Chris Koch - President and Chief Executive Officer Bob Roche - Chief Financial Officer Jim Giannakouros - Vice President, Investor Relations

Neil Frohnapple - Buckingham Research Liam Burke - B. Riley Bryan Blair - Oppenheimer Charles Brady - SunTrust Joel Tiss - BMO Garik Shmois - Longbow Research Kevin Hocevar - Northcoast Research Tim Wojs - Baird

Thank you, Bruce. Good afternoon and welcome to the Carlisle Companies second quarter 2018 conference call.

On the phone with me today is Bob Roche, our Chief Financial Officer. I am also pleased to introduce our new Vice President of Investor Relations and FP&A, Jim Giannakouros, whom I believe many of you already know from his coverage of Carlisle over the last several years.

Jim joins us from Oppenheimer & Company where he was Managing Director and Senior Analyst covering mid-cap industrials. He has approximately 20 years of experience in the capital markets.

We are very pleased that Jim has decided to join the Carlisle team and I will turn it over to Jim for a few opening comments.

Thank you, Chris for the warm welcome. I am very excited to join the Carlisle team and I look forward to meeting and working with all of you in the near future.

Chris will open today and discuss our second quarter 2018 performance in the context of Vision 2025 and our 2018 outlook. Bob will then review our segment performance, balance sheet and cash flow.

Before Chris begins with his remarks, there are a few housekeeping items we should address and I refer you to Slide 2 of our presentation entitled forward-looking statements and the use of non-GAAP financial measures. Those considering an investment in Carlisle should read these statements carefully, along with reviewing the reports we file with the SEC before making an investment decision.

These reports explain the risks associated with investing in our stock, which is traded on the New York Stock Exchange under the symbol of CSL. Statements therein are subject to a number of risks and uncertainties that could cause actual results to differ materially and the company undertakes no obligation to update these statements based on subsequent events.

With that, I will turn it back over to you, Chris.

Thanks, Jim. Turning to Slide 3, our record second quarter revenue and diluted EPS from continuing operations confirm that the launch of Vision 2025 is off to a strong start.

Vision 2025 in which we seek to drive $8 billion of revenue, 20% operating income and 15% ROIC has generated significant interest in momentum. Our longstanding culture of continuous improvement, entrepreneurial spirit and decentralization assures that the day-to-day energy, focus and efforts of our employees are directed towards actions that drive results and support the key initiatives within the context of our strategic plans.

As 2018 is unfolded, we have gained traction on our key initiatives, including achieving above market organic growth, driving cost savings and operational efficiencies through COS, focusing on portfolio realignment through M&A, and deploying capital in the form of share repurchases, dividends and capital investments. In the second quarter, we continue to maintain a near double-digit pace and organic revenue growth, recording 9.7% growth following the first quarter’s 8.8%, well ahead of our 5% long-term target.

This growth has been driven by volume and price at CCM, aerospace volume at CIT and the positive impact of CBF’s core markets of construction mining and agriculture. Our COS efforts continue to improve on a year-over-year basis as we generated 1.5% of sales and cost savings within the quarter, well within our long-term target of 1% to 2%.

We continue to reshape our portfolio and build scale through acquisitions using a disciplined approach to pursuing assets with substantial organic growth potential and opportunities for significant measurable synergies. Following the acquisition of Accella in late 2017, we have spent the first half of 2018 integrating this new polyurethane platform into CCM and driving to the committed synergies of $30 million, all while growing sales at a double-digit rate in the second quarter.

In addition to the Accella acquisition, CCM made the first steps in expanding its metal roofing platform created with our 2017 Drexel Metals acquisition by acquiring two small, but geographically important metal roofing companies. These additions will strengthen our metal roofing business in Colorado and Florida.

At CIT, to further support our aerospace sales efforts, we acquired a small, but strategic UK-based engineering and certification firm in the second quarter that will help accelerate share gains in European aerospace customers. And consistent with our desire to add focus to our portfolio and redeploy our capital to faster growing segments, we exited the foodservice business in the first quarter at an attractive multiple.

