Carlisle (CSL) Q1 2026 Earnings Call Transcript
Carlisle (CSL) Q1 2026 Earnings Call Transcript
Motley Fool Transcribing, The Motley FoolFri, April 24, 2026 at 12:03 AM UTC
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Thursday, Apr. 23, 2026 at 5 p.m. ET
Call participants -
Chairman, President, and Chief Executive Officer — D. Christian Koch
Vice President and Chief Financial Officer — Kevin P. Zdimal
Chief Accounting Officer, Vice President, and Corporate Controller — Mehul S. Patel
Takeaways -
Revenue -- $1.1 billion, down 4% year over year, reflecting delayed shipments from severe winter weather and a nonrecurring $15 million tariff-related benefit in the prior period.
Adjusted EBITDA -- $235 million with a 22.3% margin, representing a 50 basis point improvement despite lower sales, attributed to cost discipline, manufacturing efficiency, and productivity gains from the Carlisle Operating System (COS).
Adjusted EPS -- $3.63, up 1%, driven by share repurchases, which offset declines in organic earnings and increased interest expense.
CCM (Carlisle Construction Materials) revenue -- $758 million, a 5% decrease, with declining new construction volume and tariff-related dynamics partly offset by solid reroofing activity.
CCM adjusted EBITDA -- $208 million, down 4%, with a margin increase of 30 basis points to 27.4% due to procurement discipline and COS execution.
CWT (Carlisle Weatherproofing Technologies) revenue -- $294 million, down 1% as acquisition gains mostly offset persistent volume pressure in both residential and nonresidential segments.
CWT adjusted EBITDA -- $45 million, down 3%; margin was 15.2%, a 40 basis point decrease linked to product mix and volume shortfalls, partially offset by efficiency initiatives.
Net debt to EBITDA -- 1.7x as of Mar. 31, 2026, within the stated target range.
Liquidity -- $771 million in cash and cash equivalents, plus $1 billion in available revolving credit facility.
Free cash flow -- Usage of $73 million in the quarter, including a $125 million tax-related settlement; excluding this, operating cash flow improved from the prior year.
Shareholder returns -- $296 million returned through $250 million of share repurchases and $46 million in dividends, with a $1 billion full-year repurchase target reaffirmed.
Full-year outlook -- Consolidated revenue growth reaffirmed at the high end of the low single-digit range (about 3%), and approximately 50 basis points of adjusted EBITDA margin expansion, primarily stemming from pricing actions offsetting raw material inflation.
CCM margin guidance -- Anticipates Q2 EBITDA margins at ~31%, exceeding 31% in Q3, and near 28% in Q4, with full-year improvement of approximately 50 basis points.
CWT margin guidance -- Expects sequential improvement to around 19% in Q2, 22% in Q3, and at least a 100 basis point year-over-year expansion.
Pricing actions -- Two rounds of price increases announced since March, each at 5%-8% on select product lines; all incremental revenue from price will offset corresponding increases in raw material costs.
Raw material inflation -- High single-digit percentage cost increases are expected for 2026, including double-digit jumps in major inputs such as MDI and TPO resins, and high single-digit inflation in polyols.
New product pipeline -- 10-12 launches planned for 2026, with flagship products such as ThermaThin R-7 insulation, which received two industry awards and is expected to drive growth in the second half.
Operational focus -- Management continues to stress disciplined capital allocation, reinforcing Vision 2030 targets of $40 adjusted EPS and 25%+ ROIC.
Acquisition integration -- Ongoing synergies from recent acquisitions, with standout performance from MTL and Plasti-Fab contributing to margin and network improvements.
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Risks -
Management identified "continued uncertainty in new construction related to the issues we have discussed before, notably interest rates and economic and geopolitical uncertainty," resulting in no near-term recovery assumed in the guidance.
Explicit warning regarding "heightened risks surrounding the Iran conflict and sustained disruption through the Strait of Hormuz," which may materially increase energy and input cost volatility.
CWT margin expansion is partially "That was a bit of a drag, but even with that, they are making good progress." by foam product mix and relies on future volume rebound for a return to historical margin levels.
