Good afternoon. My name is David and I will be your conference operator today. At this time, I would like to welcome everyone to the Carlisle Companies' Third Quarter 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, we will concoct a question-and-answer session.I would like to turn the call over to Mr. Jim Giannakouros, Vice President of Investor Relations and FP&A. Jim, please go ahead.

Thank you, David. Good afternoon everyone and welcome to Carlisle's third quarter 2019 earnings conference call. We released our third quarter financial results after the market closed today and can find both our press release and earnings call slide presentation on our website at www.carlisle.com in the Investor Relations section.Discussing the results and our updated outlook today are Chris Koch, President and Chief Executive Officer; and Bob Roche, our Chief Financial Officer. Today's call will begin with Chris discussing our progress towards Vision 2025 and business trends experienced during the third quarter. Bob will discuss Carlisle's third quarter financial performance. Following Chris and Bob'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 certain statements made during this call may be forward-looking and actual results may differ materially from our expectations due to a number of risk factors.A discussion of some of the risks and uncertainties that may affect our results are provided in our press release and in our SEC filings on Forms 10-K and 10-Q. 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.With that, I will turn the call over to Chris.

Thanks Jim. Good afternoon everyone. Please turn to slide three of the presentation. Continuing to build on the momentum of this year's first and second quarters, I am pleased to report Carlisle had a record third quarter sales and operating income, and we made significant headway towards our Vision 2025 goals of $8 billion in revenues, 20% operating income, and 15% ROIC, all driving to $15 of earnings per share in 2025.As a reminder, we remain committed to and focused on driving 5% organic growth with operational leverage, utilizing the Carlisle Operating System and driving a continuous improvement culture, building scale with synergistic acquisitions, continuing to invest in exceptional talent, and deploying over $3 billion into capital expenditures, share repurchases, and dividends.We launched Vision 2025 in the first quarter of 2017, and we are excited about the progress we have achieved to-date. I'd like to make a special note of the record performance by CCM in the third quarter as sales and operating income were both at record-setting levels in the quarter.We were also very pleased with the significant margin improvement that CIT delivered in the quarter, and in no small way made possible by previous year's restructuring efforts. These achievements at CCM and CIT are all the more meaningful given that these two segments account for approximately 85% of revenue and 90% of our total segment operating income for Carlisle.CCM's status as a best-in-class provider of building envelope solutions continues to be evidenced by its above-market sales growth and operating margins that are nearing 20%. This performance is driven through price leadership, sustainable mid-single-digit organic growth, and supported by a strong and growing commercial re-roofing cycle. Carlisle Construction Materials remains steadfast in its resolve results to deliver on its commitment to the Carlisle experience that our contractors and distributors…

Thank you, Chris. Please refer to the revenue bridge on slide seven of the presentation. We are pleased with our overall third quarter revenue performance. Organic growth was 3.4% in the quarter, driven by strong results in our non-residential roofing, commercial aero, and medical platforms. Acquisitions contributed 5.4% of sales growth for the quarter, and FX was a 40 basis point headwind.Turning to our margin bridge on slide eight, Q3 operating margin expanded 300 basis points. Positive pricing and volume leverage combined for 90 basis points of the year-over-year improvement. COS added 140 basis points; freight, labor, and raw material costs netted to a 100 basis point improvement; and restructuring and rationalization costs were an additional 30 basis point tailwind. Partially offsetting these positives, acquisitions were a 60 basis point headwind.On slide nine, we have provided an EPS bridge. As Chris mentioned earlier, we reported third quarter diluted EPS from continuing operations of $2.42, which compares to $1.59 last year. Positive volume price and mix contributed $0.19 to the year-over-year increase. Raw material, freight and labor costs netted to a $0.23 benefit. COS, which includes sourcing initiatives, contributed $0.21, and a lower share count added an additional $0.12.Now, let's turn to slide 10 to review the third quarter performance by segment in more detail. At CCM, revenues increased 15%, with acquisitions contributing 6.5% of the growth and an organic growth rate of 8.8%, partially offset by a 30 basis point headwind in foreign currency. CCM executed extremely well in delivering approximately $20 million of net price cost realization in the quarter. Operating margin at CCM was 19.4%, a 380 basis point improvement over last year.While the macro environment for commodities helped us in the first nine months of 2019, we are extremely pleased with CCM's sourcing initiatives, which add to…

