Good afternoon. My name is Brita and I will be your conference operator today. At this time I'd like to welcome everyone to the Carlisle Companies Third Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, we will conduct a question-and-answer session. I would like to turn the call over to Mr. Jim Giannakouros, Carlisle's Vice President of Investor Relations. Jim, please go ahead.

Thank you. Good afternoon, everyone, and welcome to Carlisle's Third Quarter 2022 Earnings Conference Call. We released our third quarter financial results after the market closed today and you can find both our press release and earnings call slide presentation in the Investor Relations section of our website, carlisle.com. On the call with me today are Chris Koch, Chairman, President and Chief Executive Officer; and Kevin Zdimal, our Chief Financial Officer. Today's call will begin with Chris giving an update on our progress and achieving our strategic plan, Vision 2025, highlights of our third quarter results and a discussion of current trends. Kevin will discuss the financial details and our updated outlook. Following Chris and Kevin's remarks, we will open up the line for questions. Before we begin, please refer to slide two of our presentation, where we note that comments today will include forward-looking statements based on current expectations. Actual results could differ materially from these statements due to a number of risks and uncertainties, which are discussed in our press release and SEC filings. As Carlisle provides non-GAAP financial information, we’ve provided reconciliations between GAAP and non-GAAP measures in our press release, and in the appendix of our presentation materials, which are available on our website. With that, I will turn the call over to Chris.

