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Good afternoon. My name Ina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Carlisle Companies Third Quarter 2023 Earnings Conference Call. [Operator Instructions] And I would now like to turn the call over to Mr. Mehul Patel, Carlisle's Vice President of Investor Relations. Mehul, please go ahead.

Thank you, and good afternoon, everyone. Welcome to Carlisle's Third Quarter Call. I'm Mehul Patel, Head of Investor Relations for Carlisle. We released our third quarter financial results today, and you can find both our press release and the presentation for today's call in the Investor Relations section of our website. On the call with me today are Chris Koch, our Board Chair, President and CEO; along with Kevin

Thank you, Mehul. Good afternoon, everyone, and thank you for joining us on Carlisle's Third Quarter 2023 Earnings Call. In the third quarter, we reached a significant milestone in Carlisle's 105-year history, moving from a diversified industrial portfolio of businesses to a building products portfolio of businesses. The pending sale of CIT will mark the final step in the successful completion of our pivot to become a best-in-class pure-play building products company. Our journey to become a focused building products portfolio began in 2021 when we, as part of our superior capital allocation methodology, made the strategic decision to enhance Vision 2025 and the future of Carlisle by allocating our future cash flow and human capital into investments that would reinforce and expand our businesses that have consistently delivered the highest returns. We're confident that a focused portfolio of innovative products, services and solutions in the building envelope space that drive energy efficiency, labor reduction, and are priced to the value provided, will benefit our employees, customers and communities while allowing our shareholders to capitalize on industry-leading returns. Importantly, we deliver products, services and solutions with a clear value proposition and a significant financial return for end users and contractors alike, ensuring their businesses operate more effectively. When coupled with the Carlisle experience, these innovative products, services and solutions will create a significant and clear differentiation for Carlisle and the competitive building envelope marketplace of today and tomorrow. This new building products focus of Carlisle and the accompanying key strategic actions will build on the strong foundation of Vision 2025, and will form the key principles of our next strategic plan, Vision 2030, which will be released in December, we are proud of what our team has accomplished under Vision 2025, and look forward to sharing with all of you the next phase of value creation at Carlisle with the December launch of Vision 2030. Turning to our third quarter results on Slide 3. In the third quarter, excluding CIT, Carlisle achieved consolidated sales of $1.3 billion, adjusted EBITDA of $340 million and adjusted EPS of $4.68 per share. Our sales in the third quarter were negatively impacted by the effect of increasing interest rates driven by the ongoing Federal Reserve actions. In addition to the interest rate impact, the third quarter was also negatively impacted by tighter lending standards and increasingly conservative sentiment at contractors and distributors with respect to their inventory levels as we enter the traditionally lighter fourth and first quarters. We are nonetheless pleased that despite the sales declines, our third quarter margin performance, pricing position, and market share remain consistent with our expectations. CCM and CWT together delivered remarkable EBITDA margin performance of 27% in the quarter, marking a 100 basis point improvement year-over-year as well as a sequential improvement from the second quarter. CCM delivered a second consecutive quarter of 30%-plus EBITDA margins, and CWT drove a solid 90 basis point improvement in EBITDA margins sequentially. This performance showcases our ability to maintain strong margins throughout economic cycles. Our market position, brand strength and price discipline, complemented by the value we provide to customers through the Carlisle Experience and efficiency gains driven by the Carlisle Operating System are, and will remain pillars of strength for Carlisle's future under Vision 2030. At CCM, our team remains focused on executing their proven long-term strategies which have yielded consistent success over the last 2 decades. This focus involves maintaining our brand strength through the Carlisle experience, solving end user problems through innovation and driving efficiencies through COS and operational excellence. One additional market note, the destocking headwinds we faced over the past 4 quarters were largely in commercial roofing are behind us, setting the stage for a more normal 2024 buying profile. CWT delivered another exceptional quarter with 37% growth in EBITDA year-over-year. Revenues performed largely as expected, reflecting the impact of the challenging residential housing market but offset by the nondiscretionary R&R exposure derived from CWT's commercial and residential roof coating solutions. The CWT team continues to excel in realizing synergies related to the Henry acquisition achieving operational efficiencies through COS and factory consolidations, and enhancing margins through system selling initiatives. Building on this solid performance in the third quarter, we expect the positive EBITDA growth story to continue with CWT, especially as we continue to invest in operating efficiencies and scale volume through investments and share gain initiatives. Please turn to Slide 4. While we acknowledge the near-term challenges driven by higher interest rates, tighter lending conditions and industry-wide concerns over the timing of restocking actions, we remain exceedingly bullish on Carlisle longer-term value creation runway. As I mentioned earlier, with our pivot to a pure-play building products portfolio now essentially complete, we are a more efficient and focused organization, positioned extremely well to benefit from the attractive long-term secular trends that include a robust reroofing cycle, increasing demand for energy-efficient buildings, a significant need for solutions that increase labor efficiency on the roof, and the desire for innovation to deliver value throughout the construction process, and ultimately, building ownership. I want to spend a minute to highlight our key drivers of success and why we are positioned to win within this backdrop. CCM is benefiting from a multiyear backlog of reroofing projects in the U.S. with 40% of total roof square footage requiring replacement in the next 10 years. This backlog is helping to ensure consistent and reliable demand. CWT's revenue with 50% derived from repair and remodel demand across the building envelope and in both commercial and residential markets provides balanced exposure to mitigate the ebbs and flows of the economic cycles. 