact for the full year of 2013, can you give us a little feel for that? And then, what's the expectation for pricing as you look to '14?
It sounds like there could be some areas where there have been some strategic price actions taken. Just wondering what the -- what your outlook might have been from a pricing perspective.
David A. Roberts
Yes, we think that there -- well, there was a 1% decline in the -- in 2013 in the fourth quarter, which is an improvement over where it was earlier in the year. We implemented the price increase, the 5% price increase, effective January 1.
I don't think we'll get all of that, but I think we'll get some of that. We've also recently introduced another price increase.
Benzene continues to ramp up. We think we're going to be able to recover that with some price, but we'll have to manage it very carefully.
As of today, one competitor has followed our price increase, we're waiting to see what the other competitors do.
Peter Lisnic - Robert W. Baird & Co. Incorporated, Research Division
Okay. Is it -- I mean, is it safe to look at '14 and think that price/cost could be effectively flat if you get to some realization of that plus 5 that you're putting through?
David A. Roberts
Yes, I think that -- I mean, that's a way to look at it. There could be some pressure, but I don't think it will be dramatic as of today.
Who knows what tomorrow holds.
Peter Lisnic - Robert W. Baird & Co. Incorporated, Research Division
Okay, all right. Right.
If I switch gears then to the Interconnect business, I think in the press release you talked about some nice wins recently. Can you just talk about the longer-term growth prospects for that business.
I mean you mentioned the 787 and the 10 build rate a month there, but with the new business. What does the longer-term growth look like for that business outside of what you described for us in 2014?
David A. Roberts
I think the business will be double digits over the next couple of years. We've got -- the business that we were just awarded really won't come onstream until probably 2015 at any volume at all.
So while the 787 ramps up -- and they'll ramp higher than 10, so we'll get that growth from Boeing. And then, the other aircraft manufacturer will be ramping up the new business in Nogales and that will also improve our sales.
So we'll continue to see revenue ramp, but I think we'll be running at 10%, is probably a good number to look at over maybe the next 2 or 3 years.
Peter Lisnic - Robert W. Baird & Co. Incorporated, Research Division
Okay. And is there a way to describe that new business in terms of order of magnitude, maybe by comparing what you're realizing on the 787?
David A. Roberts
It's -- you mean as far as dollar content?
Peter Lisnic - Robert W. Baird & Co. Incorporated, Research Division
Right.
David A. Roberts
Yes, it's not as significant as what the 787 is for us. Again, it ramps up over the next 4 years.
I think initially, it's going to be maybe $10 million to $15 million ramping up to where it's -- maybe double that.
Operator
Your next question comes from the line of Matt McConnell.
Matthew W. McConnell - Citigroup Inc, Research Division
Just on Brake & Friction. I think before, you said margins could be in the 6% to 8% range before you saw any end market improvement.
Just to make sure I heard it correctly. Did you say that's now more like 10% early in 2014, is that the outlook?
David A. Roberts
Yes, what we're looking at, from a planning standpoint, Matt, would be a 10% margin rate for the business for the year. It may be slightly lower in the first quarter, but we think volume is starting to come back and I think that will help us.
We've taken so much cost out of the business that incremental margins there were well north of 30%.
Matthew W. McConnell - Citigroup Inc, Research Division
Okay, great. And is there a way to quantify or talk about sustainability of that 17% ag increase?
Is that -- was there anything abnormal there, or what should we expect for the year out of ag markets?
David A. Roberts
Yes. I don't remember what the increase was last year in the fourth quarter.
Keep in mind, this is one quarter. I think 17% is overly aggressive for the year.
We think it will grow. My guess is it's going to be in the mid-single digits growth, certainly not the 17% rate.
And it's all driven by Europe, to be very honest.
Matthew W. McConnell - Citigroup Inc, Research Division
Yes. Okay.
And then on capital allocation, did you start any buybacks in January or were you in a blackout period?
David A. Roberts
Yes, we're in a blackout period. We, at this point, are not buying any shares.
Matthew W. McConnell - Citigroup Inc, Research Division
When would you be able to begin repurchases?
David A. Roberts
As soon as the blackout period ends. I'd say, that's about all I can tell you.
Matthew W. McConnell - Citigroup Inc, Research Division
But it's your intention to start to buy back as soon as...?
David A. Roberts
Yes. What we'll end up doing is, as soon as the blackout periods end, we'll end very systematically going and doing some share repurchases.
We aren't going to announce a large share buyback, a block of shares. We'll be in the market probably end up buying -- I think we buy up to 25% of our daily volume at any given time, but we'll manage how we buy it back.
Operator
Your next question comes from the line of Ivan Marcuse.
