David Roberts - Chairman, President and CEO Steve Ford - CFO.

Ivan Marcuse - KeyBanc Capital Markets Ajay Kejriwal - FBR Capital Markets Joel Tiss - BMO Capital Markets Glenn Wortman - Sidoti & Company Tim Wojs - Robert W. Baird & Co. Neil Frohnapple - Longbow Research Rob Crystal - Goldman Sachs.

Good morning. My name is Jackie and I will be your conference operator today. At this time, I would like to welcome everyone to the Carlisle Companies Incorporated Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

After the speakers’ remarks, there will be question-and-answer session [Operator Instructions]. Thank you. I would now like to turn the call over to Mr. David Roberts, Chairman, President and CEO of Carlisle Companies. Please go ahead..

Thank you, Jackie. Good morning. And welcome to Carlisle’s third quarter 2014 conference call. On the phone with me is our Chief Operating Officer, Chris Koch; our Chief Financial Officer, Steven Ford; our Chief Accounting Officer, Kevin Zdimal; and our Treasurer Julie Chandler.

You had an opportunity to read the earnings release, I am sure you will agree that performance in the third quarter was excellent. We had superb organic sales growth which led to record quarterly earnings. All of our segments grew in the third quarter led by our largest business Construction Materials.

Overall, CCM grew at 16% but more impressive is the fact that new non-res construction grew at a rate greater than that. The aerospace industry build rates continue to be strong, which drove 11% organic growth at CIT. And in our smaller businesses, Food Service and Brake and Friction, they grew at 6% and 5% respectively.

The growth we saw in all of our businesses in the quarter was outstanding especially in [indiscernible] reported to be growing at 3%. Our nearly 15% quarterly operating earnings reflected high utilization rates at most of our factories.

One strategic objective to generate 15% operating margin is moving closer to being realized as our product portfolio continues to change and we continue to have success with COS. If we were to adjust the acquisition cost out of our earnings, the margins would have been 15% in the quarter.

At the end of the quarter, we took two more steps in changing the face of Carlisle when we announced the acquisitions of LHi and Finishing Brands. The purchase of LHi, which is a leading supplier of medical cabling is the beginning of a broader diversification within CIT.

We now have 50% of the segment sales being generated within medical equipment manufacturing.

Albeit of even greater importance was our announced agreement with Graco to purchase the Finishing Brands business, we have been pursuing this acquisition for more than two years and once regulatory approval is received, we will begin to building it into a direct competitor of Graco’s industrial business.

As we scale fluid technologies as the new segment will be called, it will become a sizeable, highly engineered product segment that will improve Carlisle’s overall margin profile.

What I enjoyed during my years at Graco was the competitive spirit that drove Graco management to be a world class supplier of fluid handling products with industry leading profitability, that same competitive spirit lives here at Carlisle. It exists the Construction Materials has driven us to be the class in the field in non-res roofing products.

That same spirit has been embedded at Interconnect Technologies wherein six short years we have become one of the premier manufacturers of aerospace cabling. That drive will be in still the and Fluid Technologies. There is room in the market for two premier suppliers.

Keen competition drives the company to be successful in going head to head with a great company like Graco will make Carlisle even better. The next few years are going to be fun. The third quarter brought another record to Carlisle as we once again improved our working capital as a percent of sales.

Sequentially, we reduced working capital 30 basis points to 17.7%.

The approximate 120 million we’ve invested in new plans and maintenance capital each of the past three years and there is 785 million we are investing into the acquisitions of LHi and Finishing Brands have been funded by the cash generated from our operations and the proceeds of the sale and transportation products.

No new debt was required to make these investments. Speaking of new factories, I was in Nogales, Mexico a few weeks ago reviewing the progress of our new CIT plant. I was impressed with the speed at which the plant has been constructed and more importantly the level of quality of the facility.

As planned, we will be producing products early next year in the state of the art facility. Our employees are anxious to move out of the four older inefficient buildings that we’re in today and into the new modern facility. I also recently visited our new TPO planning Carlisle PA and it like Nogales is nearing completion.

It is also a state of the art manufacturing facility and we will be producing saleable TPO membrane late in the fourth quarter. This added TPO capacity will be needed as we ramp up for the 2015 construction season. With the completion of Carlisle and Nogales, we will have built five new factories in less than three years.