65% of Carlisle's sales are derived from lead certified products, clearly demonstrating the growing demand for energy-efficient solutions and integrated systems to reduce carbon-related emissions from buildings. We have a growing pipeline of innovative products and are significantly increasing our investment in R&D to develop more environmentally sustainable products with improved performance and integrated system solutions that are easier to install. In 2023, we have delivered $290 million of sales from products introduced in the last 3 years. The Carlisle Experience has established us as a premium brand with a recognized value proposition backed by high-quality products and exceptional service, ensuring we deliver the right products at the right place and at the right time. And lastly, we have significant financial flexibility, thanks to our robust balance sheet and strong cash flow generation, allowing us to fund disciplined value-creating acquisitions, internal growth initiatives, and provide for the consistent and reliable return of capital to shareholders through almost a half century of growing dividends, and in the last 5 years, significant and opportunistic share repurchases. Please refer now to Slides 5 and 6 for our progress on sustainability. Sustainability is a very important focus for Carlisle. As an organization, Carlisle is committed to being a responsible environmental stakeholder, and we strongly believe that creating a more sustainable environment is also productive and economically beneficial for our shareholders. In December of last year, we announced our goal to achieve net zero emissions by 2050. While 2050 is still quite a few years away, we recognize the need to start taking action today to meet this target on time. To hold ourselves accountable and show measurable short-term progress, we created two near-term emissions reduction targets by 2030 in conjunction with the Science Based Targets initiatives also known as SBTi. First, we committed to a 38% reduction in both our Scope 1 production GHG emissions from the manufacturer of our products, and our Scope 2 operational GHG emissions from purchased energy in our operations. We also committed to a 48% reduction in our Scope 3 upstream and downstream GHG emission intensity as we transition to lower carbon feedstocks. To reach of these targets, we focused on three pillars. The first pillar is manufacturing energy-efficient products. As an example, in 2022, Carlisle sold more than $3.5 billion worth of lead qualified products to the residential and commercial building industry. Our customers will save as much as 155 million-megawatt hours over the lifetime of those products, which is enough energy to power almost 14 million homes in the U.S. for a year. In addition, we converted over 50% of our spray foam blowing agents from traditional HFC formulas to more environmentally friendly HFO formulations. As a reminder, HFCs are 1,000x more carbon-intensive than HFOs. So this action resulted in reductions of almost 10,000 tons of Scope 1 GHG emissions and over 200,000 tons of Scope 3 emissions, while at the same time, contributed to over $2 million in annual cost savings. This transition from HFCs to HFO comes 13 years ahead of the mandated EPA HFC phasedown requirements, positioning Carlisle as a leader in the spray foam insulation sustainability landscape. The second pillar is lowering emissions across our facilities and manufacturing processes. Carlisle's leadership in driving environmental management in our factories is reflected by our qualifying an additional nine facilities this year to ISO 14001, the environmental management standard. We now have 42% of Carlisle facilities qualified to ISO 14001. This year, we also launched energy management programs at our Montgomery, New York, and Tooele, Utah plants to drive the necessary enhancements to be prepared for ISO 50001 certification by the end of 2025. Both programs are yielding significant waste and energy savings, ultimately reducing our carbon footprint and returning value to our shareholders. Earlier this year, we invested over $125 million in our new Sikeston, Missouri polyiso facility. This investment in Sikeston represents the latest in manufacturing advances and is another example of our commitment to reduce emissions from our facilities through the latest advancements in green building technology including solar power generation and energy base load control systems. We are extremely pleased that Sikeston meets the highest sustainability standards, including lead platinum specifications. We are also pleased that pending final certification by the United States Green Building Council, Sikeston will be the first LEED v4 platinum manufacturing facility in the entire country. The LEED v4 standard is a performance-based approach to efficiency management that calls for measurable results throughout a building's life cycle, and we are proud to lead our industry in this transformation. Our third pillar is reducing landfill waste. This includes developing programs and partnerships to recycle and upcycle materials away from landfills. As an example, Carlisle was piloting a program to recover and recycle roofing materials, which has helped divert 95,000 metric tons of waste from landfills since inception of the program this year. These are just a few examples of our ongoing sustainability efforts, and I encourage all of you to take a look at our 2022 corporate sustainability report, which we published at the end of August and is posted on our website. It contains superb information, including clear examples of how our products reduce carbon footprint in buildings, reduce emissions in our operations and how we plan to reduce waste to landfills. Please turn to Slide 7. Our earnings power and margin sustainability in this challenging environment demonstrates the success of Vision 2025. As a reminder, the pillars for sustainable value creation at Carlisle under Vision 2025 included one, drive mid-single-digit organic revenue growth; two, utilize COS to drive continuous improvement, and drive greater efficiency; three, build scale with synergistic and accretive acquisitions; four, maintain a returns-focused capital allocation strategy, including organic investment to drive growth, a disciplined approach to M&A and returning capital to shareholders. And notably, thus far in 2023, we've returned $699 million to shareholders with share repurchases of $580 million and $119 million paid in dividends. And of course, none of this could be possible without continuing to rely on, invest in, and develop exceptional talent. With Vision 2025 targets achieved, and the pivot effectively complete, we will now turn to Vision 2030, the next phase in our 105-year journey as a company. Vision 2030 will continue to build upon Vision 2025, but with a focus on building products. As I mentioned earlier, Vision 2030 will be released in December, and we'll provide comprehensive details about our path to further value creation for all Carlisle stakeholders. And with that, I'll turn it over to Kevin to provide additional financial details as well as our updated outlook for the fourth quarter. Kevin?