Pricing actions "is offsetting raw inflation," but do not contribute to incremental EBITDA as management expects higher input costs to "neutralize" price gains for 2026.
Summary
Carlisle Companies (NYSE:CSL) reported a 4% revenue decrease and margin expansion for the period, driven by aggressive cost controls and favorable reroofing trends, even as new construction demand remained weak. Management reaffirmed the full-year outlook at the high end of the low single-digit revenue growth range, entirely due to announced pricing increases offsetting raw material cost inflation, resulting in projected double-digit EPS growth. A strengthened liquidity position, disciplined capital allocation, and successful integration of recent M&A were cited as key enablers supporting Vision 2030 targets; management underscored that incremental margin or profit improvement for the year will depend on operational levers and potential end-market recovery, not price/cost arbitrage.
CEO Koch stated, "orders improved as the quarter progressed, and we exited March with better momentum than we entered the year," indicating positive sequencing into Q2 activity.
New product launches, including ThermaThin R-7 insulation, are concentrated in the back half of the year and expected to support second-half growth but do not affect Q1 or Q2 results.
Management explicitly maintained a cautious stance on the second half of the year given "ongoing geopolitical volatility" and "limited visibility" into macroeconomic developments.
Pricing in both CCM and CWT is expected to deliver revenue increases entirely for cost recovery, with no expectation of incremental profit benefit unless input cost pressures abate unexpectedly.
Operational discipline, recurring reroofing revenue, and strong balance sheet flexibility were repeatedly referenced as critical factors ensuring resilience through the current market environment.
Industry Glossary -
COS (Carlisle Operating System): The company’s framework for continuous improvement, productivity, and manufacturing efficiency across business units.
CCM (Carlisle Construction Materials): Segment focused on building envelope products, commercial roofing, and related services.
CWT (Carlisle Weatherproofing Technologies): Segment specializing in liquid and powder protection products, engineered sealants, and waterproofing solutions.
TPO (Thermoplastic Polyolefin): A roofing membrane used in commercial applications, whose pricing is directly influenced by petrochemical input costs.
MDI (Methylene Diphenyl Diisocyanate): A chemical raw material used in polyurethane foam production, a major cost driver in the CCM segment.
EPS (Expanded Polystyrene): Lightweight rigid foam used in insulation and roofing products, with pricing and supply influenced by acquisitions such as Plasti-Fab.
ABI (Architecture Billings Index): A leading indicator of nonresidential construction activity, reported near 49.8 in context.
Full Conference Call Transcript
D. Christian Koch: Thank you, Mehul, and good afternoon, everyone, and thank you for joining us today. Carlisle Companies Incorporated’s first quarter results exemplify the focus and execution our teams consistently deliver even in challenging operating environments. Revenue for the first quarter was $1.1 billion, down 4% year over year, driven primarily by two timing-related factors. First, winter weather delayed projects and shipments across many regions in North America. Second, last year’s first quarter benefited from approximately $15 million of tariff-related order pull-forward from Canadian customers, which did not repeat this year. Despite those headwinds, the underlying fundamentals of the business performed as expected and delivered better EBITDA margins in the quarter despite the sales challenges.
As we reflected in our year-end 2025 call, improving profitability was a top priority for 2026. Q1 results reflected strong execution on that priority, with adjusted EPS rising to $3.63, up 1% versus last year, and adjusted EBITDA margin expanding by 50 basis points to 22.3%. It is important to underscore that margin expansion in the quarter was a result of our focused efforts, particularly worth noting in a quarter where volumes were pressured. The margin improvement reflects work that has been underway for several quarters. Our teams have been systematically driving productivity, improving manufacturing efficiency and execution across the network, tightening cost discipline, and simplifying, effectively using all parts of the Carlisle Operating System, or COS.
Those actions will continue to compound over time and will drive our forecasted margin expansion under our Vision 2030 goals. This is another reminder that Carlisle Companies Incorporated is built to perform through cycles, not just at peaks, regardless of the environment. Q1 was a demanding quarter operationally, and the team responded exactly the right way. We stayed focused on the areas we can control: cost discipline, thoughtful pricing execution, and supporting customers through innovation and the Carlisle experience. That execution is clearly reflected in our results.