We continue to return capital to our shareholders through our share repurchase program initiated in 2017 and with the goal in Vision 2025 of deploying $1 billion over the plan. In the second quarter, we repurchased $111 million of shares.

When combined with our share repurchases for 2017 and the first quarter of 2018, we have returned over $0.5 billion to shareholders. We also deployed $23 million of dividends in the second quarter of 2018 extending our 41 consecutive years of continued and increasing dividends.

And lastly in June, we recognized the important contribution of our employees to the success of Vision 2025 by announcing a one-time stock grant to all employees globally. This grant will give our employees the opportunity to be engaged in, drive and benefit from our success.

Turning to Slide 4, in the second quarter of 2018, Carlisle experienced strong organic growth at CCM, CIT and CBF resulting in record second quarter revenues of $1.2 billion, a 26% increase over the second quarter of 2017 and our 21st consecutive quarter of year-over-year sales growth. Our operating income in the second quarter grew 9.2% to $159.7 million contributing to record second quarter diluted EPS from continuing operations of $1.87.

EPS was positively impacted by a lower effective tax rate and reduced share count which Bob will discuss in more detail later. Our solid second quarter earnings performance reflected strong organic growth and continued progress on operational execution.

In the quarter, we continue to face significant headwinds across our businesses, especially in our raw material, freight and labor-related costs. We were largely able to offset these pressures with higher sales volumes by driving price increases, implementing freight surcharges and generating savings from the Carlisle operating system.

We were especially pleased with CCM’s leadership on pricing recording the largest price gains in the quarter since the first quarter of 2013. We expect this positive pricing trend to begin in 2017 to accelerate into the second half of 2018.

We anticipate our business will operate in an increasingly inflationary global environment through 2018. However, we expect the strategic restructuring actions taken in 2017 coupled with the impact of COS and the significant pricing actions implemented across our businesses to deliver solid gains and profitability in the second half of 2018.

Let’s now turn to the divisional achievements in the quarter. The second quarter continued to reinforce CCM’s market leadership by delivering exceptional returns in a business that is now gaining momentum for price increases and is broadening growth opportunities by expanding further into the building envelope.

The CCM team delivered record second quarter revenues and operating income and approximately $6 million of price realization. Additionally, sales from new products nearly tripled compared to the second quarter of 2017 driven by breakthrough introductions of roofing products that significantly reduced labor content on the job.

In the current environment of significant labor and trucking constraints, our ongoing focus on delivering value to the Carlisle experience is being recognized by our customers resulting in share gains across many product lines. Providing a little more color on market dynamics, Bob and I recently attended the Western Roofing Expo in Las Vegas, Nevada as well as travel to Midwest in the Mid-Atlantic states, meeting with some of CCM’s largest distributors and customers.

Sentiment across the Board suggests that current and projected volume levels will remain robust with many contractors experiencing substantial backlogs. We remain focused on integrating the fourth quarter 2017 acquisition of Accella.

CCM is on track to deliver the first year savings of $10 million of stated synergies in 2018 as projected in our deal model and we are further encouraged by the double-digit sales growth experienced in the spray polyurethane foam and liquid applied roofing markets. CIT’s record second quarter revenues reflect continued strength in aircraft build rates as well as our increased content per plane.

The satellite connectivity ramp in sales is in line with previous expectations as the global demand for aircraft connectivity continues to grow. This market continues to evolve as geographies are added in the technology and applications related in-flight connectivity advances.

CIT’s Global Medical Technology business continues to grow, well-positioned to leverage favorable industry dynamics such as aging populations and trends towards minimally invasive procedures and is supported by a pipeline of approximately 120 active projects. We are excited and pleased to announce that the 2-year Shenzhen to Dongguan China factory move has been completed according to the timeline we expected.

This move has significantly expanded our medical technology engineering and production capabilities allowing us to accelerate conversion of our product pipeline. The original CFT acquisition thesis remains fully intact, rationalize the footprint, vertically integrate, deploy COS, enter new segments and build an organization that is now pivoting towards growth.