Thank you, Chris. For segment highlights, please turn to Slide 8. CCM delivered third quarter revenues of $914 million, down 16% from the prior year. The decline was due to the remaining destock of $50 million that we expected in challenging end markets driven by higher interest rates, tighter lending conditions and project delays. Adjusted EBITDA margin was strong at 32% as we maintained pricing discipline while holding share, which drove positive price/cost in the quarter. In addition, CCM drove cost reductions through operating efficiencies supported by our continuous improvement culture in the Carlisle operating system. Moving to Slide 9. Revenues at CWT decreased 15%, primarily due to residential demand weakness and project delays. Adjusted EBITDA margin was 23.4%, expanding 890 basis points from the third quarter of 2022. The CWT team continues to excel in realizing synergies with the Henry acquisition, achieving operational efficiencies through COS and enhancing margins through system selling initiatives. Slide 10 provides a year-over-year bridge items to the third quarter adjusted EPS. Moving to Slides 11 and 12, Carlisle ended the third quarter of 2023 with $108 million of cash on hand. We repaid our $300 million senior notes on September 1 and have $1 billion of availability under our revolving credit facility. We generated cash flow from continuing operations of $390 million and invested $30 million in capital expenditures. We deployed $330 million toward share repurchases, and paid $42 million in dividends. As of the end of the third quarter, we have 8.6 million shares available for repurchase under our share repurchase program. Turning to Slide 13. We have provided our updated Q4 2023 financial outlook. For CCM, we expect year-over-year revenue to decline 3% to 5% in the fourth quarter. For CWT, we expect year-over-year revenue to decline approximately 10% in the fourth quarter. For the total company, we expect year-over-year revenue for the fourth quarter to decline 5% to 7%. We attribute the lower revenue primarily to the challenging markets and overall economic uncertainty, which is causing project delays. Given the solid execution by our teams across Carlisle, EBITDA margins are expected to increase approximately 200 basis points year-over-year despite the lower volume expectations. We remain focused on disciplined pricing, which is leading to better price/cost capture this year, operational efficiencies and managing costs through our continuous improvement efforts. With that, I turn it over to Chris for closing remarks.