Underlying demand trends in our end markets were consistent with the information from our Q1 outlook based on the Carlisle market survey, with weather being the key variable that caused a slight shortfall to projections for the quarter. Reroofing activity grew low single digits, continuing to provide the stable, recurring demand base that defines Carlisle Companies Incorporated’s resilience across economic cycles. Commercial reroofing remains our primary revenue engine, accounting for roughly 70% of CCM’s commercial roofing business, supported by an aging installed base with 20- to 25-year roof life cycles and increasing content per square foot driven by innovation that improves energy efficiency and reduces labor costs.
We also understand that to protect and grow our position in the market, we must drive to be the leader in specifications, systems performance, comprehensive warranties, the Carlisle experience, and most importantly, trust with contractors, architects, and building owners—areas where Carlisle Companies Incorporated continues to lead. Importantly, orders improved as the quarter progressed, and we exited March with better momentum than we entered the year. April activity to date has been encouraging, with reroofing work in line with seasonal norms and backlog conversion improving as weather disruptions have subsided. Offsetting this is the continued uncertainty in new construction related to the issues we have discussed before, notably interest rates and economic and geopolitical uncertainty.
While we remain early in the quarter, the level of order activity we are seeing gives us increased confidence in the trajectory of the business as we move into the second quarter and into the heart of the roofing season. However, at the same time, we remain cautious about the second half given the ongoing geopolitical volatility. New construction remains soft across both residential and nonresidential markets, as expected. Our full-year outlook does not assume a near-term recovery. A higher-for-longer interest rate environment continues to weigh on construction activity, and our plans appropriately reflect that reality. Turning to pricing and input costs, recent geopolitical escalation has materially increased uncertainty in global energy markets.
Rising oil prices impacted our petrochemical-linked raw materials and freight. We acted quickly in mid-March, announcing price increases across both CCM and CWT effective mid-April, and implementing real-time freight surcharges to drive more immediate recovery. In addition, we announced a second round of price increases at CCM today to offset the additional cost pressures that disruptions in the petrochemical supply chain are driving. Those actions are beginning to work their way through the market, and we expect price-cost dynamics to improve sequentially through the remainder of 2026. It is also important to be clear that we are constantly evaluating the actions in the market by our suppliers and will act accordingly to address any misalignment.
More specifically, heightened risks surrounding the Iran conflict and sustained disruption through the Strait of Hormuz introduce uncertainty, which we are monitoring very closely. If volatility persists and structural cost levels reset higher, we are prepared to take additional pricing actions as needed. Our approach remains disciplined and deliberate. We have seen this type of situation play out repeatedly during periods of significant disruption. Whether during the global financial crisis, the COVID-19 pandemic, or now amid elevated geopolitical risk, Carlisle Companies Incorporated has demonstrated exceptional margin sustainability.
That durability is reinforced by the discipline embedded in Vision 2030, the depth and tenure of our team, our recurring reroofing revenue base, the fact that over 90% of our revenue is generated in North America, and our superior capital allocation approach. Another important contributor to that durability is the way Carlisle Companies Incorporated allocates capital. We view capital allocation as a core competency, not a byproduct of the business. Across cycles, we have consistently prioritized returns over growth for growth’s sake, investing organically where we have durable competitive advantage, pursuing acquisitions only when they meet our stated criteria, and returning excess capital to shareholders when that represents the highest and best use.
This balanced and disciplined approach continues to differentiate Carlisle Companies Incorporated and supports our ability to compound value over time. Based on our execution and the actions already underway, we are reaffirming our full-year 2026 outlook of low single-digit revenue growth and approximately 50 basis points of adjusted EBITDA margin expansion. Kevin will now walk through the financials in detail. Kevin?
Kevin P. Zdimal: Thank you, Chris, and good afternoon, everyone. I will review our first quarter financial results and then provide additional details on our full-year outlook for 2026, which is unchanged from the outlook we provided in our previous earnings call. Beginning with consolidated results on slide four, first quarter revenue of $1.1 billion was down 4% compared to last year. As Chris mentioned earlier, the two primary drivers of that decline were the adverse impact of this winter’s harsh weather limiting the number of days that roofing contractors were able to spend on the roof, and the absence of approximately $15 million of tariff-related pull-forward that benefited 2025. M&A contributions from our recent acquisition slightly offset the organic shortfall.
