Carlisle Companies Incorporated

Good afternoon. My name is Hannah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Carlyle Company's fourth quarter 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, we will conduct a question and answer session. I would now like to turn the call over to Ms. Gianna Kuros, Mr. Jim Gianna Kuros, Carlyle's Vice President of Investor Relations. Jim, please go ahead.

Thank you. Good afternoon, everyone, and welcome to Carlisle's fourth quarter 2022 earnings conference call. We released our fourth quarter financial results after the market closed today, and you can find both our press release and earnings call slide presentation in the investor relations section of our website, carlisle.com. On the call with me today are Chris Koch, Chair, President, and Chief Executive Officer, Kevin Zimmel, our Chief Financial Officer, and Dave Smith, Carlisle's Vice President of Sustainability. Today's call will begin with Chris giving an update on our progress in achieving our strategic plan vision 2025 highlights of our fourth quarter and full year results and a discussion of our current business outlook. With our recently announced commitment to achieving net zero emissions by 2050 Dave will elaborate on our commitment to this pledge and provide a general update on our sustainability progress and Kevin will discuss additional financial details and our outlook for 2023. Following our prepared remarks, we will open up the line for questions. But before we begin, please refer to slide two of our presentation where we note that comments today will include forward-looking statements based on current expectations. Actual results could differ materially from these statements due to a number of risks and uncertainties, which are discussed in our press release and SEC filings. As Carlyle provides non-GAAP financial information, we've provided reconciliations between GAAP and non-GAAP measures in our press release and in the appendix of our presentation materials, which are available on our website. With that, I will turn the call over to Chris.

Thank you, Jim. Good afternoon, everyone, and thank you for joining us on our fourth quarter 2022 earnings call. Please turn to slide three. Let me begin my commentary by complimenting the entire Carlyle team on the sales and earnings records set in the fourth quarter and the full year of 2022. 2022 truly was an exceptional year. In addition to delivering record fourth quarter sales of $1.5 billion, we also delivered record annual sales of $6.6 billion, surpassing both the five and $6 billion marks in sales for the first time in Carlisle's 105-year history. We further delivered a record adjusted diluted EPS of $3.92 in the quarter, an increase of 34% year-over-year. 2022 also marked a key milestone in our Vision 2025 journey as we delivered $17.58 of GAAP EPS for the year, exceeding our primary Vision 2025 goal of generating $15 of GAAP EPS for our shareholders. Exceeding this goal three years early is a testament to the hard work and dedication of all of Carlyle's employees and to their commitment to the work of Vision 2025. These record results are even more remarkable given the extremely challenging operating environment of the past few years. Of the many challenges we faced over this period, I would say navigating the COVID pandemic was the most unexpected challenge. For so many people, the pandemic was a traumatic experience in their lives from a health and welfare, social and economic perspective. I'm grateful for the significant actions Carlyle employees took to keep us all as safe as possible while navigating COVID in their personal life as well. In addition, we also experienced significant supply chain disruptions, an inflationary environment, and labor and material shortages. Our record results would not have been possible without the clarity of mission that Vision 2025 has provided us since its launch in 2018 and the unwavering commitment of our teams. Guided by Vision 2025, our teams remained unified and stayed the course for the past five years, diligently overcoming the challenges we faced. Please turn to slide four. Our record results continue to demonstrate that vision 2025 has been the right strategy for Carlisle in addition to our world class teams and proven business model we've benefited from a strong balance sheet and excellent cash flow generation to provide both financial and strategic flexibility to execute and achieve our ambitious goals. A significant portion of our success has been driven by the multi year process of reshaping our portfolio to pivot from a diversified. industrial products company to a higher-returning building products portfolio of businesses. This transformation sets the stage for a more focused, simplified, and better understood path for future sustainable value creation at Carlisle. The pillars of Vision 2025 remain core to our strategy going forward. These include, first, drive mid-single-digit organic revenue growth. In the fourth quarter, we delivered 6.6% organic revenue growth, which helped drive organic growth of 29% for the full year 2022. Notably, all four segments contributed to this growth. Second, utilize the Carlisle Operating System, or COS, to drive continuous improvement. We use COS to consistently drive efficiencies and enhance operating leverage. For the full year 2022, Adjusted EBITDA margin expanded nicely, and COS contributed to that. We continue to target COS savings of 1% to 2% of annual sales. Third, build scale with synergistic, accretive acquisitions. Under Vision 2025, we have streamlined and optimized our portfolio through acquisitions and divestitures to build scale in our highest-returning building products businesses and to broaden our suite of energy efficient solutions. Through 2022, we have invested over $3 billion in accretive acquisitions. And fourth, a returns-focused capital allocation strategy that includes deploying over $3 billion into capital expenditures, share repurchases, and dividends. Since the launch of Vision 2025, we have invested over $3 billion into these areas of capital allocation, also three years ahead of our original plan in 2022 we made capital investments of over 184 million dollars into our businesses to drive innovation increase operational efficiencies and enhance the carlisle experience we also returned over 500 million dollars to shareholders with share repurchases totaling 400 million dollars and 134 million dollars paid in dividends in 2022 and of course None of this would be possible without continuing to invest in and develop exceptional talent. Through the accelerated execution of Vision 2025, Carlisle has built a solid foundation leveraging a diversified workplace, decentralized management style, entrepreneurial spirit, and a culture of continuous improvement, which will continue to guide our value creation journey in 2023 and beyond. Turning to slide five, I'd like to highlight some of the many accomplishments in the fourth quarter. First, collectively our building product segment, now constituting over 80% of Carlyle total sales, delivered record fourth quarter sales and adjusted EBITDA. Second, we are pleased with the ongoing integration efforts at our newest segment, CWT. The team continues to effectively capture the projected synergies from the Henry acquisition of $30 million, while focusing on delivering excellent customer service in a challenging environment. This commitment to our channel partners and customers was recognized when Henry was awarded the Home Depot's Building Materials Vendor of the Year Award in October. Third, we continued the introduction of our innovative, labor-saving, 16-foot TPO product to the market, which is manufactured on the industry's latest and most technologically advanced TPO line in Carlisle, Pennsylvania. As a reminder, we began shipping this product in the third quarter of 2022. Additionally, construction of our state-of-the-art Polyiso facility in Sykeston, Missouri is on track for completion in the second quarter and on track to achieve LEED Platinum certification, the highest level of commercial building energy efficient standards. Fourth, pricing remained and continues to be positive across all segments as we continue to demonstrate our value to our customers. Fifth, supply chain and material availability returned to a more normal state. This return to normal has enabled our channel partners to settle back into more of a historical buying cadence. And finally, global aerospace markets continue their recovery, driving strong sales and backlogs at CIT and increased profitability on the back of the significant restructuring actions taken by the CIT team over the past few years. And with that, I'll turn it over to Dave Smith, our Vice President of Sustainability, for an update on our ESG progress. Dave?