Thanks, Kevin. In closing, I once again would like to express my thanks and appreciation for the excellent work done by all of Carlisle employees in the third quarter. Their perseverance and commitment to Vision 2025 has allowed us to continue to deliver solid results and maintain an optimistic outlook for the future. And that concludes our formal comments. Operator, we are now ready for questions.

[Operator Instructions] And your first question comes from the line of Tim Wojs from Baird.

Maybe just to start, I know you gave us the guidance ranges for Q4 with the segments in kind of a total company. I was kind of curious if there were any kind of base case kind of planning assumptions that you'd be able to kind of share on '24 at all, just kind of high-level puts and takes as we kind of think about revenue and margins.

Yes, Tim, it kind of early, as you know, we're going through our 2024 planning right now and wrapping things up with the division. So we still need to get their final looks in that. We'd like to update in greater detail when we launch Vision 2030 in December. So there'll be somewhat 11 other months, and we'll have that under our belt. Where we'll be able to give you a little more perspective on our outlook for '24. But I think Kevin will share a few things that might help with our perspective on where we think '24 is going.

Yes. So on the -- we do have some tailwinds from the destocking. So that will be a positive for 2024. Pricing that's remained stable where we are in the third quarter, expect that to continue into the fourth quarter and into 2024. So maybe down a couple of percentage overall for 2024. The end market demand, as Chris says, too early to discuss that piece of it.

So Tim, I think on the pricing thing, too, if I give a couple of things to Kevin's thing. I've been very surprised at all the -- we've heard a lot of feedback in the markets around competitor action. But one thing that's been good going into '24 is as you saw our margins held the same, our pricing was, in fact, basically flat in core CCM for the third quarter. And we've had real stability there. So I think there's been this rationality in the market despite a lot of talk from all of the competitors despite volumes being down. And I think that's a positive sign going into in 2024. I do think raws, if we give a little perspective there, maybe a little bit of pressure there. I think, again, that's dependent on what's happening in the Middle East. And although we don't have a direct correlation to oil prices, you know that a lot of our raws come out or indirectly related to oil. So that -- and then we've got some good gains that are continuing with CWT. I think that trend you saw in the third quarter with Frank Ready and the CWT team, they're taking action on a bunch of fronts that should help us continue to see that margin expansion and get more to our aspirational levels, which are a lot closer to CCM for CWT. And then I think last, we continue to work on innovation and I know that should be -- there should be some good tailwinds, even though they're not huge with new products, both in CCM and CWT.