To-date, we have rebuilt the leadership team, closed 11 locations, invested in machining of new component parts, successfully deployed COS throughout the organization, and launched a number of new products. All of these actions have resulted into solid foundation upon which we will build under Vision 2025.

As CBF continues to benefit from the recovery in commodity markets as evidenced by the double-digit growth in our off-highway markets of construction, mining and agriculture. The Tulsa, Oklahoma to Medina, Ohio plant consolidation is on track to be completed by year end and we expect to realize annualized savings of $12 million to $15 million from this move.

As volumes continue to improve and our plant consolidation investments wind down later in the year, we expect CBF’s operating margins to continue their upward trend. Bob will now provide further detail about our segment performance and review our balance sheet and cash flow.

And after Bob’s review, I will discuss the outlook for 2018. Bob?

Thank you, Chris. Please turn to the sales bridge on Slide 5 of the presentation.

As Chris mentioned in his opening remarks, we are pleased with our record second quarter revenues. Organic growth had a positive 9.7% impact driven by strong commercial construction demand at our CCM business, continued SatCom connectivity ramp at CIT and strength in construction, agricultural and mining equipment markets at CBF.

New revenue recognition standards had a 0.9% positive impact. Acquisitions contributed 14.3% of sales growth in the quarter and foreign exchange had a positive 0.7% impact.

Turning to our margin bridge on Slide 6, operating margin percentage decreased 200 basis points in the quarter to 12.9%. The net impact of revenues had a positive 140 basis point impact, COS drove 150 basis point margin improvement.

Acquisitions had a negative 140 basis point impact in the quarter, and finally, rising raw material freight and labor-related costs driven largely by CCM had a negative 360 basis point impact. On Slide 7, we have provided an EPS bridge.

As previously stated, we reported a record second quarter diluted EPS from continuing operations of $1.87, a 28% increase from the second quarter of 2017. Higher volumes contributed $0.29.

Tax-related items added $0.24. COS contributed $0.15.

Share repurchases added another $0.09 and price realization added $0.07. Offsetting these positives were higher raw material, freight and labor-related costs of $0.20, higher interest expense of $0.07, unfavorable product mix of $0.04 and FX and other of $0.12.

Our tax rate of 21.5% was primarily driven by U.S. tax reform, with approximately $4.6 million of one-time tax benefits in the quarter.

Now, let’s turn to Slide 8 to review the second quarter performance by segment in more detail. At CCM, revenues increased 31.3% in the quarter driven by high single-digit organic growth and strength in commercial construction.

Our 2017 acquisitions primarily Accella contributed 22.3% for the year-over-year growth. As Chris mentioned, we experienced meaningful positive price realization in our CCM legacy business for the first time since early 2013 and we are anticipating continued positive price results related to the announced increases for the duration of 2018.

We anticipate the effect of our pricing actions will more than offset higher raw material inflation and freight costs for the second half of the year. Despite this rising raw material freight and labor cost environment, CCM delivered operating margin of 17.1% in the quarter driven by higher sales volume, price realization and savings from COS.

The legacy CCM business delivered margins similar to second quarter of 2017. These positives were offset by approximately $11 million of raw material and freight cost increase.

Dilution from the Accella acquisition also contributed to the 340 basis point operating margin decline. Now, please turn to Slide 9 to review CIT’s results.

CIT delivered outstanding revenue growth of 17.8%, of which nearly 100% was organic. CIT experienced double-digit growth in the aerospace market.

Additionally, organic growth initiatives in medical and test and measurements markets are accelerating. CIT’s operating income improved by 36.1% to $27.5 million due primarily to higher volumes, lower restructuring costs and COS savings.

This positive momentum was offset by unfavorable mix and FX impact largely due to the strengthening Chinese RMB. Operating margin of 11.6% represented a 160 basis point improvement over last year.

