Carlisle Companies Incorporated Q4 FY2025 earnings call

• Vision 2030 targets: Reaffirming adjusted EPS of $40 and ROIC above 25%, with goals of 30%+ EBITDA margins at CCM and 25%+ at CWT.
• Core pillars: Operational excellence via Carlisle operating system (COS), Carlisle experience (promise of right product to right place at right time), innovation (aiming to invest 3% of sales in R&D, with 25% of revenue from products <5 years old by 2030), acquisitions (focus on bolt-on and adjacent in building envelope to enhance systems and margins), and talent management.
• Innovation examples: ThermaFin seven polyiso insulation, temperature sensing gun for adhesive application, and products like RapidLock, SameShield, etc.
• M&A: Focus on bolt-on and adjacent acquisitions in building envelope to enhance systems offering and increase content per square foot, with recent acquisitions like MTL, PlastiFab, etc., to integrate and capture synergies.

For the fourth quarter, CCM (Commercial Construction Materials) delivered revenue of $827 million, a decline of 0.8% year over year. The macroeconomic uncertainty continued to pressure new construction activity but was mostly offset by solid demand for commercial reroofing. Fourth quarter adjusted EBITDA for CCM was $222 million, a 10% decline from the prior year, with an adjusted EBITDA margin of 26.8% which decreased 260 basis points. CWT (Consumer & Industrial Technologies) reported fourth quarter revenues of $301 million, up 4% year over year, supported by revenues from recent acquisitions. However, organic revenue declined 7% due to softness in residential and nonresidential new construction markets. CWT's adjusted EBITDA was $48 million, down 10% from last year, with an adjusted EBITDA margin of 15.9% that decreased 240 basis points year over year.

• Consolidated revenue growth expected in low single digits for 2026.
• Adjusted EBITDA margins expected to expand by approximately 50 basis points.
• Plan to repurchase $1 billion of shares.
• First quarter 2026 revenue expected down low single digits vs last year, with Q2 flat and strong second half leading to full-year low single-digit growth.
• Aim to maintain return on invested capital ~25% and free cash flow margin over 15%.

• Market uncertainties: Elevated market uncertainties affecting M&A activity and end market conditions.
• End market softness: Continued softness in residential and nonresidential new construction impacting revenue.
• Labor shortages: Persistent labor shortages which could affect operations and pricing.
• Raw material fluctuations: Fluctuations in raw material costs impacting margins.

Q: Discuss Vision 2030 progress and key pillars for reaching $40 EPS objective A: Chris Koch mentioned the most important pillars are margin expansions at CWT and technology/innovation. New products and M&A remain key to reaching $40 EPS.

Q: CCM demand trends and strategies A: Chris Koch noted CCM in good position, new construction market expected to rebound, reroofing demand sustainable, and emphasis on new technology. Kevin Zdimal added first quarter expected down ~3%, flat in Q2, then pickup in second half.

Q: Volume assumption for 2026 and distributor restocking A: Chris Koch said progress made with distributors, seasonal destocking and inventory levels lower, expecting volume improvements with summer construction season.

Q: 2026 price outlook for single ply in CCM A: Chris Koch said pricing relatively flat, but new construction rebound, labor shortages, and new technology could support upward pressure on pricing. Labor shortages potentially worsening.

Q: Price-cost for 2026 and pricing in CCM A: Kevin Zdimal mentioned mixed raw material trends, with some deflationary in key buckets but steel being a negative, expecting flattish pricing for CCM in 2026.

Q: Pricing in CWT for 2026 A: Kevin Zdimal said CWT pricing was down less than 1% in Q4 and expected to be pretty flat throughout 2026