Okay. Okay. No, that's helpful. And then just given the announcement you guys made last month around selling CIT and kind of moving that to discontinued operations. I mean can you just maybe elaborate a little bit on what that sale price or that process looks like? And maybe kind of give us a little bit of a time frame there?

Yes. I think first of all, pretty conventional process. We -- I think most of the interest would have been and is from strategics. We have a few parties in the process. Process is going very smoothly. We're happy with it. I think we would like to have a contract signed sometime in the fourth quarter. And so you can -- that kind of if you work back from that, you can probably tell where we are in the process based on our announcement when we have done it. And then I think we probably closed right after the first of the year, if we can close sooner than that, that would be great. But now it's going well and good interest and exciting process. It's a great business, and we've been pleased by the response.

Okay. Okay. Good. And then -- just a last one for me. I don't think the fluid sale is reflected in the end of the quarter balance sheet. And I think you were expected or expecting to use the proceeds from that for buybacks. So I guess, what would your buyback assumption be in the fourth quarter? I mean could you actually buyback -- you used all of the proceeds in the fourth quarter to buy stock back? Or does that lead in the first half?

Yes. So our plan that we talked about on the last call was $900 million for the year, and that was based on -- we were planning on $400 million, and the additional $500 million for CFT. So that's really the number that we're looking at is a total of $900 million. And you're correct, we closed on officially first week of October. But that number of $900 million stays the same.

And your next question comes from the line of Bryan Blair from Oppenheimer.

I appreciate all the detail on run rate CCM dynamics. Just to level set, what is your team seeing in the first month of Q4? Does that align with the down 3% to 5% guidance? Or is there some reliance on further easing of comps in November and December?

No, I think October, actually, we were pleased with how October is shaping up. Obviously, with this dynamic environment, I think we have the same concerns you do as to when, what's happening, but it's been positive both from a billings bookings perspective and what we're seeing going into November.

Understood. Price/cost remains a good guy. What has been realized year-to-date? And is there an updated full year guide on that front?

Yes. So we gave a range last time for CCM at $60 million to $80 million for the full year, and we expect we can narrow that range to $70 million to $80 million for the year. And yes, about 3/4 of that has been realized at this point?

Got it. Appreciate that detail. And then last one, the step-up in CWT margin has been nice. And there's obviously a lot of noise playing out quarter-by-quarter. But if we balance the second and third quarter of last year, relative to this year, 650 basis points or so, margin expansion. How should we think of the breakout of the drivers there? Clearly, price/cost has been again, a good guy for that segment, synergies are reading through. I believe you've exited a less profitable or unprofitable business. Just curious if you can provide any detail on what the drivers are there and what we should expect going forward, Chris, I believe you said that the aspirational margin target is much closer to CCM. So that's quite compelling if you can make that happen.

Yes. Kevin will hit you with a couple of other ones, but I was really pleased. One thing I'd like to note is -- and I give a lot of credit to Frank here and the team coming in and Mehul is part of that, coming right into Carlisle from Henry and getting all the synergies we need. And I think there's still more to be taken out there on synergies. That will be one driver. And then looking at the business, and Frank did a really nice job of quickly acting to, we exited a business, a rubber business. We consolidated a few factories and the teams jumped on board with COS. Now COS is one where I see a lot of potential, because the COS, we've done a lot with plans and assessments, and we're just starting to get into spending that capital. And I think there's a long runway there with COS. So that's a positive. But I think you'll continue to see streamlining of the operations, better operations themselves, operating efficiency through COS. And then Kevin has got a couple of other things he'll touch on.

Yes, Chris, at the key highlights there, but the other one was selling initiatives. They're doing a good job on that piece of it. Obviously, you don't see at all with what's happening in resi right now, but that's been a positive. And yes, we expect continued improvement into 2024 and into 2025 as well from that number. So year-over-year improvement in each of the upcoming years.