As many of you are aware through the press releases and other public information, a significant supplier of satellite communication product announced they are going through some financial and strategic challenges in their business. At this time, we are in close communication with this customer and are taking appropriate measures to ensure Carlisle is prepared to react quickly to any significant changes in this market.

As a reminder, Carlisle enjoyed the solid working relationship with the world’s largest OE aerospace customers and we intend to continue to support the accelerating transition to a complete fleet of global satellite connected plans. Turning to Slide 10, CFT’s revenues, excluding foreign exchange, increased slightly.

Strong growth for standard products in all regions was offset by weakness in the transportation market and system sales, a portion of which were shifted into the third quarter. CFT’s operating income improved 5.4%, the third consecutive quarter of sequential margin improvement.

Operating income benefited from previous actions we have taken to drive efficiencies from our facility rationalization efforts, progress on vertical integration and price. Turning now to Slide 11, CBF achieved excellent revenue performance in the second quarter, increasing 20.8%, which reflects an organic sales increase of 17.7% and favorable foreign exchange of 3.1% primarily related to the euro and RMB.

The sales increase reflects price inflation, share gains and continued recovery in off-highway vehicle markets. With the recovery in sales, CBF’s operating income continued to improve.

The $1.6 million increase included $3.9 million of expense related to the consolidation of the Tulsa, Oklahoma manufacturing facility into our Medina, Ohio facility and $3.2 million of raw material inflation. We are on track to complete their facility consolidation by the end of 2018 and expect to realize annual savings of $12 million to $15 million from this project beginning in 2019.

On Slide 12, we have provided detail of our restructuring facility rationalization and other acquisition divestiture related items by segment. Charges in the second quarter included in operating income were $7.7 million for all segments.

For the full year 2018, we expect approximately $23 million to $27 million of costs largely driven by our Tulsa, Oklahoma footprint’s consolidation. Turning to Slide 13, as of June 30, 2018, we had $762 million of cash on hand and $1 billion of availability under our revolving credit facility.

Our balance sheet remains strong. As of June 30, 2018, our net debt to capital ratio was 24%, our net debt to EBITDA ratio was 0.8x and our EBITDA to interest ratio was 19x.

Turning to Slide 14, our free cash flow in the quarter was a use of $60.4 million compared to a cash generation of $67.1 million in the prior year. This decrease in free cash flow was due to the timing of cash taxes paid related to the sale of Carlisle Foodservice Products, U.S.

tax reform and increased working capital to support revenue growth. And with those remarks, I will turn the call back over to Chris.

Thanks Bob. Please turn to Slide 15.

We are going to discuss the 2018 updated outlook. For Carlisle overall, we are raising our 2018 consolidated revenue outlook to approximately 20% growth.

By segment, at CCM driven by a healthy 2018 forecast for the U.S. commercial construction market and including contributions from acquisitions, we now expect revenues to grow in the mid 20% range.

CCM will continue to maintain discipline around the execution of our price increases to offset the previously discussed inflationary cost pressures. Finally, we will also drive operational efficiencies in our factories, ensure the Accella integration delivers expected synergies and continue to expand into the building envelope space.

In the CIT segment, we will continue to expect revenue growth to exceed 10% driven by strong aerospace market growth within the med-tech platform and the ongoing SatCom conductivity ramp. We remain focused on converting a strong pipeline of new products or projects, driving a higher content per aircraft and seeking high-quality acquisitions for our med-tech and aerospace business.

At CFT, we continue to expect revenue growth in the mid single-digit percent range for 2018 with our significant efforts in investment to restructure the business, the fluid technologies platform is now focused on improving margins, operational excellence, launching new products and seeking acquisitions to continue to build out this platform. At CBF, we continue to expect revenues to grow in the mid-teens driven by accelerating growth in the CBF core markets.

At CBF, we continue to expect revenues to grow in the mid-teens driven by accelerating growth in the CBF core markets. We are seeing continued improvement at OEM customers, solid growth in all regions and share gains as a result of key sales initiatives launched in the past 2 years.

Corporate expense is expected to be approximately $75 million. Depreciation and amortization expense is expected to be approximately $190 million.