Ivan M. Marcuse - KeyBanc Capital Markets Inc., Research Division
Real quick on the Mexican plant that you're building. You may have said this, but is this going add any incremental sales or expand capacity, or is it just a consolidation of plants?
And how much you think that -- you may have said this, is it going to save you over -- once it's completed?
David A. Roberts
Yes, we -- I don't have a savings number in front of me, Ivan, but what it's going to end up doing, it will -- it will consolidate the 4 factories, so we will get some savings from that. And honestly, we just got the contract for the new business and we're working through what the total cost savings will be in doing this.
So we'll consolidate, we'll get savings from that, but we also get the additional capacity to allow us to build the new business that we got.
Ivan M. Marcuse - KeyBanc Capital Markets Inc., Research Division
Got you. And then, if you look at your PVC, so is this going to add incremental sales or is it going to replace -- if I understand correctly, you've already been selling PVC sort of on a, I guess, a 2-step process.
So is this just going to make you a direct seller or is this going to add incremental sales? Or how to think about the PVC business going forward?
David A. Roberts
Yes, the way to think about it in '14 is there's no incremental add. It's basically replacing what we were outsourcing.
We'll get improved margins because we're now manufacturing rather than buying and reselling. And then I think you'll start to see some incremental revenue that will occur in '15 and beyond.
Ivan M. Marcuse - KeyBanc Capital Markets Inc., Research Division
Okay. And then my last question on the new construction aspect, the waterproofing.
Have you seen it just stay at a steady state on year-over-year improvements or has it been accelerating going into -- I know the weather has probably made the numbers tough in the last couple of months. But if you've looked at -- I mean, how's the ramp, I guess, in the new construction, and how would you describe it?
David A. Roberts
Yes, there's been a slight acceleration in waterproofing and coatings. Insulation has been ramping all year.
So what we're seeing -- when you start seeing waterproofing and coatings, you're seeing something that's below foundation. So it suggests that there are new buildings going in, is where that product is sold.
And what we saw that start to ramp in the second half of the year.
Operator
Your next question comes from the line of Neil Frohnapple.
Neil Frohnapple - Longbow Research LLC
Dave, is there any way to quantify the increase in orders at Brake & Friction you're experiencing? I'm just trying to get a sense for if mining were to continue to tick down, if you're able to keep that growth rate positive.
I mean, how much are we positive at this point?
David A. Roberts
Yes, I don't think -- my guess is, is that we aren't going to see mining decline at the rate it’s been declining because they just aren't building any trucks. And whatever we're selling to mining today is primarily replacement product.
So it really depends upon what ag does and what construction does. So I would look at mining relatively flat or maybe slightly down, but I think it's going to be relatively flat in 2014 and you'll see some uptick in ag and construction.
Now I think that's going to be -- certainly in the first half of the year, I would think flat would be the best way to model it and then see some increase in the second half of the year. I think that increase is going to be mid-single digits, maybe.
Neil Frohnapple - Longbow Research LLC
Got you. And then I know you guys had some price concessions with a few of your customers.
Just trying to get the sense for if pricing on the new orders that you're seeing has improved or if it's still challenged at this point.
David A. Roberts
Pricing is where it was. We're still challenged with the customers that we've got, and that's part of the reason that the margins have taken somewhat of a hit.
But we think additional volume will help us at least get it back to 10%. But we've given away price and we have not seen anything that would suggest that's going to get any better.
Neil Frohnapple - Longbow Research LLC
Okay. So the margin improvement story is all predicated on volume, the volume is driven so then the restructuring maybe benefit from there as well.
David A. Roberts
Exactly. It's all whatever cost improvement we can make and any slight improvement in margin.
Neil Frohnapple - Longbow Research LLC
Okay, great. And then one final one.
Despite the lower volumes you're experiencing thus far in the first quarter within CCM, what are you seeing from a quoting activity standpoint that gives you confidence that this business will pick up as the spring selling season begins?
David A. Roberts
Yes, I think that we are quoting on a number of jobs -- or our roofers are quoting on a number of jobs and contractors. We feel comfortable this business will probably grow high single digits this year.
Now if the winter continues into July, then we've got an issue. But we think we'll pick up what we end up losing, if we lose anything in the first quarter.
We just haven't seen enough information yet. But every time you turn on the TV, there's snow and cold weather somewhere.
Operator
Your next question comes from the line of James Kawai.
James Kawai - SunTrust Robinson Humphrey, Inc., Research Division
On Construction Materials, I think in prior quarters you noted that the industry was absorbing some PPO on polyiso capacity. And then we saw pricing, I guess it was down 3% in the third and now it's down 1% in the fourth.
I mean, it seems like it's being absorbed and that we're in a much healthier environment there going forward. Any thoughts there?