Adjusted EBITDA was $235 million in the quarter, resulting in adjusted EBITDA margin of 22.3%, a 50 basis point improvement from 2025. The margin expansion on decreased revenue is the result of strong execution led by COS-driven productivity gains, procurement discipline, and efficient management of selling and administrative costs. Adjusted EPS was $3.63 for the quarter, up 1% year over year. This increase was driven by share repurchases, which more than offset lower organic earnings and higher interest expense. Our segment performance starts on slide five.
CCM generated first quarter revenue of $758 million, a 5% decline year over year, reflecting lower volumes due to this winter’s weather and last year’s tariff-related pull-forward, along with continued softness in commercial new construction activity, partially offset by solid reroofing growth. CCM adjusted EBITDA was $208 million in the quarter, down 4% year over year. However, adjusted EBITDA margin increased 30 basis points to 27.4%. COS productivity gains, disciplined procurement, and selling and administrative cost controls all contributed to the improvement in the EBITDA margin. Moving to CWT on slide six, CWT reported Q1 revenue of $294 million, down 1% year over year.
The slight decline reflects contributions from recent acquisitions, which mostly offset volume pressure from continued softness in both residential and nonresidential new construction activity. CWT adjusted EBITDA was $45 million, down 3% year over year. Adjusted EBITDA margin was 15.2%, a decrease of 40 basis points compared to the first quarter of last year. This margin decrease reflects the impact of lower volumes, partially offset by the benefits of internal initiatives, including footprint consolidation and the expansion of in-house production of expanded polystyrene resin from our Plasti-Fab acquisition. We continue to see a clear path to meaningful margin expansion at CWT over the balance of 2026 as these actions compound and integration synergies build.
For your reference, slide seven provides our first quarter adjusted EPS bridge. Turning to slide eight, Carlisle Companies Incorporated’s financial position remains strong. As of 03/31/2026, we had $771 million in cash and cash equivalents and $1 billion available under our revolving credit facility. Our net debt to EBITDA ratio was 1.7 times, within our target range of 1 to 2 times. This financial strength continues to provide us with significant flexibility to invest in innovation and capital expenditures, pursue synergistic M&A, and consistently return cash to shareholders.
Moving to our cash flow on slide nine, seasonally, Q1 is the quarter where we deploy cash to pay down year-end incentive and rebate liabilities and build working capital ahead of the construction season. Net cash used in operating activities was $45 million in the quarter, and free cash flow used in continuing operations was $73 million, reflecting a $125 million post year-end settlement of an accrued tax-related liability. Excluding this tax-related payment, operating cash flow improved year over year as we deployed less cash into working capital. During the quarter, we invested $28 million in capital expenditures.
We also returned $296 million to shareholders through $250 million of share repurchases and $46 million of dividends, and we are maintaining our pace toward our annual repurchase target for 2026 of $1 billion. Now turning to our outlook on slide 10, oil cost volatility, interest rate uncertainty, and prolonged geopolitical conflicts are adding broader macro pressure to an already soft new construction market. However, based on our progress to date, we are reaffirming our 2026 outlook. We continue to expect full-year consolidated revenue growth in the low single-digit range, and with our recent price increase announcements, we now expect revenue growth at the higher end of that range, along with double-digit growth for EPS.
Our consolidated full-year revenue outlook reflects CCM revenue growth in the low single digits driven by higher prices and continued strength in reroofing more than offsetting slower new construction, and CWT revenue also up low single digits as contributions from higher prices and share gain initiatives more than offset continued end market softness. Consistent with our guidance at the beginning of the year, we still expect consolidated adjusted EBITDA margins to expand by approximately 50 basis points for the full year, supported by price realization building through the year to offset raw material increases, continued COS-driven productivity gains across both segments, and the structural operational improvement actions underway at CWT.