Thanks Bob. Please turn to slide 16 as we discuss our updated 2019 outlook. For total Carlisle, our revenue outlook for 2019 remains unchanged as it has since our original guidance was issued in February.By segment, at CCM, driven by what we view as a positive North American non-residential new construction market, growing demand for re-roofing, a solid backlog of work of contractors, continued tight labor markets, and the addition of Petersen to our architectural metals platform, we continue to expect revenues to grow low double-digits in 2019.At CIT, we now expect to return to our original 2019 forecast of mid-single-digit revenue growth. While we expect to see continued strength in our core CIT markets of aerospace and medical and benefit from pricing actions taken in 2018 to offset inflation and other cost increases, we are realistic about our ability to offset the negative impact of the Boeing 787 MAX issues and the impact from the slowdown in the global economy on our industrial customers.Our restructuring plans and related charges of approximately $15 remain on track, which as a reminder, are related to the consolidation of North American facilities to drive operational improvements and efficiency gains.At CFT, despite our progress on expanding our platform with meaningful acquisitions, the significant decline in the Chinese automotive and industrial markets, coupled with a very real decline in capital spending in North America, we are now reducing our expectations to a decline of low to mid-single digits. And at CBF, given the lower than expected volumes year to date, we now expect revenues to decline low double-digits.Turning to our corporate items, corporate expense is now expected to be approximately $95 million to $100 million for the year. Depreciation and amortization expense is still expected to be approximately $200 million. For the full year, we…

[Operator Instructions]Your first question comes from the line of Bryan Blair with Oppenheimer. Your line is open.

Good afternoon guys. Great quarter.

Thanks Bryan.

Hey thanks. Good afternoon.

I was hoping we could start kind of high level with CCM, updated perspective on where the industry is in the replacement cycle and specifically whether you think you may be approaching peak at this point?

Well, in the replacement cycle, I think we've showed you and others the re-roofing demand that was created with roofs that were put on in the past 20 years plus and are coming due. We see that accelerating at least for the foreseeable future. And so, I think for the re-roofing cycle, we are nowhere near peak. I think we're accelerating into the strong part of that cycle.

Okay, that's great to hear. And obviously, good price/cost realization again in 3Q. That remains a hot topic. What is the updated estimate for 2019 benefit?

Yes, Bryan, we're thinking 80 to 85 now as raw materials stayed lower than we thought holding throughout the year.

Got it. And given current trends, would it be fair at least on a preliminary basis to think of 2020 price/cost as flattish or should we anticipate given -- there is some continued benefit given the January pricing and still pretty cooperative commodity costs?

Yes. I mean, Bryan, we're not going to comment on 2020 deeply now, but based on where we are with the pricing, we did put out a pricing increase of 2% going into January. So, that should help next year, and it's too early for us to call what's going to happen to commodities right now.

That's fair. Thanks guys.

Yes.

Your next question comes from the line of Neil Frohnapple with Buckingham Research. Your line is open.

Hey guys. Congrats on the quarter.

Hey Neil.

Could you just talk more about the two acquisitions announced last night, Providien and Draka? I'm just curious would you expect margins to be accretive to CIT segment profitability in 2020? Again, nice improvement in the quarter on CIT, so just trying to figure out how those acquisitions will impact the business in 2020?

Yes. Bryan -- Neil, where we are now, I think it's a little bit too early for us to talk about that. Obviously, that will unfold as we sign and close on these deals. What I can tell you is that Providien, they're an excellent company. They fit right into the necessary areas that we had to continue to build out this space, and they're well run. I would think that we would not have acquired this if we didn't think that the margins are similar to what we project for our medical business going forward.And then really Draka Fileca is, if you say it one word, it's really like the legacy CIT business, very similar in Europe, and we don't see anything in that business that would prevent us from executing the same way we have in our legacy businesses in aerospace.

Okay. And then just a specific question on Providien. I think some of the revenue is tied to aerospace and auto with its Dynaroll business. So, could you just talk about how much of Providien's total revenue is nonmedical related because it sounds like it's more of a medical play, but I'm just again curious on some of the Dynaroll business there.

Yes. And again, I'm really hesitant to get into too much detail prior to the close, but I would say that the vast majority and the impactful part of the Providien acquisition, both from a revenue and an operating income perspective, would be in the medical technology space.

Okay. And then just one final one, Chris, is around capital allocation. Especially as it relates to the M&A pipeline following these two deals, will you sort of pump the brakes, so to speak, in other deals until you get these integrated? And then I guess just as a follow-up with regard to your appetite for share repo in light of these deals.