Thank you, Jim. Good afternoon, everyone, and thank you for joining us on our third quarter 2022 earnings call. The third quarter of 2022 was another superb quarter for Carlisle, as our teams across the globe continued to deliver on the Carlisle experience, utilized our continuous improvement culture to improve our processes and leveraged our position as a preferred supplier of solutions to our customers, from order entry to deliveries, to writing specifications, to the ongoing performance of our products in the Building Envelope. We also continue to see positive underlying trends, including positive multiyear re-roofing needs, solid new non-residential construction demand and increasing interest in energy-efficient solutions. Additionally, a much improved supply chain resulted in the emergence of a more orderly and normal operating environment than we have seen during the last two years. One example of this improvement is within our CWT business where we have gone from having 50-plus suppliers on our watch list to now having less than 10. While supply remains tight in many areas, we did see our customers have more confidence in the supply of our product, which drives a better and more efficient workplace and ultimately a reduction in the need for building inventory and extending lead times. As we enter the fourth quarter, despite the positive underlying trends I just mentioned, we continue to operate in a highly uncertain and volatile environment, which has really been the case since March of 2020. The continued effects of inflation and impact on the American consumer have been significant. The decision by the Fed to mitigate rising inflation with meaningful increases in interest rates has slowed the housing market due to a rapid increase in mortgage rates, which has raised borrowing costs for buyers and pushed many prospective buyers out of the market. In addition, most signs are pointing to a slowdown in US and global growth, which will likely impact jobs and investments for the near term. Coupling these factors with the coming US midterm elections and another potential 75 basis point increase by the Fed in November, there is no doubt the fourth quarter will continue to bring us volatility, uncertainty and a more cautious stance by consumers and businesses. Turning back to the performance of the quarter and a more focused eye on our work here at Carlisle, I am very pleased with the outstanding performance of our teams. They continue to show resilience and persevere in their work and have driven record year-to-date earnings to over $14 of diluted earnings per share on a GAAP basis, well on our way to achieving our Vision 2025 annual EPS target of $15. Our accelerated path to achieving Vision 2025 is due to our teams' unyielding commitment to deliver the Carlisle experience and a resilient and continuous improvement culture, all the while focused on delivering results for our stakeholders. Please turn to slide three. Our record results continue to demonstrate that Vision 2025 which has provided the clarity and consistency of mission since its launch in 2018 has been a guiding beacon and well-defined path for Carlisle, particularly given extraordinary volatility in global markets over the past several years. In addition to our world-class teams and proven business model, we've relied on a strong balance sheet and excellent cash flow generation to provide both financial and strategic flexibility to execute on our long-term plan and elevate the earnings power of Carlisle. A significant portion of our success has been driven by the multiyear process of reshaping our portfolio to pivot from a diversified industrial products company to a building products focus setting the stage for more focus, more simplification and a better understood path to accelerated and sustainable value creation. The pillars of Vision 2025 remain core to our strategy going forward. These include: first, drive mid single-digit organic growth. And in the third quarter, we delivered 28% organic revenue growth. Second, utilize the Carlisle Operating System or COS to drive leverage. We use COS to consistently drive efficiencies and enhance operating leverage by targeting cost savings of 1% to 2% of sales annually. In the third quarter, adjusted EBITDA grew 75% nicely leveraging our sales growth. Third, build scale with synergistic accretive acquisitions. Under Vision 2025, we have streamlined and optimized our portfolio through acquisitions and divestitures to build scale in our highest returning building products businesses. CWT leadership continues to execute extremely well on delivering a smooth and efficient integration of Henry and is on pace to exceed our initial synergy targets of $30 million. The CWT team is doing an excellent job working both incremental cost synergy opportunities and seeking to drive revenue synergies given it's now a broader set of products. We remain excited about acquisition prospects within the Building Envelope and we're working in an active pipeline of opportunities to broaden our suite of energy-efficient solutions. And fourth, a returns-focused capital allocation strategy that includes deploying over $3 billion into capital expenditures share repurchases and dividends. Since the launch of Vision 2025, we have deployed over $2.8 billion into these areas. Turning to our 2022 year-to-date actions, we've made capital investments of over $130 million into our businesses to drive innovation and the Carlisle Experience is exemplified by the third quarter launch of our first industry-leading 16-foot TPO line in Carlisle PA and we remain on track to deploy $175 million in capital expenditures this year. We've also made share repurchases totaling more than $200 million and paid approximately $96 million in dividends in 2022. To that point, we were very proud to raise our dividend 39% to $3 in the third quarter, which continues our 46-year trend of annual dividend increases. This 39% increase is Carlisle's largest in the past 25 years and reflects our strong sustainable financial position and confidence in continued growth of Carlisle's earnings and cash flow. While the pillars of our soon-to-be achieved Vision 2025 have proven to be sound, I want to reiterate that these are core to Carlisle. With these cultural and strategic pillars in place, we are proud of our accelerated execution of Vision 2025 and remain committed to our approach to sustainable value creation for all stakeholders. Please turn to Slide 4 and let's look at the drivers of our record performance in the third quarter and year-to-date sales and earnings. First, US non-residential construction demand remains strong and we are optimistic that the underlying trends will overcome well-known pressures seen in the global economy. Re-roofing demand also continues to be a reliable, significant and sustainable driver for growth and new construction still a tailwind. Notably we are on track for double-digit volume growth at CCM for the second straight year. Fortunately, material availability has improved meaningfully in the past few months and as such, we are seeing a normalization of buying patterns by our customers. Additionally, the need for energy-efficient building solutions to help mitigate rising energy costs and collectively help reduce the planet's carbon footprint will continue to be a driver. Second, pricing at all of our businesses continues to be positive as we focus on earning price for the value we create for our customers through the Carlisle Experience. Our continued and growing investment in new product innovation, world-class manufacturing capabilities and best-in-class customer service encompass the value proposition that our partners have come to rely on from Carlisle. And architects and building owners know they'll benefit from our innovative energy-efficient building solutions that the market increasingly demands. Third, residential markets are facing increased pressure due to interest rate hikes, significant inflation and, at the consumer level, a reduction in building products expenditures. While impactful in the short-term, we believe that longer-term fundamentals in residential markets remain attractive, given the undersupply of homes in the US and growing demand for energy-efficient building solutions, particularly given recent supporting legislation and rising energy costs. Fourth, aerospace markets continue their recovery, driving record backlogs at CIT and increased profitability on the back of restructuring actions taken over the past few years. We're very optimistic about the prospects for continued recovery in the aerospace markets, supported by a shortage of aircraft, which has caused the US airlines to cut back on flights as they struggle to cope with the rebound in passenger travel both domestic and international. Finally, we remain firmly committed to sustainability. Please turn to Slide 5. The recent publication of our third corporate sustainability report is another milestone in our ESG journey. Carlisle's three pillars of environmental sustainability, energy-efficient products and solutions, the reduction of greenhouse gas emissions in our manufacturing operations and the reduction of waste entering landfills are central to our efforts to achieve our sustainability goals. We also announced on October 17, a special stock option grant to all eligible employees, representing Carlisle's third broad-based stock option or cash equivalent grant to employees in the last 12 years. We believe that it is beneficial for all employees to have ownership and participate in the success of the company. This grant provides a significant incentive for the team to drive actions that will help Carlisle achieve its long-term objectives. Additionally, through the Inflation Reduction Act that was signed into law in August, the building industry can take advantage of extended and expanded incentives through energy-efficient building practices. More than $300 billion will be invested in energy and climate reform through energy tax incentives, investments in clean energy production and tax credits aimed at reducing carbon emissions. These increased incentives for US builders, installers, homeowners and commercial building owners who demonstrate reduced energy use should drive increased demand for Carlisle building products and energy-efficient solutions. Lastly, we continue to make significant strides towards aligning our greenhouse gas reduction strategy with the Science Based Targets initiative or SBTi, which defines and promotes best practices and science-based targets that help provide companies with a clearly defined path to reduce emissions in line with the Paris Agreement goals. We are on pace to submit our alignment goals for approval by the end of 2022. Please turn to Slide 6 where we highlight our record performance in the third quarter of 2022. Revenue increased 36% year-over-year with organic revenue up 28%. All segments contributed to this record growth. Adjusted diluted EPS increased 89% year-over-year to $5.66 driven by higher volumes price Henry's contribution and COS initiatives, which more than offset inflation and supply chain disruptions. And with that I'll turn it over to Kevin to provide more detail about the businesses, additional financial details and our updated outlook for the remainder of 2022. Kevin?