We will continue to execute the levers within our control while remaining mindful of the macro risk and limited visibility in this dynamic environment. We remain confident in Vision 2030 and our long-term financial targets of $40 of adjusted EPS and 25%+ ROIC. Our path to Vision 2030 is founded on organic growth anchored in steadily increasing reroofing demand and content per square foot, COS-led margin improvements in both segments, disciplined capital return through share buybacks, and targeted, synergistic M&A when the right opportunities are available at the right price. These are flexible, independent levers. Our strategy does not depend on all of them contributing in every year.
As we showed under Vision 2025, the trajectory toward the target can accommodate choppy periods, and cumulative execution across these levers over time is what ultimately drives us to our destination. With that, I will turn the call back to Chris for closing remarks.
D. Christian Koch: Thanks, Kevin. Overall, the first quarter was challenging, but the team delivered results with the kind of perseverance and disciplined execution that compounds over time and ultimately distinguishes Carlisle Companies Incorporated from its peers. While we are very cognizant of the volatility that continues in the markets, what we are targeting for 2026 is designed to place a minimal reliance on new construction from current levels or a broader macro tailwind. We remain an imperative business with a leading position in what we believe is the most attractive building products market in the world. The structural demand drivers in North America are secular and intact. Our balance sheet is strong. Our operational capabilities are advancing.
And our capital allocation remains disciplined. We remain very confident in Carlisle Companies Incorporated’s position as we move further into 2026. Before I close, I want to acknowledge and thank the Carlisle Companies Incorporated employees who produced these results through their daily effort and commitment to excellence. Over the years, they have made the commitment to ensuring our success. Thank you all for your time and continued interest in Carlisle Companies Incorporated. We look forward to providing further updates as the year progresses. I will now turn the call over to the operator to open the line for questions.
Operator: Thank you. Ladies and gentlemen, we will now open the call for questions. For the sake of time, we kindly request each person limit themselves to one question to give everyone the opportunity to participate in the question-and-answer session. If you would like to ask a question at this time, please press star then the number one on your telephone keypad to raise your hand and enter the queue. We will pause just for a moment to compile the roster. Our first question comes from Susan Marie Maklari with Goldman Sachs. Your line is open.
Susan Marie Maklari: Thank you. Good afternoon, everyone. Good afternoon. My first question is about demand. Can you give us an update on the new products, how they are doing in the market, the path for further introductions that you expect this year, and within that, can you talk about how these product offerings and the service that Carlisle Companies Incorporated has for contractors help in terms of price elasticity? Do you think that is partially what you are seeing when you talk about the level of activity and the improvement you are getting into the spring season?
D. Christian Koch: Good questions. On new products, we are forecasting to release just over 10 to 12 new products this year. Probably the biggest one is our ThermaThin R-7 insulation, which I am sure you have read about, what it is doing for R-value per square inch, and the implications for cold storage, for reduced inches on the roof in terms of insulation, or being able to put more inches of insulation on for a given vertical inch. It is significant. We have been out doing testing. We launched at IRE. We won two awards—one from specifiers and industry experts for a new product award, and the other was the show attendees voting it the best new product at IRE.
That recognition from both specifiers and contractors is encouraging. The product is gathering momentum in terms of recognition and more testing. We do have test sites where people are using the product and giving feedback, not to determine whether it is good—it is—but to understand how it works and validate some marketing considerations. Deliveries will start around July, so it is creating enthusiasm but not really impacting any growth in Q1 or Q2. We also have a new gun for our foam adhesives that has come out, introduced and reflected more in Q2 as we start to sell it. So a lot of these new products are, I will say, second-half loaded in terms of growth.
On how service and new products help, they really do differentiate us in the eyes of the contractor. We want to increase energy efficiency, which is important to specifiers and building owners, and we want to get labor off the roof. As we know, there are labor constraints in the industry. To grow as an industry, we must use the existing labor pool more efficiently. Products like ThermaThin, our new FAST-like scan, and solutions like Peel-and-Stick and Seam Shield are designed to help contractors install faster. Coupled with the Carlisle experience—having the right product in the right place at the right time—contractors are not standing around wondering where the shipment is. They can depend on us.