Yes, I think we continue to take the same position we have going into this. I think these will -- these integrations will go smoothly. We continue to look for any acquisitions within the building envelope, within the MedTech, within Aerospace, and within Fluid Techologies to expand that platform.So, right now, the pipeline has been good, and we’ve remained disciplined, and it's nice to see that these fit our models, and we think they'll be great additions. But that also will prevent us from continuing to be opportunistic on our buybacks, and I think we'd take the same approach we have for the past three years.

Okay. So, if the right deal came along, you wouldn't be afraid to pull the trigger so to speak?

No, sir.

Okay. Thank you so much. I'll pass it on.

Your next question comes from the line of Tim Wojs with Baird. Your line is open.

Hey guys. Good afternoon.

Good afternoon.

Good afternoon Tim.

So -- nice job. So, maybe going back to the pricing question. Just more of a cadence question. So, are you kind of thinking about pricing kind of structurally different than what you have in the past where historically it's been very reactive to commodity increases? I mean, is this a situation now where you think every year you're going to have a January price increase that is going to go through to your customers? And is that what you're trying to kind of push through the market in terms of cadence?

Yes, Tim, I would say that in the past, it was almost pricing the same [ph], like you said, very reactive and almost with a very broad brush just reactive in some big bucket in reaction to raw materials. We have worked over the past few years to really focus on changing that and really pricing to the value we're providing the marketplace and around the market dynamics, and specifically around each product line and where they sit from a value proposition.And then also separating out the costs that occur every year to us to provide that value to our customer and the Carlisle experience, so you're absolutely right. I think there's been a structural change in the way we approach pricing. Hopefully, it's more refined and hopefully better understood and accepted.

Okay. And is there any -- as you’ve kind of gone through kind of an internal review, is there any areas of the portfolio that you think are very underpriced relative to the market value or do you just think that the whole portfolio can kind of migrate higher over time?

I think that through disciplined approach and more systematic look at that through more sophisticated tools that we have now, we've been investing in, I think there is -- while the entire organization has seen pricing this year and we've been really pleased with that, even CFT and CBF have had pricing despite the headwinds, we still have room. We still have room to do a better job on pricing.

Okay. Okay. And then just the last one on just labor of contractors. Is there -- it's tight? I mean, is there anything that scares you that at some point that the labor just -- there's not enough labor for the reroof market to grow much beyond a couple of points? I guess I'm just kind of curious if there's kind of a structural kind of limit to how much the industry can grow if they're not adding workforce?

No, I don't think so. And I think one of the things that -- it is tight. We seem to be -- we have a nice backlog of jobs. One of the things that it does for us and I'm encouraged by is it brings us back to the value proposition of CCM and some of the labor-saving products that are coming out, and we're seeing traction on those.So, I think through greater efficiency, better delivery, better utilization of the Carlisle experience, we think that creates capacity with the labor that's there. So, that's really our goal, is how can we get that roof put down to the high quality standards we have as quickly as possible and make us the most efficient choice for people that are utilizing our products in the industry. And I think that will create some of that necessary flex in labor we need.

Okay, great. Good luck on the rest of the year.

Thanks so much Tim.

Thanks Tim.

Your next question comes from the line of Joel Tiss with BMO. Your line is open.

Hey guys. How is it going?

Hey Joel.

Joel, how are you?

All right. So, I just wondered if you could give us a sense of how far out your kind of visibility on the CCM business goes. Are we kind of into the middle of 2020? And also are the competitors going along with the pricing or is it too early to tell?

So, maybe I'll -- the first one, Joel, we have -- we took the price leadership there on a 2% increase and then we have seen competitors follow, not all of them but a vast majority of them, which is a good sign. As far as looking out, we hate to get too far and project out into 2020. But I would say probably the same thing we said at the end of 2019, which is where things are today, we're likely to leave 2019 with a nice backlog, tight labor markets, relatively good and positive new construction demand and then the growing re-roofing. So, I think that sets up for a good start to 2020 at least.

Okay, that's very helpful. And then on the medical platform, is it fair to kind of guess that you're around the $250 million in revenue level? And is that a platform much higher margin or noticeably higher margin than the overall CIT?

Yes, it is $250 million, just around $250 million, Joel. And we believe short term with purchase accounting and things going on that it will be in line. But over the long-term, it's inherently higher margin.

Okay, that's great. Thank you so much.

Thanks Joel.

[Operator Instructions]Your next question comes from the line of Garik Shmois with Longbow Research. Your line is open.

Hi thank you. Question on CCM, the organic growth of 9%, just wondering if you can maybe break out volume and price.

Yes, Garik, as we talked about last year, we lapped the price into the third quarter. So, price was relatively small part of that. There was some as we did announce some small price increases and as Chris said, we're getting very strategic. But it was a very small part.