Thank you, Chris. For segment highlights, please turn to Slide 7. CCM drove revenue growth of 39% with excellent leverage. This performance was driven by continued strong demand in US commercial roofing capturing price earned by delivering on the Carlisle Experience and new product sales, partially offset by what we consider near-term softness in our Architectural Metals business, potentially more persistent challenges in our European business due to the effects of a recession and ongoing energy crisis and unfavorable impact from changes in foreign exchange rates. Adjusted EBITDA margin of 32.5%, a record performance in the third quarter by our CCM team was driven by volume price and COS, and partially offset by raw material and labor inflation and unfavorable mix. Moving to Slide 8. Sales at CWT increased 44% year-over-year. This growth was achieved despite ongoing but improving supply constraints in pockets of incremental softness in demand, namely in residential markets. As we pass the one-year mark of our Henry acquisition—the largest acquisition in Carlisle's history—we continue to execute on our synergy strategies, drive the principles of the Carlisle Experience and are in the process of rolling out COS throughout CWT to drive further leverage in our operations. Moving to slide 9, CIT revenue increased 25% year-over-year in the third quarter of 2022, with balanced growth in its Commercial Aerospace and Medical Technology platforms. We continue to see domestic travel approach pre-pandemic levels and as a result have seen CIT experience record backlog. We expect to see continued rising demand for narrow-body aircraft and eventually wide bodies as domestic and international travel continues to recover. Leveraging these positives, our team delivered a nice lift in profitability in the third quarter versus the first half of 2022 aided by previous restructuring efforts. Turning to CFT on slide 10, CFT generated organic revenue of 10% year-over-year, partially offset by a 7% year-over-year FX headwind. With over half of CFT sales being international, we expect a strong U.S. dollar to continue to be a headwind to sales growth near-term but fundamentals remain intact. We remain confident that commercial and operational improvements combined with a strong backlog will deliver revenue growth and incremental margins in the mid-40% range. Slides 11 and 12 provide details about our record third quarter consolidated results for revenue and adjusted EPS. Moving to slides 13 and 14, Carlisle ended the third quarter of 2022 with $625 million of cash on hand with cash generated from continuing operations totaling $366 million, capital expenditures of $48 million, share repurchases of $26 million and dividends paid of $39 million during the quarter. We currently have 4.2 million shares remaining in our share repurchase authorization. Our net debt-to-EBITDA ratio is 1.6 times, down from three times at the end of 2021 which, as a result of the Henry acquisition, was elevated compared to our target net debt-to-EBITDA range of one-time to two-times. Given the repayment of our $350 million senior notes on October 17th and our expected EBITDA growth for the balance of this year, we expect to maintain our net debt-to-EBITDA ratio within this target range. On slide 15, we have our updated 2022 financial outlook. At CCM, we expect to deliver a record full year in 2022, and expect year-over-year revenue growth in the 35% to 40% range. At CWT, we continue to expect revenue to grow approximately 60% year-over-year. At CIT, we now expect revenues to exceed 20% in 2022. At CFT, we now expect mid-single-digit revenue growth in 2022 due to foreign translation headwinds. Finally, on a consolidated basis for Carlisle, despite the significant headwinds and volatility the economy has experienced in September, we expect to deliver a record year in 2022 with a full year revenue growth in the 35% to 40% range. Given strong fundamentals across our businesses staying ahead of inflation with proactive pricing actions and driving strong leverage through COS, we maintain our expectations for total Carlisle adjusted EBITDA margins to expand approximately 650 basis points. With that, I turn it over to Chris for closing remarks.