That plays into growth, makes us stickier with customers and architects, and hopefully allows us to grow share while increasing profitability and sales dollars per square foot because we price to value. I hope that covers it.
Susan Marie Maklari: That was perfect. And then my second question is on the CWT margins. Can you talk about the efforts coming through there, how we should think about the path of improvement, and your ability to realize some level of expansion this year despite the tough environment?
D. Christian Koch: Profitability growth in CWT is a key focus for Frank Ready and his team. We set a goal this year of getting as close as we could to 20%. We want to return to those margins we expected when we bought Henry—into the 20s—and ultimately push to 30% over time. Volumes in resi have been tough, but the team has done a lot: automation, footprint consolidation, and insourcing have had sizable impacts. In Q1, we would have made more traction toward the 20% goal if the mix had been a little different. Sales had a heavier mix on the foam side, which is a lower margin than the retail side we had anticipated in our plan.
That was a bit of a drag, but even with that, they are making good progress. We expect progress to play out linearly through Q2, Q3, and Q4, and hopefully a rebound in volume would make a big difference.
Kevin P. Zdimal: Yes, we see improvement from quarter to quarter. Q2 might be around 19%, improving to 22% in Q3, and overall for the year, in our guidance, we are looking for at least 100 basis points of margin improvement year over year for CWT.
Susan Marie Maklari: Okay. All right. Thank you both, and good luck with the quarter.
D. Christian Koch: Thank you.
Operator: Your next question comes from the line of Timothy Ronald Wojs with Baird. Your line is open.
Timothy Ronald Wojs: Hey, guys. Good afternoon. Maybe just on the pricing piece, are you seeing anything you can share on stickiness? The first round has only been effective for a couple of weeks. Also, usually you need price because of demand-driven inflation, and this is more of a supply-side shock. Does that change how the industry deals with price or how contractors accept price?
D. Christian Koch: I will start, and Kevin can jump in. We did have two price increases—one in March and one in April. The effective date of the first one was around April 15. As you know, we are protecting jobs that were already quoted; we did not retroactively increase those. We will see it move through into Q2 and then into Q3. I think the stickiness will be pretty good. There is clear line of sight to the driver. Contractors and distributors see what is happening with oil and petrochemical derivatives, and they understand diesel and freight impacts because they feel them on their own fleets.
This is broad-based across the industry, not unique to one player, so I think industry resolve will be there. We will watch it play out in Q2. It is a bit different than a rising-demand situation, but for us, we will control what we can—continue to drive innovation and efficiency, take labor off the roof, and provide value with new products and service. Hopefully that results in share gains or maintenance through a difficult time. Our feeling is there could be resolution sooner than later compared to, say, the residential housing cycle.
Kevin P. Zdimal: On CCM margins specifically, as we get into the second quarter, we think we will be approaching 31% EBITDA for Q2, slightly exceeding 31% in Q3, and around 28% in Q4. For the full year, about 50 basis points of improvement for CCM.
Timothy Ronald Wojs: Great. I will hop back in the queue. Thanks.
Operator: Your next question comes from the line of Bryan Francis Blair from Oppenheimer. Your line is open.
Bryan Francis Blair: Thank you. Good afternoon. Somewhat of a follow-up to Tim’s first question. You are still expecting low single-digit revenue growth for 2026, but you have announced a fair amount of pricing since last quarter. In the revised, reaffirmed guide, what are you now baking in for volume versus price per CCM and CWT for the year?
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Kevin P. Zdimal: It is really the same for both CCM and CWT. As we went into the year, we had said low single digits and talked at the bottom of that range—probably 1%. Now we are talking at the top end of that low single-digit range—about 3%—and all of that improvement is price. We will see some price in Q2 and much more in Q3, so the second half is where more of the price realization comes through, but we will see some in Q2 as well.
For the full year, it is hard to put the full number on it, so for now we have increased to 3% for the year, and we will update at the end of next quarter if needed.
D. Christian Koch: One addition: we started the year expecting a bit of a favorable from raws, and now our forecast is more neutral as price offsets raw inflation.