For the full year, we expect capital expenditures will be approximately $135 million to $150 million. We are anticipating free cash flow conversion to be approximately 100% excluding the effect of the sale of Foodservice Products.

Depending on timing and investment income derived from the sale of Carlisle Foodservice Products, we expect our 2018 net interest expense to be towards the lower end of the $55 million to $60 million range. Our tax rate is expected to be approximately 24% to 26% in 2018.

With our strong balance sheet and cash flow generation we will continue to invest in our business, fund strategic acquisitions and return capital to Carlisle shareholders through dividends and share repurchases. Following our strong second quarter performance, we entered the second half of 2018 well-positioned to achieve our growth and performance objectives despite facing an increasing inflationary environment.

With the early traction we have achieved against our Vision 2025 goals, we are excited to build on our positive momentum and expect to deliver record performance in 2018. This concludes our formal comments on the second quarter results in 2018 outlook.

Bruce, we are ready for questions.

Hi, guys. Congrats.

Can you talk more about the increase in the CCM segment full year revenue forecast, especially the raise in the organic sales forecast, just curious on what’s driving the change whether it’s further share gains or anything else you could point to?

Well, we still can see strong growth in our segments. I think across the board, we are seeing good growth, polyiso growth, EPDM growth, TPO and PVC, Accella growth is strong, so we continue to see a pretty positive outlook for that growth as well as this backlog situation and we think there will be a rush to get in the jobs before the winter hits.

So we are pretty positive about what’s happening in the environment and then we layer on the price as well and we do expect to continue to see a very good pricing trend in the CCM markets in the second half. Bob, would you like to add anything?

No, I think overall we are continuing to see the high single-digit growth that we experienced in the first half continuing on across all product lines and internationally.

Okay, great. And then I guess just looking on CCM again an acceleration in the price improvement, it sounds like you guys are pretty bullish on the priced outlook from here, just curious if you could provide just more color on what’s given you the confidence that this will continue to accelerate here and at the $30 million of positive price realization is still the right number for the full year?

Yes. And I will talk about the momentum and Bob can talk about the price realization there.

We committed to being disciplined on price a while back. We have been talking about it for a while.

And as you know, we had a couple of price increases this year and we have just held to those and we see no change in our policy with respect to the pricing that we have in place. It’s what we will continue to do.

We have continued to talk about it. And I think we have confidence, because we feel that the volume that a company does price increases is still going to be there and reinforce that environment.

Okay. And then are you guys sticking to the $30 million then for the full year?

Yes. Everything we are seeing today is still around the $30 million.

Clearly, we are going to continue to monitor and push for more, but all the momentum we have we got little over $6 million in the first half. So we think it’s a good a good number to get to 30 for the full year.

Okay, great. Thanks so much.

I will pass it on.

Thank you. Good afternoon, Chris.

Good afternoon, Bob.

Hi, Liam.

Chris, you talked about Accella being dilutive to CCM margins, is there anything you can do with that business, I know you are seeing nice revenue growth there, but is there anything you can do to help boost margins aside from volume increases?

Well, I think our major focus has been on the price. If we look at what we, Liam, just refresh your memory, we bought Accella, we have the January – 2 force majeures that drove the price in – the prices of raw materials in that market up and unfortunately Accella was not under the same type of contracts that CCM was.

We have worked very hard and we will continue to work to get the Accella team on the same CCM contracts that involve some reformulation, that’s why it takes a while, but that’s probably the biggest driver is to get them over to the contracts and then on the market side continue to drive price increases in the market.

Great. And on fluid technologies, you mentioned the transportation revenues deferred into the third quarter are those larger projects or is that for single customer, is that just a large order?

It’s larger projects. Again, we are – I think we said it before, we continue to see, we become victims I think of the automotive OEs and other major transportation products companies and they do push things up from time-to-time as they look at their schedules in the summer and then over the winter shutdowns and so this is just a transfer of that to a different data in the fall or winter.

Great. Thank you, Chris.