In closing, I want to express again how pleased I am with the hard work and perseverance of Carlisle employees. Their resilience and experience will continue to provide Carlisle with a competitive advantage as we navigate in this highly complex environment. Despite numerous macroeconomic challenges, the Carlisle team continues to deliver our culture of continuous improvement, focused on delivering solid results. Our outstanding third quarter demonstrates Carlisle's progress towards achieving our goals as laid out in Vision 2025, including delivering $15 of GAAP earnings per share three years earlier than originally contemplated. While we will be vigilant and monitor the macroeconomic environment and the drivers of each business we continue to be optimistic about the direction of Carlisle. And as Kevin mentioned we expect a record fourth quarter and a record 2022. This concludes our formal comments. We are now ready for questions.

Thank you. The first question we have from the phone lines today comes from Tim Wojs of Baird. Please go ahead when you are ready.

Yeah. Hey, guys. Good afternoon.

Good afternoon, Tim.

Maybe just to kind of start on the market. I guess when you look at the non-residential parts of your business, I mean, have you seen any changes within order rates or backlogs or anything like that over the last 60 days to 90 days? And then I guess on the residential side could you kind of quantify what your exposure is on the resi side and kind of what your assumptions within that market are for the next few quarters?

Sure, Tim. I'll begin and then Jim and Kevin can add their thoughts. We are noticing improvements in the materials sector for our non-residential business as I've mentioned regarding the supply chain. Our MSP program, which we implemented due to high demand and the need to allocate resources because of limited industry capacity, started to ease in September as conditions improved. Consequently, this has led to a greater confidence in sourcing products, resulting in changes in buying patterns. Previously, we had to extend order timelines into 2023, indicating a long-term view from contractors. However, with the supply chain enhancements, we are now observing a return to more typical order patterns, which is definitely a positive shift. In terms of the non-residential mix for Carlisle, it stands at approximately 85-15. For CWT, it’s roughly 50-50 following the addition of Henry, and regarding CCM, we're at about 90-10. James, do you have anything to add?

Yes. Just as a reminder too on the fourth quarter piece as we normalize that's compared to last year where things were not normal and we had a very busy fourth quarter last year. So seasonality will start returning more to what it has been historically.

Okay. Okay. And then as you kind of get back to normal seasonality, I mean does that have any implications in terms of kind of how you guys have kind of moved to a pricing upon shipment type strategy, or how do you kind of think of that unfolding over the next call it 12 months?

Yes. Well, I don't think it changes anything in pricing, Tim. As we said, pricing has continued to be strong.

Okay.

We don't see any changes in actual pricing. I mean as far as we can see forward, we did have the actions in September that were increases and we've had other actions that we're going to start to lap in 2023, but no real change in pricing. I think the only thing is that comment you mentioned the detail around at time of shipment with the MSP unwinding in that allocation process, yes, we'll be relaxing that and going back to more normal kind of terms and conditions for our non-residential customers.

Okay. And then one last question about the EBITDA guidance for the year, has anything really changed there? I'm trying to understand if there were any changes at all.

Yes. We remain confident on the year-over-year improvement of 650 basis points. So no change from the previous guidance there.

Okay. Thanks very much, guys.

Thank you. We now have Bryan Blair of Oppenheimer. Please go ahead. Your line is open.

Thank you. Good afternoon, guys.

Hey, good afternoon, Bryan.

I was hoping you could quantify the impact on the top line and margins from the challenges in Architectural Metals and Europe in Q3. Alternatively, could you isolate the performance of US commercial roofing for that quarter? I'm curious how Q3 compared to Q2 for the core single-ply business.

Yes. So we don't break out the individual business units within the segments. Overall, obviously, though the third quarter for CCM and core roofing is the majority of that segment. I mean we had significant improvement year-over-year over 750 basis points improvement for the quarter.

Yes. And I think it's safe to say, Bryan, that the European situation is not one that anybody would say has improved over the last quarter. I would just add that.