Operator: Your next question comes from the line of Analyst with JPMorgan. Your line is open.
Analyst: Thank you for taking my questions. I would like to double click on distribution channel inventories. There has been industry-wide discussion about consolidation leading to inventory destocking and order volatility with distributors including QXO and other key channel partners. Are you seeing signs that distributor inventory levels and ordering patterns have returned to more normalized levels, and how would you characterize the current activities in your distribution channels? If you could also talk about consolidation dynamics for the short and medium term, please.
D. Christian Koch: On inventory, we are moving into what we would think is a more normal inventory situation as we move into the construction season. There needs to be more out there to sustain increased activity and service levels. In Q4, we saw destocking—carrying less inventory with higher interest rates and a less favorable economic outlook. In Q1, we saw a continuation of Q4 levels. As we got into April and closer to the construction season, we saw a pickup in distributors’ willingness to carry inventory if they see building activity improving. The ABI at 49.8, getting close to 50, might support a bit more inventory, and we might also see some inventory picked up ahead of price increases.
On distribution dynamics, the QXO situation we have talked about continues to improve, and we continue to have great conversations with them as integrations progress. We also have excellent relationships with other distributors—good programs and progress. The recent TopBuild acquisition activity in the industry is not as impactful to Carlisle Companies Incorporated. Much of that is resi fiberglass insulation where we do not play, and Beacon’s significant presence in shingles is also not a market we are in. So the direct effect is more limited. With QXO and Beacon, we are focused on the initiatives we started the year with to get back to historical levels with both.
Operator: Your next question comes from the line of Analyst with William Blair. Your line is open.
Analyst: Hey, everyone. Thanks for the question. I wanted to ask about 2Q revenue. Can we assume normal seasonality? And Chris, you mentioned March exited better. Did you see trends improve once the weather got better?
D. Christian Koch: Yes, weather improved later in the quarter and activity picked up. We estimate weather impacted about three days in Q1, which we ballpark at around a $30–$35 million impact on the top line. As weather improved in March, momentum improved. ABI trends also looked a little better. Warehousing is improving; our outlook there is up around 2% this year after being down 5% last year. Educational buildings were down about 13% last year, and they are seeing some positive growth. That aligns with ABI improving. The price increase timing also pulled some activity forward into the transition, contributing to momentum exiting March and into April.
Kevin P. Zdimal: On quarterly seasonality, we really look at it in buckets. It is a very seasonal business. For CWT, typically about 23% of revenue is in Q1, 27% in Q2, 27% in Q3, and 23% in Q4. CCM is a little different: about 20% in Q1, around 30% in Q2, Q3 a little lighter than Q2, and Q4 is the balance.
Operator: Your next question comes from the line of David MacGregor with Longbow Research. Your line is open.
David MacGregor: Thank you, and good afternoon, everyone. I wanted to go back to elasticity of demand and the extent to which the rapid onset of higher project costs could give rise to project deferrals or limit job scope. Also, is warranty expiration still a business driver, or are people approaching that differently?
D. Christian Koch: We have seen some project delays, but we started seeing them around August–September last year as rate-cut expectations shifted. The current Middle East crisis can cause additional delays, but it has not been as impactful as we might have thought so far. If the crisis continues longer, recovery could take longer and have a bigger impact on prices. Another dynamic is supply availability—similar to labor constraints. If there is not enough supply, delaying a project risks not getting materials later, and labor could be reallocated, pushing work into next year. On warranties, they remain a driver, especially for larger projects. Building management teams value the warranty; they do not want exposure.
When a warranty expires, they prioritize reroofing and a new warranty to avoid risk. So for us, availability and supply are bigger concerns than elasticity right now.
Operator: Your next question comes from the line of Garik Simha Shmois with Loop Capital. Your line is open.
Garik Simha Shmois: Thanks. On the CCM revenue guidance moving toward the higher end of low single digits, it seems driven by pricing. Any change to your volume expectations, especially given momentum in March and April? Is there some conservatism given the magnitude of the price increases?