Okay. That makes sense. Wanted to ask actually about CFT, the outlook is calling for sequential increase in sales. I think that was kind of expected. And 4Q was going to see an increase, I think largely due to some new product introduction. So, just wanted to confirm that that's the main driver of the sequential increase in CFT and I guess I got a follow-up question on CFT.

Yes, I would say Garik that certainly new products, I think some better alignment around the new acquisitions. Obviously, integration as we get through some of that and they pick up speed and we're certainly excited about what Ecco brings and that combination on the Sealants and Adhesives platform, so in essence, those are new products to us, too. So, yes, I think that's a fair assessment.

Okay. And I just wanted to ask, you saw deceleration in the macro environment for CFT and for CBF in that matter in the third quarter. Just wondering as you're looking out to 2020, will you need to take any additional cost actions in those businesses to right-size given the, I guess, weaker market opportunities?

No, I don't think so. I think that the play for CFT is still -- and CBF has been longer term. I think that the investments we made in CBF, it certainly paid off. Moving back to Medina, we think we're back on track there at least from a profitability perspective. If volume does return, then we're right back to where we were, say, in the 2011, 2012 timeframe.And then on CFT, look, I mean, this is going to be a big part of Carlisle's future going forward. We'll continue to invest in acquisitions as we're able to build out the platform in those areas, we're going to continue to invest in new products to help us expand into new markets and new geographies and continue to make that. So, no, I don't see any cuts -- any structural cuts for us going forward.

Thank you.

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

Hey everybody. Nice quarter.

Thank you.

Hey Kevin.

Wondering just on CIT, it's been a while since you've done any acquisitions of kind of this magnitude that you announced today. So, I think one of the hurdles has been expensive asking prices and multiples on any acquisition. So, I'm wondering what's changed there. Have some of the multiples come back down to earth? Or have you had to step up a bit? Or what's kind of changed there in that environment where you're able to announce two deals of this size kind of one after another here?

Yes, I think what has changed -- certainly multiples have not come down at this point. I mean I think you're right. We would look at what's happening in the economy and think they might. But both these are very, very different than maybe the last two acquisitions we've done in the medical space.Draka Fileca really, really is very close to our -- and I'm talking about legacy business going back to the Tensolite days, it's right in our wheelhouse, right in our core. And so the pathway to synergies, the pathway to more efficiencies, things like that, is a very good one for us, and that makes it very desirable.And then on the Medical Technologies, this play, if you think about Providien versus some of the, I would say, more single play or single-line acquisitions that have come up, I mean, this gives us a lot of what we need to build out the whole platform, thermoforming, the assembly, the precision machining and metals, injection moldings, and it was all in one basket that makes it very attractive and gets us much further down the process than some of the more -- some of the other recent acquisitions that we've seen in the market would have done.

Okay, got you. And then we heard there was a tornado damage to one of your CCM facilities down in Florida a couple of days ago. So, wondering -- I heard it was an Insulfoam facility. So, wondering if you could give any comments there. Do you expect that to have any disruption? Or can you service from other locations? Just wondering if you could give any comment on that.

Yes, I mean, first of all, we're thrilled that everyone was safe. There was no injuries at all in -- a terrible thing that happened to that facility. But overall impact on the quarter should not be anything. We don't see much going forward. We can -- we'll have it up running pretty quickly, and we believe we can ship it from other places to make up for it.

Okay, got you. And then on CFT, you mentioned that pricing was positive in the quarter, and obviously, volumes were down quite a bit. So, wondering if you're having to trade off volumes for pricing. Wondering how the competition is doing. Is competition also have positive pricing and kind of think you're performing at market? Or wondering if you could just comment on how the balance of price and volume is looking in that business.

Yes, I don't think we're trading any volume off for price. I mean I think this is a market that if you look back at the competitors, Northeast and Graco, these others, I mean pretty much end users, it's an ROIC sale, and people are paying for value, it's very tangible and returning to their bottom line. And that's why we see significant investment in R&D, and that investment can pay off because that's a type of sale.Now, when we look at the competition, I think, in some cases, we've seen them being even more aggressive with price increases that have been announced throughout the year. So, I think we are right in there with where we should be vis-à-vis the competition.

Okay, great. Thank you very much.

There are no further questions at this time. I will turn the call back over to the presenters.

Thanks David. This concludes our third quarter 2019 earnings call. I'd like to thank everybody for your participation. We look forward to speaking with you at our next earnings call. Have a great evening. Thanks.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.