Good afternoon. My name is Megan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Carlisle Companies Incorporated Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. At this time, I'd like to turn the call over to Chris Koch, President and CEO of Carlisle Companies. You may begin your call.

Thank you, Megan. Good afternoon, and welcome to the Carlisle Companies' third quarter 2016 conference call. On the phone with me this afternoon here are Steve Ford, our Chief Financial Officer; Titus Ball, our new Chief Accounting Officer and Julia Chandler, our Treasurer. On this call, I'll be discussing our third quarter performance and the 2016 outlook. Steve will review our segment performance, balance sheet and cash flow. Before I discuss our results in more detail, I would ask that you review slide two of our presentation entitled Forward Looking Statements and the Use of Non-GAAP Financial Measures. Reconciliations of U.S. GAAP to non-GAAP measures are provided in our earnings release and the appendix to this presentation. Those considering an investment in Carlisle should read these statements carefully along with reviewing the reports we filed 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. Carlisle reported adjusted earnings per share of $1.74 in the quarter, a 12% increase over the third quarter of 2015 and record results for a third quarter. Our strong performance in the quarter demonstrates the continued focus Carlisle Companies has on growing our key platforms and driving operational excellence in our businesses. As announced, we recorded a significant non-cash impairment charge at CBF in the quarter due to continued declines in commodity markets and recent lowered expectations for a near-term recovery in the global off-highway equipment market. Please turn to slide three of the presentation to begin our review of third quarter results. This slide contains results reported on a non-GAAP basis to exclude the impairment charge at CBF. Net sales were up 1.8% in the quarter reflecting 1% organic sales growth…

Thank you, Chris. Please turn to slide six of the presentation. At CCM, sales increased 1.4% in the quarter led by mid-single-digit growth in domestic commercial roofing sales and a 3% increase in sales into Europe. This growth was partially offset by lower sales into Canada. As Chris noted, most of the volume decline in Canada was from the decision not to pursue low-margin business as well as an overall soft new construction market. Selling price at CCM was lower compared to the prior year, but remained stable on a sequential basis. CCM's EBIT grew 14% in the quarter and its EBIT margin increased 250 basis points to 22.8%, reflecting continued selling price stability, lower raw material costs, savings from the Carlisle Operating System and higher sales volume. Please turn to slide seven to review CIT's results. CIT's net sales increased 7.9% in the quarter, reflecting contribution of 4.5% from the acquisition of Micro-Coax and a 3.4% organic growth. Sales to the commercial aerospace market increased 8%. Sales to the medical market grew 10% in the quarter. Sales to the military defense market declined 12%, reflecting the non-repeat of certain government projects. Sales to the industrial market declined 7% on weakness in the construction market. CIT's EBIT margin declined 110 basis points to 19.3% in the quarter. The Micro-Coax acquisition had a dilutive impact to CIT's margin of 90 basis points, primarily due to $1.2 million of non-recurring transaction costs, including costs related to the fair valuation of inventory pursuant to purchase accounting. Also included in CIT's EBIT in the quarter was $1.2 million in plant startup costs for its new state-of-the-art facility in Dongguan, China, a 50-basis-point negative impact to margin. Offsetting the negative impact of these costs were positive contributions to CIT's margin from higher sales volume and…

Thanks Steve. Please turn to slide 15 as we discuss our 2016 outlook. Consistent with our view from previous quarters, we expect to achieve total sales growth in the mid-single digits for the full year, and excluding the impairment at CBF generate significant earnings leverage on our sales growth. By segment, at CCM the U.S. market conditions remain favorable. In anticipation of higher raw material costs associated with polyiso insulation production, we recently announced a 5% price increase effective January 2017. This action demonstrates our commitment to maintaining price leadership in the market. We expect CCM to achieve sales growth in the low single digit range for 2016 and significant earnings leverage. CIT is expected to achieve high single-digit growth for the full-year including sales contribution from the Micro-Coax and Star Aviation acquisitions. Demand for CIT products remains high in aerospace and medical markets, and we're excited about the investments we're making in these markets. The acquisition of Star Aviation strengthens our position in the in-flight entertainment and connectivity market by providing us with better access to the retrofit sector. CFT remains on track with its key integration and global sales initiatives. Progress is being made on vertical integration, footprint consolidation, and we continue to actively search for bolt-on acquisitions. Due to increasingly difficult global industrial conditions, we now expect total sales growth in 2016 to be in the low- to mid-single digit range. Carlisle FoodService is expected to complete 2016 with sales growth in the low-single digit range and very strong EBIT leverage. At Carlisle Brake & Friction, given the recent changes in outlook, we expect CBF sales in 2016 will decline from 2015 in the low teens. We are taking the necessary steps to reduce our cost structure, pursue new sources of revenue, and position this segment for future success as markets recover. Corporate expense is expected to be $61 million and D&A is expected to be $135 million. For the full year we are planning for capital expenditures of approximately $110 million. We're expecting free cash conversion to exceed 100%. Interest expense is expected to be $30 million. The tax rate for the fourth quarter and full-year is expected to be between 42% and 43% due to the impairment charges taken. The impairment is expected to have an additional 10 percentage point impact on our tax rate in the fourth quarter. Once again, we are proud of our results this quarter and especially the record 18% EBIT margin as it represents the progress we've made in continuing to transform this business. We will continue to drive operational excellence throughout Carlisle, make sound investments, and pursue our long-term strategies in order to deliver increased value for the Carlisle shareholder. This concludes our formal comments on the third quarter results and 2016 outlook. Megan, we're now ready for questions.