David A. Roberts
Yes, I think that's correct. I mean, there'll still be -- we've got a new plant coming online.
We have 2 new polyiso plants come online. I think there'll be some pressure on pricing for the next 6 to 12 months, and I think the net capacity starts getting consumed with the reroofing product and also new construction, and I think pricing pressure will be a little less as we get further in the year than perhaps it is today.
But honestly, we've always got pricing pressure in this business. And I think we've said it before, is that being diligent about holding onto price is the reason the margins are at 15%.
James Kawai - SunTrust Robinson Humphrey, Inc., Research Division
Understood. Got it.
And then benzene, I think, spiked in January pretty hard. It seems like it might be somewhat temporary, but -- and I do believe you guys tend to price out your supply for several months, so I suspect it won't have an impact on margins.
But any risk there that you wanted to flag?
David A. Roberts
Well, you're exactly right. I mean, it did spike in January.
We do contract for a quarter at a time. If it continues to spike, we could have some price inflation -- or cost inflation as we get into the latter part of the first quarter into the second quarter, but we'll handle that with price increases if we do see it continue to spike or remain where it is.
We might be slightly delayed as we normally are with price versus cost, but I think we'll eventually recover it.
James Kawai - SunTrust Robinson Humphrey, Inc., Research Division
And then on the acquisition pipeline, is there any kind of further color you could provide there in terms of the size of the deal that you're looking at and potentially timing in broad buckets, first half, second half, something along those lines?
David A. Roberts
Can I just say no? I mean, we're working on -- we're always working on things.
I don't think you're going to see anything very early in the year. That's about all I can tell you.
Operator
Your next question comes from the line of Joel Tiss.
Joel Gifford Tiss - BMO Capital Markets U.S.
I just wondered if that little bit of a surge that you saw in the volume in the last 1.5 or 2 months of the year in food, Is that Carlisle-specific or is there -- is that just the market?
David A. Roberts
I think we picked up some share, and I think there's a little bit of growth in the market, but I think we picked up some share. If you look at what we ended up doing in the third quarter, we were working very hard to reduce our working capital.
I think we over-reduced and we got the inventories back up and we're picking up share I think.
Joel Gifford Tiss - BMO Capital Markets U.S.
So maybe half and half?
David A. Roberts
Yes. I think it's a little more than half and half, I think more of it's from share gain than the market picking up.
Joel Gifford Tiss - BMO Capital Markets U.S.
Okay. And I just wondered if you could sort of frame the way you're thinking about the liquidity, like how much do you have to work with?
I mean, just sort of generally for 2014 and what I'm trying to do is just put sort of buckets around share repurchase. And I know it's fluid if you find the right deal, it's going to shift from one side to the other.
But sort of generally how do we think about the size of it.
David A. Roberts
We're sitting on $755 million in cash. We've got a revolver of $600 million that's untapped.
Now I don't think I'd go into the revolver to buy shares back, I think we can do that with that cash we have and still make some of the acquisitions that we're looking at. So I think the liquidity that we'll use for share repurchases and for acquisitions will come out of the cash that we have.
Joel Gifford Tiss - BMO Capital Markets U.S.
So maybe $200 for share repurchase -- $200 million for share repurchase, up to $500 million if there's no acquisitions?
David A. Roberts
I don't think we can get to $500 million.
Steven J. Ford
Yes, Joel, I think we would not anticipate getting anywhere close to the $500 million. We're talking about being sort of continuous open-market buyers subject to trading limits and blackout periods, we're not looking to do an accelerated buyback.
So in terms of modeling it for the full year, I would be thinking more in terms of $100 million to $150 million than anywhere near the $500 million.
Operator
Your next question comes from the line of Glenn Wortman.
Glenn Wortman - Sidoti & Company, LLC
Just to clarify a couple of things. You never said that volumes are down in CCM here in 2014 so far, did you?
David A. Roberts
Volumes are down? Oh, I'm saying that it's starting slower than we thought it was, primarily because of the weather.
Right.
Glenn Wortman - Sidoti & Company, LLC
Yes. No, that's what I thought.
Okay. And then when you talk about Brake & Friction flat, are you talking about sequentially or year-over-year for the first half of '14?
David A. Roberts
Sequentially.
Glenn Wortman - Sidoti & Company, LLC
Okay. And then on acquisitions, if you can, can you just elaborate a little bit on the types of businesses you may be targeting?
I think you mentioned you might be looking at something outside of your existing businesses.
David A. Roberts
Yes, well, we're -- I mean, our priority is to find bolt-on acquisitions in our 3 core businesses, so CIT, Construction Materials and the Braking business. But we are looking at a couple of other things that are outside of what we end up -- it would be difficult to put that in as a bolt on one of the business that we have today, is about the best way I can put it.