All five of those factories were constructed in our businesses that are currently enjoying double digit organic growth. Everyone here at Carlisle is very excited about our achievements in the third quarter. These were the next steps in the creation of the new Carlisle, a company that is much different than it was seven years ago.

Let’s now turn to the slide presentation that’s available on our website. Before we begin the review, turn to slide two and read our forward looking statements and the explanation of the use of non-GAAP financial measures.

I strongly urge you to read these statements and review the documents we filed with the SEC, both detail, the risk associated with investing in Carlisle. As we begin our review turn to slide three where you will find our third quarter financial summary.

Sales increased 13% as all of our businesses grew, the fastest growing was Construction Materials with organic growth of 16%, say that again, that was 16% organic growth. Followed closely was CIT with 11% organic growth, and Brake & Friction sales were up 5% and FoodService sales grew 6%.

EBIT increased 22% as we earned a $134 million yielding an operating margin of 14.8%, 100 basis higher than 2013. Included in a margin calculation is 1.1 million of one-time cost associated with the purchase of LHi and $400,000 of one-time cost associated with the purchase of Finishing Brands.

EPS for the quarter was a $1.31, up 28.4% compared to a $1.2 in 2013. In the third quarter cash flow was $65 million, down 61% over last year. Our receivables increased during the quarter due to the strong sales we enjoyed in all of our businesses. And this will have a short-term impact on cash flow.

Last year’s cash flow also included transportation product which generated most of its cash in the first-half of the year. Slide 4 is our sales bridge which details the positive and negative impact on revenue.

Organic sales were up 13.4% driven by volume growth of 14.1%, offset by negative pricing of [0.7%] The pricing impact was self at CIT and Construction Materials. Construction Materials much of the pricing impact was due to our distributors reaching new pricing levels as their volumes increased. FX was positive [0.1%].

Slide 5 details our EBIT margins bridge, our quarterly operating margins increased by 100 basis points on higher volume and COS savings. While being offset by acquisition cost at CIT, higher freight cost at CCM and slightly unfavorable pricing at CCM and CIT, our operating earnings grew $24.4 million.

Slide 7 begins a review of the individual businesses starting with Construction Materials. Sales for the quarter grew 16% from $506 million to $589 million. Thankfully we added two new polyiso plants and are adding a new TPO plant. They have and will allow us to support the increased demand we are seeing in the industry.

Pricing was slightly lower, while volume was up an impressive 17%. Third quarter European sales slowed a bit on very tough comparisons, we may also be seeing a slight slowdown in the German economy, but it's really too early to tell. Year-to-date European sales are up 15%. EBIT for the quarter were up 17% to $97 million compared to $83 million in 2013.

Margins moved higher 10 basis points to 16.5%, while margin was impacted by $2 million of startup cost, these costs are starting to wind down. Last year our third quarter plant startup costs were $3.4 million. As a side note we should experience another $2 million of startup cost in the fourth quarter as the TPO plant comes online.

Slide 9 details CIT’s performance, sales in the third quarter set another segment record as we shift the $164 million with the wrecking, wire, cable and connectors to our customers. Sales were driven by a healthy 13% growth in Aerospace, 11% in Test & Measurement and 3% in Military, Industrial sales were down 3%.

As in the first-half of the year, we continue to see heavy demand for Aerospace cabling in the quarter, Test & Measurement sales were also strong driven by a telecommunications customer. EBIT grew 37% in the quarter as we earned $34 million compared to $25 million last year.

EBIT margin was up 380 basis points to 20.6%, included in the margin calculation was $1.1 million of acquisition charges associated with the purchase of LHi. LHi margins are approximately 60% of what we think they should be and the first day we own the company our operations people were onsite preparing for a COS split to lean up this engine plant.

It may take a year or so to start to see significant margin improvement [Audio gap] details the performance of our braking business. Sales grew 5% on strong demand for construction equipment and breaking systems.

Considering that our CCM new construction sales were up significantly in the quarter and our braking sales to construction equipment manufacturers were up 26%, the recovery and non-res construction appears to be underway. We did see our ag business soften and had a slight downturn in mining compared to last year.

We think that ag will be soft for the next 12 months or so and mining has still not shown any signs of economic recovery. The silver lining in that cloud is that the sales and mining equipment can’t get much worse than they are, not that that’s a good thing. EBIT was up 17% in the quarter, higher volume drove 70 basis points increase.