And your first question comes from the line of Joel Tiss.

Hi. Sorry, I wasn't ready for that. When did the favorable raw materials turn the other way in CCM? And can you give us a little bit of a sense to how much margin improvement came from just the raw material piece just to isolate it, if you can?

Yeah. So at CCM in the quarter, raw materials were favorable about $18 million and selling price was unfavorable about $13 million, so it was a net positive of about $5 million. I think based on our forecast for the fourth quarter, I think in the quarter raws should year-over-year be relatively flat. I don't see much of a pickup in the fourth quarter.

Okay. And any insight into 2017?

Hey, Joel, I think 2017 right now we're in the process of going through the planning exercise in that. But I think it's going to look pretty similar to what we're seeing right now.

And then can you just talk a little bit about just to finish out on that sector that 20% plus operating margin. I know it's just one quarter. But you've been steadily marching higher and have characterized this business historically as more of a 15% to 17% operating margin business and been moving that number up. Can you just give us a little sense like if we're thinking forward the next two to five years or something like that, where should we be thinking that the normalized margin for the sector is?

Yeah, I think obviously the gains that CCM has made over the last couple of years have been excellent, and one of the things we've talked about was first before we got into how much bigger could they be was securing the gains. And I think the sequential stability in pricing has been good. We've captured the price to raw material savings there. The team's got a lot of good initiatives there. So my thought is going into 2017 that we want to continue to hold on to these gains and obviously continue to work on driving productivity and operational efficiency in the business, launching new products and these (24:25) things and hopefully improve on that.

Great. All right. Thank you.

And your next question comes from the line of Jim Giannakouros. Jim Giannakouros - Oppenheimer & Co., Inc. (Broker): Hi. Good afternoon, guys.

Hey, Jim. Jim Giannakouros - Oppenheimer & Co., Inc. (Broker): As far as just to ask another follow-up question on price/cost. We noticed recent increases in MDI, other inputs. How should we be thinking about those spikes? And do they hit your P&L I assume given your comments not in 4Q, but if these input price increases were to hold, how should we be thinking about your margin progression in the first half of next year?

In terms of timing I think you're right. It's more of a Q1 event and that's why we've announced the 5% price increase in polyiso. And other competitors have had similar announcements. So we're optimistic and hopeful that we're able to sort of get that price increase and that we're able to sort of offset the raw material increase and allow us to maintain these higher levels of margin performance. Jim Giannakouros - Oppenheimer & Co., Inc. (Broker): Okay. Okay. And just to understand, Canada is what percent of sales in CCM? And can you size how much it was down and give us a sense for the level of improvement in EBIT margins specifically in Canada?

Yeah. So Canada is close to 5% of total revenues. In the quarter we were down between 25% and 30%. Last year we had some very, very low margin business that resulted in margins being fairly non-existent in Canada. And without those sales repeating, we're having nice margin performance. So the increase on a margin percentage basis is significant. Jim Giannakouros - Oppenheimer & Co., Inc. (Broker): Okay. Thank you. And one last one if I may, as far as CIT margins, if we take out the one-time impact that you highlighted in 3Q and you mapped some in 4Q, should we be thinking about 20%-plus margins in 2017 in that business or are there other offsets that would probably keep you sub-20% going forward?

Yeah, Jim. I think our goal is to have CIT above 20% on that. And so I think, you take the one times out, we've got work to do on new product development, but as we see it now again 20%-plus is our goal. Jim Giannakouros - Oppenheimer & Co., Inc. (Broker): Thank you.

And your next question comes from the line of Ivan Marcuse from KeyBanc Capital.

Hey, guys. Thanks for taking my questions. Sticking to CIT real quick, the acquisitions are kind of dilutive. Are the margins for those deals or for those acquisitions similar to where you're reporting now or will it be dilutive at least initially until you ramp it up?

With purchase accounting initially it will have a little bit of a dilutive effect, but we expect these margins to get very close to the base business quickly. Certainly, as we move in and throughout next year towards the end of the year, we'd expect margins to be close to the base levels.