And we've got a little bit of jumping back and forth. We got a little -- we've got some new products too that are very exciting that Frank has. And Henry won the -- they were supplier of the year at Home Depot recently. And I think that's another channel that is new to all of us here at Carlisle, and I know probably new to you, too, but Frank is doing a good job of finding ways to create opportunities with the Carlisle products and bring them potentially into that channel as well as look at potential acquisitions that could help us strengthen our position there. So overall, we've got a lot of nice kind of vectors going on here to drive to that aspirational margin of, let's say, 30, 30 plus.

And your next question comes from the line of Saree Boroditsky from Jefferies.

Obviously, a large portion of CCM is driven by reroofing demand. Can you just talk about the appetite in the ability of building owners to push out jobs if they decide to patch a roof. And if they do patch it, how much time does that buy them?

Well, we've got Mehul here who, and by the way Saree, good afternoon, we have Mehul who's the Henry expert on patching and roof coatings. And I think he can touch on that. I think one of the things for me that's always been a constraining item is the amount of routes that we put on that are under warranty. And I know Henry has a warranty related to their roof coatings. But I think when we talk about roof warranties, the thing that to me in terms of how far can you push out is always how far do you want to risk that warranty. And generally, our warranties are 20 years or so, people start looking at getting these roofs, reroofed at the 17, 18, 19 year time frame. And obviously, with the labor constraints we have today that can be extended. But I think you can push it out a little bit, but ultimately, it's really about the value of what's underneath in your business. You don't want leaks in data centers. You don't want leaks in hospitals or education facilities and those kind of things. And so I think that pushing it out creates a really -- it's a pretty big risk profile for people to do it. But when they do it, and I think it's again probably a small percentage in most cases. Now with tougher economic times, remember, there will be more. But hopefully, they'll use Henry coatings. And Mehul, maybe you want to talk about how long those Henry coatings can sustain the life of a roof.

Yes, absolutely. So Saree, on the Henry side, they offer several roof coating applications. They have roof mastics, which they could do in the short term, by themselves 1 or 2 seasons to restore an existing roof that's not in horrible shape, that's not damage you're leaking. There are silicon roof coating applications that could extend it further maybe 5 years or so. But a lot of these roofs that are getting completely replaced, they're probably past that cycle and you're going to require 1 or 2 years of that temporary roof patching solution that Henry offers.

Understood. And then just to make things clear in the guidance, I think in your 4Q 2023 outlook for adjusted EBITDA up 200 basis points. What's the base case for that? Is that with CIT and CFT? Without? Can you just help us understand where we're coming from with the up to 200 basis points?

Yes, that's we're taking CIT out of both the '22 and '23 number.

Got it. Okay. That's helpful. And then I guess last one. Can you talk about the competitive environment into next year, just given these potential market headwinds that you've discussed? And maybe think about a framework for how we think about price/cost if we do see lower market end market demand given some of your commentaries on oil prices.

Well, I think you've seen a pretty competitive market this year. I think we have to complement the teams that we're competing against. I mean, as we said when Elevate was for sale at that time Firestone, and Holcim purchased them, we get good operators that would come in, and I think they've lived up to that. And certainly, their acquisition of Malarkey and Duro-Last and these things, they've proven they know how to run a good playbook there. GAF is always a good competitor, great quality company. And so I think we won't see any real changes in the competition. It's tough. It's been tough. And everybody will continue to invest in R&D, I'm sure and continue to invest in their channel and in factories. So I don't really see much change there. On the price/cost, I think -- as I said, I think we've had pretty good stability there. We may see some opportunity for some price action if raws were to take a dramatic increase due to what we're seeing in the Middle East or some other disruption. But I don't really see that right now. So I think all in all, to me, it's going to be a little bit of more in the same. And I just reserve the right there that we're here in October. And we'll have more color on that as we get closer to December, and we get through things. So we'll be able to give you more of that.

And your next question comes from the line of Garik Shmois from Loop Capital.