Akron closing cost were minimal this quarter as we neared the completion of this project. There will be another $600,000 spent in the fourth quarter as these operations wind to a halt and the production begins at our (Tulsa) [ph] plant. Turning to slide 13, details the results of FoodService. Sales grew nicely in the quarter, up 6% over 2013.

FoodService was up 7%, Healthcare up 5% while Jan/San was flat in the quarter. We are regaining some of the market share we lost earlier in the year when we cut our inventories too deeply. Profitability improved 7% as we generated 12.1% operating margins. In addition to increased volume, we saw better pricing realization in the quarter.

2013’s results had a one-time $1 million gain on the sale of our Reno facility. So one could conclude that our year-over-year improvement from operations is even better. We expect earnings and the sales momentum to carry us into the fourth quarter. This concludes my review of the business segments.

We’re going to turn the floor over to Steve who will take us through the balance sheet, cash flow and working capital.

Steve?.

Thanks Dave. Good morning. Please turn to slide 14 of the presentation. We ended the quarter with $805 million of cash on hand. On October 1st we acquired LHi for an enterprise value of $195 million using our cash on hand. We also plan to fund the acquisition of Finishing Brands with cash on hand and expected cash flow generation in the fourth quarter.

Following these two acquisitions, we expect to have all $600 million of availability under our credit facility leaving us ample liquidity to further pursue our long term growth objectives and return capital to our shareholders. Our balance sheet remains strong. We had no net debt at quarter end.

Following the two acquisitions, we expect our net debt to capital to be less than 25%.

Turning to slide 15, our free cash flow from operations for the three months ended September 30 was $65.1 million, $102.6 million lower than the prior year primarily due to higher receivables and inventory related to strong organic sales growth at CCM and CIT as well as the sale of our Carlisle Transportation products where cash generation is concentrated in the first half of the year.

For the full year, we expect to convert our free cash flow at the rate of close to 90%. Turning to slide 16, our average working capital as a percentage of sales for the third quarter 2014 was a record low 17.7%, a 120 basis point improvement from the 18.9% reported for the third quarter 2013.

We further improved inventory churns 7.4 churns compared to 6.9 churns and continue to make progress toward achieving our long term goal of 15% of sales. And with those remarks, I will turn the call back over to Dave..

Thanks Steve. Jackie, can we open the floor now for questions please..

[Operator Instructions] And our first question comes from the line of Ivan Marcuse with KeyBanc Capital Markets..

Quick question, if you looked at your new construction business and roofing and your replacement, how much would you say each of them grew?.

Well we were up 16% overall new construction grew at a rate much fast, not much, but grew at a rate faster than re-roofing. I think re-roofing was up about 30% and new construction was pushing 20%..

Would you think that the industry is growing at in re-roofing?.

Ivan, I think it’s pretty close to that. I think that we may have picked up some share but not dramatic. I think that the industry probably had a heck of a quarter..

And was there any sector within new construction that was stronger than the other region?.

No regional differences, the Midwest is still a bit slow but the perimeters of the U.S. are doing very well. Nothing that’s noticeable going on in any region..

Okay.

And with your acquisition related cost, is there anything in your results for Liquid Finishing Brands or is no cost been booked for that yet?.

Well, we had $400,000 that we took at corporate. But obviously we don’t own it yet. But those are just some legal costs and so on that we had during the quarter..

Okay.

And then with your CapEx I mean looking to be 120 million for the year, how much of that’s related to the new plants and then how much of CapEx will be associated with the acquisitions?.

Well none of it was associated with the acquisition….

Right now, going into 2015 what would you expect to CapEx to sort of net out to be?.

Yes, I don’t think there is going to be much in LHi and I am guessing here maybe a few million dollars, we don’t know about Finishing Brands yet, as you walk through their plants, they are actually in pretty good shape at Finishing Brands.

Fairly typical of what you would expect to see, I don’t think that there is going to be any large capital projects next year in Finishing Brands..

Okay.

And then the new plants this year, how much was the CapEx associated with them?.

I think you can figure there was probably $40 million, yes not quite half of the capital spin was new plant. We think that probably next year and I haven’t seen the budgets yet, but I would expect that maintenance capital next year is going to be $70 million to $80 million..

On the current business?.

Yes. And like I said, I don’t think there will be much in the acquisitions that will be required..