D. Christian Koch: It is largely price-driven at this point. With geopolitical uncertainty, we do not know how much that could impact demand, so as we enter Q2, we are guiding to low single digits at about 3%. Maybe it gets better in the second half, but for now, that is a conservative guide.
Operator: Your next question comes from the line of Adam Baumgarten with Vertical Research Partners. Your line is open.
Adam Baumgarten: Thanks for taking my question. On the price increases, the ones you announced in March/April were about 5% to 7% on membranes and polyiso. What is the magnitude of the incremental price increases you announced today? The change in guidance to the higher end of the low single-digit range implies realization is relatively low—maybe conservative. And what are you thinking about for price-cost in 2Q?
Kevin P. Zdimal: For Q2 price-cost, we are looking to offset cost increases with price—neutral for Q2, and that is the same assumption for Q3 and Q4. It is hard to predict exactly how much pricing and raw inflation we will see. We are seeing raw increases now, which is why the second announcement came out. I would expect that pricing to stick in the marketplace. If it all goes through, you will see higher revenue, but EBITDA dollars will not be incremental from that pricing because it is offsetting raw inflation. The second price increase was approximately 5% to 8%, very similar to March.
Operator: Your next question comes from the line of Analyst with Zelman & Associates. Your line is open.
Analyst: Thanks. On the raw material piece, can you give us a sense of the magnitude of input cost inflation you are baking into your guidance?
Mehul S. Patel: Overall, as Kevin mentioned, moving our revenue outlook from the low single-digit range to the higher end is basically a couple of points of price, and with a neutral price-cost assumption, that implies a similar level of raw material inflation. If you do the math, that implies about high single-digit raw material inflation as a percentage of raws for the full year.
Operator: Your next question comes from the line of Keith Brian Hughes with Truist. Your line is open.
Keith Brian Hughes: Hello? Can you hear me now? On the last answer, the high single-digit raw material inflation—some inputs are up more, some less. What is the range of inputs coming in year to date?
Mehul S. Patel: Yes, Keith. MDI is our biggest raw material purchase. Walking down the top inputs: MDI is up double digits, impacted by supply-demand dynamics and benzene, which is up significantly and linked to petrochemicals. Our TPO resins, closely linked to propylene, are up double digits and tie closely to the propylene index. Polyols are also up, driven by supply-demand dynamics and diethylene glycol, running high single digits.
Keith Brian Hughes: On polyols, there have been shortages with a plant outage. Is that causing any problem?
Mehul S. Patel: For us, polyols for polyiso insulation in CCM and spray foam in CWT have a bigger impact on CWT given the types of polyols we use. We are in a pretty good position with options to get volume.
Keith Brian Hughes: Okay. Thank you.
D. Christian Koch: Thanks, Keith.
Operator: Our last question comes from David MacGregor with Longbow Research. Your line is open.
David MacGregor: Thanks for taking my follow-up. Could you talk about acquisitions made over the past couple of years, synergies captured versus your initial plans, and whether you could squeeze a little more out this year if needed to offset some of the price-cost dynamics?
D. Christian Koch: Results vary by deal, as you would expect. At the top end, the MTL acquisition has been exceptional in every way. The management team has done a very good job managing through raw material volatility, taking share, and developing new products. Plasti-Fab has also been a great acquisition; the vertical integration around EPS bead has been valuable. The team continues to invest in automation and strengthen manufacturing in Canada. The fill-in EPS acquisitions are performing, building a North American-wide EPS network. They are meeting deal models. The bigger impact is volume, particularly in CWT, where end markets have been soft. The team’s work on margin expansion continues—footprint consolidation, insourcing, automation, technology, and new products. Could we squeeze more out?
We can, but to really push back to the mid-20s, some volume increase would help. The improving ABI and a potential housing recovery would be the bigger drivers.
David MacGregor: Got it. Thanks for that detailed answer.
D. Christian Koch: Of course.
Operator: There are no further questions at this time. I will hand the call over to Chris Koch for closing remarks.
D. Christian Koch: Thanks, everybody. It is a very challenging time as we work through these issues. This concludes our first quarter call. We look forward to talking with you again on our second quarter call, and we will have more information about how pricing and everything else has played out by then. Thanks very much.
Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.
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