Hi, good afternoon, Chris, Bob, Jim. Thank you for taking my question.

Hey, Bryan.

With the restructuring in CIT and CFT largely in place entering the back half, is there any update on what we should expect for 2018 exit margins or where we could see margin inflect in those segments in 2019?

Yes, I mean, we don’t usually talk about margin guidance. I mean, we give revenue, we don’t go with margin.

I mean we are seeing improvement in those margins and we expect them to continue from those savings, but we don’t go specifics, Bryan.

Okay. And then in terms of long-term outlook, any change to what’s been discussed in the entitlement margin in CFT of 20% range?

No, I think you are right on there. As we said in the comments, the deal thesis still holds that was a 22% business prior to acquisition.

We have had some amortization in that, that we have added in, but we are back to that 20% plus. And with respect to the margins of CIT, I think we have said we will get back to those margins we have traditionally had in the 18% to 20%.

Okay, thanks again.

You bet.

Hey, thanks. Afternoon and evening guys.

Hey, just quickly on CIT and SatCom, it sounds like the ramp on that is going as planned, it’s kind on want to verify that there has been really no disruption there that you are still seeing that, I mean, you did obviously some supplier stuff going on. Is that on track or where are we on that?

We are on track, bit over $22.5 million in the quarter as we expected and everything is going according to plan through the second quarter.

Great, thanks. And just on the med-tech part of CIT, I think before you talked about one, you will really make that a larger portion, I think maybe up to same size of the aerospace at some point down the road, larger to M&A, we were going to see a whole lot of M&A on that business.

Can you just talk about kind of the pipeline and what you are seeing there or maybe is it just a fact of some of the multiples being asked for those assets or just still pretty elevated or is there anything else going on as for our strategy there?

No, nothing going as far as strategy, I think it’s a two-pronged approach really and the team at CIT continues to work on new products of us. We have got the pipeline there.

We continue to add resources and we will continue to generate our own programs in that space in the med-tech space. When we look at acquisitions Charlie, frankly the pipeline has been relatively good, I think valuations in that space have been quite high and we have had trouble thinking that there is a rationale is going to win a deal.

So the pipeline is there, but it’s a very heated market in the med-tech space.

Thank you.

Hey, guys. How is it going?

Hi, Joel.

So, can you just talk a little bit about the gross margin compression that we have seen and can you give us any sense of how much of that is from acquisitions and how much of that is from negative price cost roughly?

You are talking across the whole business, Joel or are you thinking something in particular.

Yes, I mean 80% your profits come from CCM, so if you just want to – if it’s easier just to do that piece that would be fine?

Yes. I mean, if you think about CCM we made the comment that in the legacy business margins in the second quarter were flat with what we have seen in prior year.

So, it’s largely due to the acquisitions we have made which we knew were going to be dilutive to margins overall. We are working to get those margins back up to a level in the mid-teens to bring margins backup, but as we stated in most of our deal thesis that those will take over time.

So we are happy with the overall ROIC on the acquisitions in the mid to long-term margin rates, but it takes a little time to get there.

Was there any operating profit contribution from Accella?

Yes, there was. And there was – we had about a just over $10 million, $12 million of raw material headwind in the second quarter in the CCM space, but that added to that Joel and then as we said, we picked up about $6 million of price there.

So we still had some margin compression due to those raw material headwinds that we think when we get into the Q3 and Q4, those will – the price will overcome the raw material headwinds.

And then could you just take one step back and just give us a little sense of the competitive environment in CCM, I know that was more of an issue I think in 2017, but just a little update there please? Thank you.

Yes, I think the competitive environment is usual. It is very competitive.

The one thing I would say is that with the volumes now in many quarters increasing, where there is a lot of activity out there, obviously these high single-digit growth rates in the – or mid to high in the market is very beneficial to everyone. I think there have been some capacity issues at some competitors, which likely has influenced the ability of price to stick.

But the same competitors and perhaps there is some greater degree of a rational behavior due to the added volume, but no significant changes and footprint, no significant changes in product lines, no significant changes in the general go-to-market strategies.