Okay. Fair enough. And kind of nuanced point, it was called out unfavorable mix within CCM EBITDA margin and that's obviously relative to very strong year-on-year expansion. I would think with single-ply outgrowing the other business lines that that would be inherently favorable. So within that, what is the unfavorable mix call out?

Yes. We have a mix that includes different components; in addition to the membrane insulation, there are also accessories. This is contributing to the change in mix.

Okay. That's fair. And I guess any early-stage feedback you can offer on the commercial rollout of your 16-foot TPO line? I know that we are early days there but there's quite a bit of excitement around that. So just curious what you're hearing from the channel.

Yes. I mean a lot of good things. We did a lot of work to understand how we handle at the job site. Not a problem. We have rolled it out. Obviously, there's still pretty good demand for TPO in the marketplace. The team is in the process of educating contractors, talking about how to use it on the job site. People are getting used to using it. That's the rollout. But the demand certainly is there. And I think it's just a great example, Bryan, I'm glad you asked it, of one of these ways that we're going to seek to maintain that Carlisle Experience and obviously the margins that come with it where we're pricing to value because that 16-foot line is taking labor off the roof. It's allowing contractors to get their jobs done faster and move on to other jobs. And we know the same things are holding true today that held true three months ago and six months ago, labor is constrained. So everything we can do to get contractors to put down a high-quality Carlisle roof and then move on and get more jobs done. We know that means good things for us both in terms of sales and margins. So, yes, it's going well. And obviously, as with anything, it takes time to spool up and get rolling.

Excellent. Appreciate the color. Thanks, guys.

You bet.

Thank you. Your next question comes from the line of Garik Shmois of Loop Capital. Please go ahead when you are ready, Garik.

Hi. Thank you. I just wanted to follow up on the full-year revenue guidance at CCM. I think you were at 40% before; it's now 35% to 40%. Just to be clear, was that mostly on the roofing part of the business or loosening of the allocation was a bigger component of that fine-tuning of the guide on what you're seeing in Europe and in the Metals business?

Yes. I'll take that one, Garik. It's Jim. Yes. I mean it has more to do with just encapsulating what's going to happen in 4Q and reflecting the buying pattern normalization that we're seeing in the marketplace, right? And so, 40% is still in play, but we thought it prudent to expand it to 35% to 40%, just because there is that timing variance that we're seeing currently in the second half. And then obviously, as Kevin pointed out, seasonality is coming into play and we haven't had to talk about seasonality for several quarters now.

Got it. Okay. And then just lastly just on inflation, maybe you could touch on what you're seeing there? And if any of the cost baskets have changed since the last quarter?

Yes, I’ll address that. We are observing ongoing inflation in the marketplace. We've consistently implemented price increases for some time now, addressing raw material inflation. We're also making efforts to clarify the distinction between value and cost. We anticipate that things will normalize as supply becomes more available, and we've noted the reduction in our CTW from 50 to 10. There is current pressure on the supply chain to lower costs, which aligns with the Federal Reserve's actions aimed at reducing inflation, and we are starting to see indications of that. We expect this trend to begin in Q4 and continue into 2023.

Got it. Okay. Thanks a lot.

Thank you. We now have Dan Oppenheim with Credit Suisse. Please go ahead when you're ready, Dan.

I guess wondering in terms of CIT, given sort of the strong backlog in aero and medicine. Wondering sort of how do you think about the opportunity to boost margins from that in terms of strength for revenue and such what it translates into margins that you look ahead into 2023 and such?

Yes. I'll address it generally and then Jim or Kevin can provide more specific details, but I believe the outlook for CIT is very positive moving forward. One of our significant challenges has been getting our planes certified and back in the air. We recognize that demand exists, and the restructuring efforts CIT has implemented over the past two years are starting to show results. However, a major concern is the production of the 787, which has greatly impacted our sales and profitability. With Boeing not delivering the expected output for that aircraft, it has affected our margins negatively. I expect that as we move into 2023, we'll start seeing an improvement in the 787 production, and I am optimistic about this. Once we have those planes certified and flying again at a good production rate, it should positively influence our mix and enhance profitability. Additionally, they have performed well on pricing and taken necessary restructuring steps. As we return to a more typical mix, I believe 2023 looks promising for CIT.