Okay. And then for the $250 million satellite market that you pointed to, I guess the question is how much of that market share do you have now and what's the opportunity? Is it half of this or more?

Well, we look at that market and we think with the Star Aviation acquisition, it puts us around that, I'm going to say, just broadly 15% to 25% market share. I think with the work we've done with the innovative universal adapter plate, the receptivity we've had from OEs, aerospace manufacturers in that, we definitely want to be higher than 25% in this. We want to have a leading position in this market. So I'm not going to give you an exact number, but obviously there are other competitors, but we'd like to increase over the current market share we have right now as a percentage.

Who are the big competitors in this industry?

Honeywell and Panasonic are the two biggest players.

Got you. Real quick, back to roofing, if you break out sort of the industry, where is the replacement market growing at this year?

Replacement market's probably in that low-single digit, Ivan.

Okay, great. And that will do it. Thanks for taking my questions.

Sure. You bet (29:22).

And your next question comes from the line of Kevin Hocevar with Northcoast Research.

On the commercial roofing, the U.S. volumes were up mid-single digit during the quarter, which was a bit of a slowdown. If I remember correctly, I think the second quarter was up 8% in the U.S. and I know the third quarter had a very easy comp where volumes were flat in third quarter 2015. So wondering if you could give us any type of update. I thought we might see a higher growth rate heading into the quarter. So did anything impact that? Was weather a factor at all or did it grow kind of as you had expected?

Yeah, I don't think weather was a factor, but I think maybe similar to the third quarter last year there were some labor issues that I think were a little bit of a headwind for us. I think we also expected may be a little bit higher growth than we experienced, but again I think labor was a bit of a factor. And I do think the margin performance here really is the story, and we're just very pleased that the business is performing at these margin levels.

And when you look at the price increase you called out, it looks like it's only in polyiso. Is that because that's where you're mainly seeing the raw material inflation or do you expect to increase price in the other product lines too or I guess, I was just curious why only polyiso insulation for a price increase at this point?

Well, sure. Right now, as Steve just said earlier, MDI prices we see some increases coming there and so we want to make sure we get ahead of that and I would say in the rest of the raw materials it's been fairly flat as Steve said earlier as well. When we look at that price to raws ratio in the fourth quarter, it will start to flatten out, so right now we're seeing relative stability, but obviously if anything came up, we'll get ahead of that.

Okay. And then Steve, I guess in terms of cash deployment you paid off the $150 million bond that you had in your sights, you upped the share repurchase authorization. So wondering if you can give us a cadence on do you expect to be more aggressive with share repurchase now going forward or I guess just curious your thoughts on cash deployment from here and I guess share repurchase in particular?

Again, we're still focused on growing the business through investment for organic growth and acquisitions. And we're hopeful that we're going to have larger acquisitions to announce and that remains our number one priority. So, assuming that we're successful on the acquisition front, I think you can expect us to continue to repurchasing shares pretty much at the same level that you've seen in the last few quarters. If things are not as actionable as we believe they will be on the acquisition front, then we will be more aggressive on share buyback. But right now, we remain optimistic and hopeful that we can be successful on some significant acquisitions.

Okay. All right. Thank you very much.

Yeah.

And your next question comes from the line of Tim Wojs with W.R. Baird (sic) [R.W. Baird] (32:35). Tim R. Wojs - Robert W. Baird & Co., Inc. (Broker): Close enough, hey guys good afternoon. I guess my first question is just on fluid. Is there a lot of – I know you had a big equipment sale in the prior-year quarter, is there a lot of difference in terms of the margin profile between equipment sales and some of the other products in that business?

Not really. Tim R. Wojs - Robert W. Baird & Co., Inc. (Broker): Okay. So there's not any mix issues on a year-over-year basis?

I don't think so when you compare the systems to standard on an overall basis. Tim R. Wojs - Robert W. Baird & Co., Inc. (Broker): Okay. And then as we think about kind of the long-term kind of margin opportunity within fluid, I mean as you look out maybe two or three years, how could we kind of think about margins in that business, fluid specifically?

Yeah. Tim, I mean, I think we said it on the acquisition, we still feel very strongly about the actions we're going to take to drive margin improvement as well as sales growth, but really margin improvement in that business. And the footprint consolidation has started. We've dealt with a couple of facilities where we've moved the headquarters. We're working on a vertical integration right now and we've deployed significant amount of capital there to drive that. So as we start to roll this out, our goal all along was to get this margin back to the low-20%s and then when you add the purchase accounting that remained, we'd be right in line with that 30% margin. So that's the track and I think it will take a few years to get there. So we'd like to see a steady progression as we take these actions and really just continue to improve every quarter as we go through that improvement and then in the three- to five-year range get to that 20% mark. Tim R. Wojs - Robert W. Baird & Co., Inc. (Broker): Okay. Okay. So no real change there. And then just on the – Steve on the write-off, is there any D&A benefits that come with that or is that all goodwill?