And then lastly with crude falling off here, are you seeing any sort of relief on your raw material cost or on your freight cost?.

Not on the freight cost, freight cost were up, those continue to climb, and I think that’s more associated with the driver cost and it is fuel cost. We’ve seen no appreciable decline in raw material cost, we had so much raw materials going up, some of them were actually going down and they basically offset each other.

So not much in the way of raw material cost increase..

Okay. Thanks for taking my questions..

Our next question comes from the line of Ajay Kejriwal with FBR Capital Markets..

Thank you. Good morning.

Dave did not share that Construction Materials growth number right, could you repeat that please?.

Well we were up 16% overall and….

Maybe update us so far in October what you’re seeing any change versus what the performance you’ve seen in third quarter by region, by product?.

Well, I have given you guidance whether it's still great out there and construction continues..

Good.

And then following up on that last question, I know it's unbalanced not much change for you, but in the context of lower oil, maybe just help us think about your raw material purchases, how much do you hold in inventory and how far in future do you contrive from most of these materials?.

Yes, generally no more than a quarter out is what we’re doing with raw materials. We found it, we go further out than that. We have suppliers that are reluctant to do that and also a generally get themselves in trouble because we just can’t predict what’s going to happen beyond the quarter. But a quarter no more than that actually..

So just, so if material prices went down significantly you would expect to see some benefit maybe early next year?.

Yes, in 2015 is when you see it. .

Got it, good.

And then CIT maybe update us on the negotiations with your largest customer?.

It's still underway, I think that there is some mutual understanding between the two parties. There will be some impact but probably not until early next year..

Okay, good.

And then ag, so within Brake/Friction could you maybe just ag as a percent of the segment, I know you said expectations are a bit down the next 12 months, but just maybe if you can provide rough kind of parameters as to, is down 20, down 30 what are you kind of thinking?.

I think it's probably going to be where it is. Our biggest fallout which was our biggest grower before it was in Europe, Europe starting to slow ag represents and anywhere from 20% to 25% of our revenue. So, we would expect it to be down, on a comparison basis about where it is or was in the third quarter going forward..

So 20%, 25% of the segment right, so overall for the company its less than 10%, less than 5%..

Yes, it's much smaller than that, I mean if you look at Brake & Friction it's to about 8% of our overall revenue and you got 20% of that, that’s ag related. So it's fairly small in the scheme of things..

Excellent. All right, thank you very much..

Our next question comes from the line of Joel Tiss with BMO Capital Markets..

Hey, guys how is it going? I wonder just two or three things, on the construction, this is more for the Brake & Friction business.

Can you give any sense of what’s behind that because you talk to caterpillar and some of your customers and they don’t seem like they are seeing a lot of improvement, so I just wondered if is it more aftermarket, or they are building up inventories or just any sense you have there?.

Yes, I don’t think its inventory build, I think that the customers are -- they are smarter than they were 10 years ago.

I think they’re buying what they need, what we’re seeing is the equipments that's used in heavy construction equipment so if you think about putting streets in the development so on and so that’s the kind of equipment that we’re seeing sell and it drove sales upward.

Not a lot of aftermarket component in that that’s almost all going into new equipment..

And then can you give us a little shape of the opportunity in this medical business, how big is the market, who are some of the competitors there, just to sort of frame the longer term opportunity?.

Dave Roberts:.

The competitors are the likely suspects all the big cabling guys and we think that there is opportunity. As far as size of the market I’m guessing Joe it might be $1 billion in size so there is some opportunity there..

And then last, there has been some talk from Boeing about sort of pushing on their suppliers to get the margins down, can you give us any sense of what you’re hearing from them and any timing on what could be impact to be?.

Dave Roberts:.

Yes, that’s we mentioned with Ajay that the -- there has been ongoing negotiations with one of our large (airframe) [ph] manufacturers as I said there is the mutual consent that’s been reached. We don’t expect that anything dramatic will happen until -- it won’t be dramatic until probably the first of the year, next year.

So early in 2015 I don’t see it being significant but that’s about all I can tell you..

Our next question comes from the line of Glenn Wortman with Sidoti & Capital..

Can you just give us your outlook on pricing for construct materials maybe any pricing actions you have in place and your expectations heading into 2015?.

Dave Roberts:.

Yes, we had a little of price that we got in the third quarter, a very small amount but it was the first time we saw some price. We had another 5% price increase that went in to affect October 1st primarily an installation and we hope to get some of that. It’s still a -- it’s hard to explain because it doesn’t follow business school logic.