There are a couple of things that we're looking at in the pipeline that would be a new pillar for us.
Operator
Your next question comes from the line of Kevin Hocevar.
Kevin Hocevar - Northcoast Research
Wondering -- I think you talked about last quarter Boeing, this advanced opportunity capture, essentially could ultimately mean we give back in price in that -- in CIT. Just wondering how that's gone now that, I think, those talks have been -- being worked on.
David A. Roberts
Yes, it's still in the works. We haven't heard the final results from it yet.
We've had numerous meetings with them. We just don't have a final number yet.
Kevin Hocevar - Northcoast Research
Okay. And then I also think, in the polyiso insulation, the way that the R value is being calculated, changed in 2014, which essentially means thicker boards.
So just wondering, what type of benefit, if any, you think this will provide here in 2014 and, I guess, going forward as that ramps up?
David A. Roberts
2% to 4%, maybe. It's so hard to determine.
But you're right, it did -- the R factors did go up. But keep in mind that they're not building requirements, they're suggested regulations.
So you can do it if you want to, you don't have to do it.
Operator
And your final question comes from the line of Ajay Kejriwal.
Ajay Kejriwal - FBR Capital Markets & Co., Research Division
On CIT, so it's good to see you got those orders from this other aircraft manufacturer, which we all can guess who that is.
David A. Roberts
Maybe, maybe not.
Ajay Kejriwal - FBR Capital Markets & Co., Research Division
There are only 2, Dave, 2 meaningful ones globally. So there has been some talk of this aircraft manufacturer trying to replace some of their existing European suppliers.
So I guess the question is, is there more opportunity beyond what you've already won with them, obviously building a new facility in Mexico so that should put you in a good position.
David A. Roberts
Yes. The answer to that is yes.
We continue to bid work. And keep in mind, most things are on a long-term contractual basis.
So as the next contract comes up, we have an opportunity to bid on that work.
Ajay Kejriwal - FBR Capital Markets & Co., Research Division
And do you expect that sometime later this year? I mean, maybe just talk about those -- the timing of when those contracts come up, is it sometime in the second half?
David A. Roberts
I don't think you would see any benefit certainly in '14. And if anything would occur, it would be sometime probably mid-'15 before you'd be able to be able to start manufacturing that product.
What they do is start to bid the contract prior to it ending so that if they pick a new vendor, then they have to qualify that vendor. So it's a long drawn-out process that would have no benefit, certainly not for the 18 months -- or the next 18 months.
Ajay Kejriwal - FBR Capital Markets & Co., Research Division
Got it. And then, how do you feel about CIT margins in '14?
Obviously, margins have improved here nicely in the last couple of quarters. Is there any reason margins not to improve in '14?
I know you've had some pricing discussions with Boeing, but you're also seeing good volume ramp here. So maybe just color on pricing, on margins in '14 and then the seasonality, is there reason why margins in the first half should be lower than the second half.
David A. Roberts
Yes, all I can say is I'm feeling good about the margins in CIT. I think there's some upside to them.
Ajay Kejriwal - FBR Capital Markets & Co., Research Division
And the seasonality?
Steven J. Ford
I don't think there's any seasonality to the business. Generally, I think it was our second quarter, we had a little bit of seasonality in the business, but I'll -- we'll work through that.
Ajay Kejriwal - FBR Capital Markets & Co., Research Division
It should be more even for the year.
Steven J. Ford
I think so, I think so, yes.
Operator
There are no further audio questions. I'll turn the call back over for closing remarks.
David A. Roberts
Thanks, Jasmine. We are hard at work to find an acquisition that really just won't replace the earnings that we have as a result of the sale of Transportation Products.
But more importantly, we're looking for a high-margin platform that we can build into a core capital-efficient growth business for the future. The sale of Transportation Products has slowed our ability to reach our $5 billion revenue goal over the next few years.
But it actually is going to help us moving closer to achieving our global sales growth goal and also our 15% financial goals. It's also taken some of the volatility out of the earnings in our business.
As I look at '14, I see an environment that will allow our 2 largest businesses to grow at high single and possibly low double-digit rates during the year. I think FoodService will start to see low- to mid-single digit growth and like I said earlier, we're finally, starting to see signs of growth in our Braking business.
Our cost structure in each one of the business has been streamlined to give us tremendous leverage on any small incremental sales and revenue. We're also seeking to put our cash to work, as I mentioned earlier, creating shareholder value through acquisitions, dividends and share repurchases.
I think 2014 is shaping up to another record year for Carlisle. With that, Jasmine, I'd like to thank everybody for attending the call, and go ahead and end it now.
Operator
Thank you. This concludes today's conference call.
You may now disconnect.