Great. And I guess then secondly, just wondering given the comments about sort of the optimism about non-res, sort of overcoming some of the recent pressure. That's more sort of an expectation over time rather than I guess wondering if there's anything you've seen more recently that sort of would reinforce that in terms of improvement but sort of my sense would be that's more sort of weakness the quarter went on but just curious if there is anything that sort of supports the optimism right now?

Yes, we believe contractors are currently busy. I mentioned labor constraints and our analysis includes factors like ABI and Dodge reports. One positive data point is that we are now seeing about nine months of contracted backlog, compared to seven or eight months when we started 2022. The situation in the first quarter is influenced by the significant decline we experienced in the spring of 2020 due to COVID. We have since seen a strong recovery, as demand has returned, and people are coming back to workplaces and attending events like football games. This marks a return to normalcy. There will be a period where things will balance out, which we are observing in the fourth quarter. The underlying demand for contractor work remains strong, and we have emphasized that re-roofing has been a significant driver for Carlisle over time. There has been no slowdown in re-roofing while we pursued new construction throughout 2022 and 2021. Overall, I don't believe there has been any change in demand; we are simply experiencing a return to normalization that everyone is noticing as we navigate through the fourth quarter.

Great. Thank you.

Yes.

We now have John Joyner of BMO. Please go ahead when you’re ready.

Hi, good afternoon. Congratulations on another strong quarter. I assume you would prefer some normalization and moving away from carrying such a large backlog. However, how much visibility do you have going into next year? Additionally, how do you perceive the difference between the price increases you have implemented and the oil prices that have stabilized at this level?

John, I'll let Jim discuss visibility, and I think he will have some positive insights on that. Regarding oil, we've mentioned in the past that we've conducted extensive research on the relationship between oil and the end products we source from suppliers. While it serves as a general guideline, we found limited correlation, which was surprisingly low. This is influenced by processing and demand dynamics in industries like automotive, which affect the various petroleum distillates we purchase. Therefore, I don't believe oil pricing will significantly impact us compared to its broader economic indicators. More crucial is the situation at places like the Port of Long Beach, where improvements in trucking and a reduction in our watch list from over 50 suppliers to just 10 allow us better access to products and help us return to more normal operations. When companies can plan effectively, it reduces extra costs associated with labor, overtime, and freight. So, I would say that oil is unlikely to be a major driving factor for us. Jim, would you like to address the demand?

Yes, John. Our outlook is closely tied to demand as indicated by what our contractors are requesting, and the nine months of backlog mentioned by Chris is our primary focus. As we began this year, we anticipated a volume growth of 5% to 10%, and we are currently on track to achieve the higher end of that range, if not surpass it, due to strong customer demand. As we look towards 2023, we maintain a similar perspective regarding visibility, which does not extend much beyond the summer. However, during this adjustment period as buying patterns normalize, we expect to continue seeing strong volume trends, which is the basis for our projections for the coming quarters.

Okay. Got it. Got it. And maybe just one more. So, I mean after recently seeing your 16-foot wide TPO membrane line in the innovation center there in Carlisle, I mean I think many people would be surprised honestly, by the advancements in roofing and related products that are occurring. So I guess, what are some of the other products that maybe target labor savings or other areas that maybe you could highlight that you're excited about and that could be ultimately additive to organic growth?

Sure. There are a couple of products that recently came out that I'm really excited about. We can discuss their impact on margins and sales, particularly our APEEL product. It's a fantastic addition as it applies a protective layer on the TPO sheet. Once the job is done, people can peel it away, leaving a perfectly clean and brand-new roof without any dirt or traffic on it. Previously, the process required individuals to walk on dirt, which meant needing pressure washing equipment on the roof, risking damage, and consuming valuable time and labor. We’d rather our contractors focus on their next job than spend time cleaning previous ones, allowing them to install more TPO, EPDM, and PVC membranes. Additionally, we've received positive feedback on our VELCRO systems, which have proven to be incredibly robust, especially during recent weather events. These systems eliminate the need for adhesives, saving time while delivering a high-quality membrane that is versatile for various situations. This innovation aligns with our goal of having the labor force work more efficiently for our contractors. Our teams are focused on creating products that help get jobs done faster and with higher quality, ensuring contractors can provide reliable warranties to building owners. We are also exploring potential that includes the Internet of Things and improved sensing technologies on equipment to enhance product quality and reduce defects. We’re also excited about enhancing the customer experience through technology, which will offer more direct interaction with contractors. Upcoming tools will improve shipment tracking and ordering processes, enabling contractors to operate more efficiently. Our objective is to deliver value for everyone in the channel, which ultimately benefits Carlisle.