Are you gaining a little bit of – you like is your moat getting a little bit bigger by putting in, having sprayed foam like adding all the different products and some of the building envelopes and metal roofing and all the other things, are you in order mean like pushing some of the competitors, maybe they can compete across the board, are each one of those different pieces, is the different niche with different competitors?

It’s a mixed bag, Joel. I would say in the metal roofing, the Drexel platform that we are expanding, that’s a different set of competitors.

We have talked about how fragmented that market is in the U.S. There are a couple of larger businesses, but for the most part, it’s been a regional and fragmented business.

When we look at spray foam, we saw a lot of transactions happen over the last couple of years and some competitors have that product line, others don’t, but I think in general, it’s fair to say that we are increasing our moat and we are encountering some of the usual suspects. And then in some cases, we are running into some new competitors that we haven’t seen before.

Okay. Thank you so much.

Thanks, Joel.

Thank you. I just wanted to confirm on the raw material side for CCM that it’s tracking in line with your prior guidance, it sounded like the raw materials were in the $11 million range in the second quarter, pretty consistent with the first quarter.

So I just want to make sure that we are tracking with that $40 million guidance previously and I just want to put that with some of the comments that you mentioned with inputs accelerating in the second quarter?

Yes, we are seeing a track to the $40 million as we thought. Now in that, things are moving around, oils are a little bit different, freight is a little different, MDI is a little different, but when you look at the basket of inputs into the products at CCM, the $40 million is still a good number?

I would assume MDI is moderating, oil and diesel costs are getting a little bit worse, is that a fair way to think about it?

That is a fair way to think about it.

And then just lastly just on the acquisitions that you made in the quarter, recognizing they are probably relatively small, is there any meaningful revenue contribution that we should expect from the second half of the year whether it’s the acquisition in Europe in CIT or metal roofing in the U.S.?

I think combined the acquisition revenue on an annualized basis is about $20 million. So there will be some probably three quarters of that in the CCM roofing in a quarter in CIT, but again it’s small when you think about the sizes of those businesses.

Thanks very much.

Thank you, Garik.

Hey, good afternoon everybody and nice quarter.

Thank you. Good afternoon.

I am wondering if you could comment back on CCM very impressive volumes and I was wondering if you could give some type of quantification on how that – what you felt the industry growth looked like, because it seemed like maybe there was some potentially market share gain opportunities there from some plants being offline and it’s not you mentioned new products growing what 3x or triple or something during the quarter. So I am wondering if you can comment on what the industry grew kind of weighted for your product lines and then also what drove what seemingly seems to be an outperformance while still being able to get pricing traction?

Right. So, let me take the first one, the market growth.

We think that market and the data we have is I got some variation around the mean there. So let’s just say it was in the 5%, 6%, 7% range and we think we held flat to that overall.

When we look at specific pockets, you are right, I think there was some disruptions that caused us to make some share gains. I think if you were to look at the EPDM area we were up well over double-digit performance there, the polyiso maybe a little less.

So, there are some spots where we were above average in our share gains and that due to reasons we have discussed in the past. And then on the second question, Bob, you want to jump in on that?

And Kevin, maybe you can recharacterize your second question just for us again one more time I apologize I thought I had it, but….

I think you mentioned also new products growing pretty significantly to, I don’t know, what base that’s coming off of, but it sounded like kind of new products, I think you have like a Velcro application or something that that might be growing nicely. So could you just kind of comment on what the new products are in CCM that are maybe help getting in some of those share gains?

Yes, I got that. I mean, they are still relatively small, I mean the new product revenue in the second quarter was probably close to $20 million.

So, it’s still not a big part, but that’s largely our Velcro fleece backline that’s going out, Chris talked about attending the show in Vegas, the Western roofing show and I went to one of our demos of that and it was jammed, all the contractor seem to be pretty excited about that Velcro line. And then also our appeal product which we have talked about before that goes on the white roof and then you pull it off, so you don’t have to power wash it when you are done, like on a new phone or new product to just peel it off to keep it all nice and white.