Yeah. It is almost all goodwill. Tim R. Wojs - Robert W. Baird & Co., Inc. (Broker): Okay. Great. Well, all right, thanks a lot. Appreciate it.

And your next question comes from the line of Charles Brady with SunTrust.

Hey, afternoon, evening guys. Just a quick one on the China plant start-up cost. You mentioned it's going to be into Q1. Is that kind of the end of it, do we see sort of a margin lift as we go starting in 2Q of 2017 or does it drag out a little bit?

Yeah. It'll carry over certainly into the Q1 of next year. It may also carry over into Q2 of next year. So we will have some continuing China start-up expense. I would sort of plan for really most of the first half of next year.

Okay. And aside from the kind of the normal start-up costs are you baking in plant inefficiencies as you ramp up production of that or is that kind of in addition to what you're already counting on?

Yeah. We effectively have two facilities there now, so there are some redundancies and some inefficiencies that we're capturing in our number.

Okay. Thanks.

And your next question comes from the line of Liam Burke with Wunderlich.

Thank you. Good evening, Chris. Good evening, Steve.

Good evening, Liam.

Chris, the FoodService business seems to have reversed the momentum of sort of flat to down growth and flat margins, you're seeing organic growth and margin improvement there, what's been the difference?

We brought a new leadership team in just under four years ago. They put together a great plan, it centered around really factory consolidation, then working on the factories for improvement and both that entailed our operational excellence program COS, Carlisle Operating System as well as capital investment in the processes, investment in the sales force, getting focused and really they're looking now to drive leverage off of that more efficient production base. So it's been steady, the team has done a nice job. They stuck to their strategies and have really driven the operational efficiency through the business.

Okay. And then on CIT, how has the new product pipeline or new product introduction pipeline been going?

In CIT?

Yes.

Yeah. Well, you can see by the continued ramp-up of the ARINC 791, I mean, we're really pleased with that, that's bringing along some other opportunities that will hopefully unfold in 2017. It brought along the Star Aviation acquisition. Micro-Coax has some very interesting products that we're seeking to push development on and launch over the next couple of years. And then when we look in the regular business, CIT continues to seek to be a bigger player on the aircraft platform. And our relationship with Boeing, our relationship with Airbus and these other major airline manufacturers, we want them to look to us to be a solution provider. I would note that with our Star Aviation acquisition, we were able to acquire a nice engineering center in Everett, Washington that works closely with Boeing up there. And we hope that will drive other new product ideas for this business.

Great. Thank you.

Yeah. You bet.

Your next question comes from the line of Kevin Hocevar with Northcoast Research.

Hey, again, everybody. I'm curious if the hurricane that moved up the coast a couple weeks ago, did that have any – did that damage any roofs at all? Do you expect that to create any demand or no?

Yeah, Kevin, I don't know. I think maybe on the margin a little bit, but I don't think it's really going to change our forecast certainly for the quarter.

Okay. All right. Thank you.

Yep.

And your next question comes from the line of Neil Frohnapple with Longbow Research.

Good evening guys, and congrats on a great quarter.

Thanks, Neil. Good evening.

Thanks, Neil.

Returning to Brake & Friction, will the significant actions you guys are taking to boost profitability, allow you to get segment back to mid single-digit EBIT margins even at current revenue levels, or should we expect the segment to operate around breakeven for the foreseeable future until volumes recover?

Well, volume recovery would certainly help, but the actions we're taking, we're driving for that single-digit as a minimum and return to profitability and strengthen the cash flow and everything else at the volume levels we kind of project right now.

All right, that's helpful. And then just a follow-up on CCM, it seems like there is concern about a broader slowdown in U.S. non-res construction activity, just curious if you are starting to see softness creeping at all or contractors backlogs dwindle and I guess just as a follow-up any initial thoughts directionally on volumes as we move into 2017?

Yeah moving into 2017 as we said, I think we're going to see more of the same. We've mentioned it a couple of times. We like what we've done in the margin profile. We see raw material stability. We see relative stability sequentially in pricing. Those are good indicators. On the growth side, the U.S. markets are still strong. We see fluctuations within each of the verticals that we serve and some differences there, but that occurs in any year. So I think what Steve mentioned on the labor, we are getting to the end of the season. We think there is good backlog, and we think there might be some pressure on labor, so I think things are pretty much as we said. We're looking forward to stability and moving generally in the direction we've been headed so far this year.

Great. Thanks very much.

And there are no further questions at this time.

Well, thanks, Megan. This concludes our third quarter 2016 earnings call. I want to thank everyone for their participation, and we look forward to reviewing our yearend 2016 performance with you at our next earnings call. Thanks and good night.

And this does conclude today's conference call. You may now disconnect.