Just on the margin outlook for the fourth quarter, with the 200 basis points of expansion you're expecting. Would you expect CCM margins to be up year-on-year in the fourth quarter? Or is all the gains coming from CWT just given how strong the margin ramp has been there?

It's a balanced piece between CCM and CWT where, as I said earlier or last quarter, we're looking at CCM to target 30% for the year on EBITDA. So that implies improvement in the fourth quarter. And then, yes, absolutely with CWT, they continue to improve. Last quarter, say, up to 350 basis points. We're probably more like 400 basis point to 450 basis point improvement year-over-year for the full year for CWT.

Perfect. That's helpful. I wanted to ask just in some of the discussions around project delays and CWT, I just want to get more clarity there. Is that mostly on the residential side, given that was the kind of the category that was softer? Or are you seeing project delays on nonresidents impacting that segment?

I'd say it's more on the commercial side. And I'd say more -- you got the factors, the commercial lending standards, things like that are tightening up. We're finding that people need more than one debt source when they got to do these where they used to be able to do it with one. And then I think labor, Garik, is always the constraint in all of this. We don't see really labor pools changing much. We think labor continues to be what it is, and we don't see a lot of people being added to the labor roles in the construction industry over the next few years, which, again, is why we place so much emphasis on the Carlisle Experience and on labor-saving products because we think that's still a gating item.

Got it. Okay. Last one for me, just on inventories in CCM in the channel, encouraging to hear the destocking, some largely run its course finally. As you look to '24, certainly, a little bit early, but would you expect distributors to manage their inventory in more normal seasonal patterns or just given some of the macro uncertainties at this point as a base case would be prudent to expect distribution to take a more conservative view on their inventories for the time being.

Well, inventory is a use of cash, right? So when you have the interest rate levels we have today and with people borrowing and things like that, I think they're going to be managing their inventory levels pretty tightly. It's going to be a line item. I think every CEO and business leader is going to be looking at as we get into Q4 and through to Q1, just because, again, those are seasonally light, and I think they would be managing the inventories tightly anyway. So maybe you can say that's the double whammy of having a seasonally like couple of quarters coupled with some higher interest rates. But I think as we go into the year, I think we are thinking that 2024 is going to look a lot more like a normal year. We've had the COVID experience and the destocking experience and we get back to some level of normalcy and see inventory levels get back up to where they've been historically, say, in 2019 to service what we still think is a really positive outlook for the industry longer term.

And your next question comes from the line of David MacGregor from Longbow Research.

I wanted to -- just quickly, I think I caught the price/cost numbers for CCM, but I missed them if you said them for CWT, what would those look like?

CWT, overall for the full year, we're $40 million plus.

$40 million plus, okay. And then just a question on industry capacity, both for TPO and for polyiso, we get into 2024, will industry capacity be up in percentage terms for each of those 2 categories versus 2022 or 2021, looking back over 2, 3 years? .

Well, I'm looking back as to what's been added. And I think we've always said this industry has been pretty rational in terms of adding lines. We did add our sites in line for polyiso. We did add our 16-foot line in Carlisle for TPO. Obviously, no change in EPDM in the industry. A couple of years ago, we saw Eco had a facility, I think, in Maryland, and I think GAF might have added one in Eastern Pennsylvania for TPL and polyiso. So I think that's it. PVC no real additions there that I can think of. So I think industry capacity is still compared to the historical averages. We're right in line with where we probably should be given market growth in that. I don't see any massive additional capacity being added or having been added. So I'd say...

I mean, when you can think about what you've added, what GAF has added, is there any way to express that as a percentage over a base maybe 2 years ago or.

Well, we used to say that one factory, at least in TPO or polyiso, also added about 5% to 7% capacity of the industry. I think that's probably -- as the industry has grown, I mean, I think that's still probably a good number.