All right. Excellent. Yes. Thank you. Sounds exciting.

Appreciate it.

Thank you. We now have Adam Baumgarten from Zelman & Associates.

Hey, good afternoon everyone. Just a question on CWT maintained total revenue guidance for the year. I know last quarter you were calling for 20% organic revenue growth. Has that changed at all given the third quarter?

We're still in the range of that. I mean those are approximate numbers. But yes, that's what we're still striving to hit for the fourth quarter and full year.

Okay. Got it. And then just on some of the residential softness in CWT that you cited just a couple things curious. Was there any difference in maybe the level of weakness between maybe the repair and remodel market or the home center market and new construction? And then as well was there any level of destocking in any of the channels during the quarter that may have impacted growth?

I don't believe we experienced any destocking. In fact, in some of our retail channels, we're in the process of gaining shelf space and market share by taking some from competitors. But, Jim, are you going to address the first question?

I want to point out that the repair and remodel segment is more stable compared to new construction. We are noticing some tightening in the residential market, which led to relative softness that we observed in the third quarter and expect to continue into the fourth quarter. Therefore, Kevin is referring to staying within that 60% total range, which isn't enough for us to adjust our previous guidance.

And I think the other thing is we've got a pretty significant percentage of that residential homeowner that is dedicated to fixing leaks to making repairs and that kind of thing. And so I think there's some stickiness there that we'll see and maybe even some improvement as people are a little bit more restrained on their incomes. They might go to more of a Henry product to repair leaks and things like that, so.

Okay. Great. Thank you.

You bet.

Thank you. We now have the next question on the line from David MacGregor of Longbow Research. Please go ahead when you’re ready.

Hey, good afternoon everyone.

Good afternoon.

I can speak firsthand about the strength of the Henry product for fixing leaks, as I was working on that last weekend. I wanted to ask you about carryover pricing into 2023 in CCM and how much benefit you think 2023 pricing will receive from the pricing actions taken in 2022 that carry over.

Yes, this is Jim again. David, if you look at the price increases throughout the year, the last one occurred in early September. By considering that, you could estimate a mid-single-digit plus benefit for 2023 if you maintained that throughout the year.

Okay. Good. Just on the CCM what can you say about the size of the jobs that you're seeing the size of the tickets? Are you seeing any meaningful change there, or are things pretty much continuing on trend?

Yes, things are continuing on trend. Haven't had that called out that there's been any change in the size of the projects, no.

Okay. Henry, can you just talk about being above target in terms of your synergies and the stronger accretion and just what you think might be driving that? You mentioned a moment ago gaining share in retail. I'm guessing that's a contributing factor, but anything else that you can call out?

I believe the teams did a remarkable job. This integration is likely one of our best acquisitions ever. The team reflected on previous experiences and utilized an effective playbook for this integration. We've standardized that playbook and now apply it to all our integrations as a collaborative effort between the Henry team and the CCM team. It was beneficial to have Frank Ready leading the Henry side of the integration, ensuring accountability. We had a dedicated person overseeing the acquisition integration along with external resources to support the process. It was crucial to identify what was achievable upfront, set realistic goals, and have a clear plan to execute them. I'm really pleased with the outcome. The teams are ahead of the synergy targets and will conclude the year on track to exceed the $30 million goal. Regarding accretion, we are seeing positive results, driven by the strengths of the Henry team, including their strong brand and excellent relationships with major retailers. This has allowed us to showcase Carlisle’s support, additional capital, and resources for project opportunities. The Henry team has effectively leveraged both Carlisle’s position and their own to make a compelling case as a leading supplier to these major retailers and homeowners. However, one challenge affecting accretion is the impact of rising interest rates on homeowners, leading to a shift in spending habits. Unfortunately, there might not be much the Henry team can do to mitigate this situation.

Great. Thanks for that and congratulations.

Thank you very much.

We have no further questions on the line. So I'd like to hand it back to the team.

Well thanks very much. That concludes our 2022 Q3 call. We appreciate everyone's attendance and their great questions. We look forward to talking to you at the end of the fourth quarter and have a good end of the year. Thank you.

Thank you. That does conclude today's call. You may now disconnect your lines.