So, those seem to be growing very nicely and we are gaining traction. Now, we are hoping they get a lot more than the $20 million I talked about, but that’s where we are today.

Hey, Kevin. I think the other question you asked had to do with the pricing and was it we did it maybe surprise us in the quarter or we were able to hold on to volume in that and we have been pretty disciplined on that for the last few quarters and we went into that May price increase and we looked at it, I would say there was a interpretation we were to be firm on price and was the volume going to fall or would it not fall.

And so I think we are very pleased that we were able to get the pricing traction we had without really seeing any degradation versus the market growth rates.

Got it, okay. And then you mentioned too on the SatCom side maybe some customer having some issues, could you update us on where SatCom is today and kind of thoughts as we progressed through this year and next how to think of the revenue and earnings to that part of the business given that development?

Yes. I mean, overall we are still in the $90 million range for this year we expect.

That’s still everything we see on track. The market hasn’t changed.

There has been some public announcements of some of the providers in that space that are having some problems. So we don’t know what that’s going to do to us over the long-term, but we step back we know that airlines and planes are going to get the satellite connectivity as demanded by the market who is going to do that is still playing out and we feel we are well-positioned.

Got it, okay. And then Bob you mentioned that CCM I think you said I guess I wanted to clarify that earnings, the legacy CCM business profitability was similar, are you saying that the EBIT dollars were similar from the legacy business or the EBIT margins?

The margin rate year on year.

Okay, got it. Okay, thank you very much.

Hey, guys. Good afternoon.

Nice job.

Hi, Tim.

So, I guess lot has been covered I just had a couple of follow-up questions. I guess just big picture in CCM just given how it sounds like robust that the end-market is in terms of volumes.

Do you feel like you can be a little bit more selective with project activity just to be able to hold price or do you feel like you are getting on the volume you should get or do you feel like you are vetting some projects kind of flip through the cracks?

I think it’s fair to say that all the way along where we have seen projects that are not a good return for the Carlisle shareholder we have selected to not fulfill those orders and leave those to the competition. So yes, to a certain degree, we have declined some of the opportunities we could have taken advantage of if we wanted to drop to those pricing levels.

Okay. And then just how are you guys thinking about kind of cash flow use and capital use and maybe the back half of ‘18 and into ‘19 it sounds like maybe the acquisitions might be a little smaller and some of the bigger ones might be a little expensive.

So would you spend free cash flow and buybacks in the back half of the year, should that be our kind of expectation there?

I think our buybacks are going to continue. The rate may change obviously depending on the thing that Bob and I have talked about a lot, which is the availability of acquisitions.

But the pipeline is full, we like to be active there and where we see things we can act on we will to provide again a disciplined approach to synergies and organic growth and they are just starting to find, but they are there. And so I would like to think we would be a little bit more active on acquisition front in the second half of the year.

Okay. And then just the last question on the restructuring charges, is the uptick in CBF, is that incremental restructuring or is it just I think some of those charges actually were supposed to flow into ‘19 is it just a pull forward of those dollars?

It is. It’s a pull forward of the dollars.

And also as you know volumes are way up. So, we are spending a little more on moving some other equipment that we weren’t planning on due to the fact that now the volumes are still higher, we are going to need extra capacity that was in the original plan.

So it’s a little bit of that.

Okay, but the right way – okay, so the right way to think about it so as you kind of go into next year, the charges will mostly falloff and then you will also get that kind of run-rate $12 million to $15 million in synergies as well?

Yes, we are expecting a little bit of charge in next year for CBF like couple of $100,000 just as the lease continues, but other than that, there is projects done in the fourth quarter.

Okay, great. Well, good luck on the back half of the year guys.

Thanks.

Thanks, Tim.

Okay. Thanks very much, Bruce.

This concludes the 2018 second quarter earnings call. We want to thank everybody for their participation.

We look forward to speaking with you at our next earnings call. Thank you.