Okay. That's really helpful. Last question for me is just you're passing that pivot point now. So congratulations on all the progress on getting to where you are now. Presumably, there's quite a substantial inorganic growth chapter ahead of you. I wonder if you could just talk conceptually about where within your business, you see maybe the opportunities as you pursue that building envelope vision, what is the big sort of white space opportunities for you within that building envelope opportunity?

Yes, we could -- that's an extended discussion because the building envelope space stretches from windows, doors, garage doors, I mean you've got shingles, you've got nails. We could get into all sorts of stuff. But I think for us, if you think about our core and what we do well, it would -- it's really going to be around that core building envelope, other roofing ideas, things down the wall, getting into the wall. But again, that -- an idea that I think when we look at things, it's going to be either -- it's going to have synergies either in channel. So is it something that helps us with the channel. And obviously, my comments on the retail piece and the big box stores in that. And having said that Frank has opened up a new channel for us there. There's some interesting opportunities there. We look at new products, and there are some things in roofing and there are some things in wall cladding and things like that, that we think we have certain processes and raw materials that could be added to that like insulated metal building panels or one that obviously -- we do metal and we do polyiso and those kind of things. So that could be one that we would look at. But I think you're going to find that there's enough for us with channel and with core synergies there too, in products too. keep it pretty close to what we're doing now. We think there's enough that -- it's not going to be too far afield. I don't see us getting into nails, for example, or getting into some piece of equipment related to cranes or something like that, right? So it will be a more CCM, CWT looking acquisition, adhesive, sealants, as I said, roofing materials, metal, things like that.

Where are acquisition multiples right now, Chris?

They're moving, I think. This is one of the interesting things. I think we all knew they were pretty high for the last couple of years, and I think they're moving down, I think, for types of businesses we look at. probably in the 8% to 10% range, maybe 9% to 11%, something like that, depending. But I think there's also value to be had a little bit lower as people get more realistic about the surge that came with COVID and what's happening in the market. I also think, seeing things in the private equity markets around wanting to seeing extended monetization events, the time keeps extending. And so we think there may be some opportunities to generate some lower multiple and opportunities for exit by looking in that space.

And your next question comes from the line of Adam Baumgarten from

If we think about where you stand today and assuming stable price, stable costs, on the input side, how would that look in terms of the impact of next year at this point?

I guess -- sorry, you're breaking up there. I think you said if we look at stable prices, stable costs, how does it look for next year. Again, we don't want to get too far into what next year looks like right now given what's happening in the markets. But again, our view on pricing is been that this year was a pretty tumultuous year as well, and pricing was relatively stable, and raws were relatively stable. In fact, we're kind of beneficial. But again, I think we're going to have to wait and see what happens in the markets. But our view into the fourth quarter, as Kevin dictated or indicated is good, another stable quarter. Q1, we think, Q1 of last year wasn't the best quarter. I think we were down in the high 500s in terms of revenue on that. So this year, if our exit point is maybe somewhere in the 650, 660, 670 range for fourth quarter then. We think that brings more stability into the year could get off to a good start. And then we I think if we can keep interest rates at a reasonable level, and we can get some confidence back in the economy and stability, I think it could be a good year.

Okay. And then I guess if we think about demand into the fourth quarter, given your implied guidance, and if we strip out the destocking in 3Q, it seems like 4Q is maybe a little bit lighter than usual. If you could just kind of walk through the moving pieces there, if there's still some other kind of one-off type like factors in that guidance?

Yes, really no one-off things. It's just more of the things we talked about with some of the project delays would be the biggest piece, and that's all around the interest rates and market uncertainty that for economic uncertainty that people try to delay some of those jobs.

Thank you. Mr. Koch, there are no further questions at this time. Please proceed.

Okay. I want to thank everyone for joining us on the call. And we look forward to, first of all, launching our Vision 2030 in December and sharing all those details with you. And we'll be in touch on that. And then following up with our fourth quarter call as we end the fourth quarter and move into 2024. So thanks very much, and look forward to talking to all of you very soon.