The demand is high yet pricing is very difficult to get. Now with that said we’re still getting 16.5% margins in the business. So we’d love to have additional price but it’s just difficult to get right now..

Okay.

And then, within Brake & Friction is there much difference in the margins between end markets and ag mining construction?.

Dave Roberts:.

Well, mining is generally a higher margin business, it’s usually a highly dollar content and higher dollar in the margins but I mean there is not significant difference. Generally what happens with the size of the break which is a relationship the size of the unit you’re putting it on. We have a higher dollar amount in higher margin content.

So on the smaller units lower margins, on the bigger units higher margins..

Our next question comes from the line of Tim Wojs with Baird..

Just you talked about adding a few factories and CCM over the past couple of years I guess as you look over the next few years, how do you think capacities looking in the CCM business?.

Dave Roberts:.

I think we’re in great shape. We’ve got the branded plant going in Nogales that handles the airbus contract. We’ve got the two new polyiso plant the PVC plant, and the new TPO line going in. We should be in great shape for the next three or four years..

Okay. So it sounds like some of those investments should be a tailwind going forward..

Dave Roberts:.

Yes, it better be..

Okay.

And then I guess just an update on the capital allocations priorities post the two acquisitions, are acquisitions still a priority for capital, would you look a little bit at buyback, just a little bit of an update there would be helpful?.

Dave Roberts:.

Yes, I think that we’ve made two sizable acquisitions over the last two weeks basically are in the process of making two. What we’re looking at next is the start to build out the fluid technologies business and we’ll be looking for pump companies so and so forth but frankly the pipeline today doesn’t really have anything in it.

So I would think as we generate cash, we will be actively involved in share repurchases I think we’ve said it in the past it’s going to be a systematic program. We have now ending our blackout period.

We’ve been in blackout period for two years because we’ve been shaping basically fluid technologies and that is now over and we can put a 10b5 plan to start buying back some shares..

That’s great.

And then I guess just looking at Brake & Friction that the margins took a little bit of a step back from what we saw in the first half of the year, how should we think of that business going forward just in terms of the margin profile?.

Dave Roberts:.

I think the margins will get better as we get into next year. Keep in mind we're winding down the Akron plant and there was some additional cost associated with that, not significant but some cost.

And as we go forward we would expect 2015 to actually see improved margins on a small increase in revenue I guess?.

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

Dave, I understand you guys won’t give 2015 guidance until February and I know you just gave some color on the last question on Brake & Friction margins. But any commentary you can offer from a higher level.

Because it seems like your largest segments all have a lot of runway of market growth behind, I am just wondering, is that how we should be thinking about next year and beyond or does the macro environment particularly international is a little positive?.

We think new construction is definitely improving I mean we’ve seen it actually over the last year and a half or so. So we think that will carry strong momentum in the 2015 in CCM.

We’ve got the -- the comparisons are going to get a little tougher in CIT as we’ve enjoyed the ramp up but we’ve got new business there coming in the form of Airbus through the year and we’ve got the new LHi. So you’re going to see growth in the business.

And I think as we go through the year I think there will be a overall margin decline primarily because we’re in pricing negotiations with a large customer and LHi doesn’t have the margins that we have today.

So, as we improve the margins at LHi as we bring the new pricing scheme in I think you will see a shortfall or a downward trend in margins early in the year with some ramping up as the year goes by.

Brake & Friction we just talked about it I think it will be up a few percentage points I think marginal improve and I think you will see the same type of growth in FoodService then the margins will improve there as well. We’ve never done that..

And then just looking at 16% CCM growth in the quarter, you guys mentioned Europe slowed a bit.

Just wondering what was the difference in volume growth between Europe and North America?.

Well, 16% obviously is North America. I think -- and it’s the smallest segment, I think Europe itself was probably flat in the quarter so there wasn’t a lot of -- there wasn’t tremendous impact on the overall business because of the smallest component of our business and I think was relatively flat in the quarter..

Okay and then just finally am I reading too much into the timing of closing for Liquid Finishing Brands? I mean, I think you guys site it’s estimated to close on or about yearned, where before it sounded more like 1Q15. So any….

Yes, we can’t predict what FTC is going to take from a timing standpoint. I think we’ve had meetings onsite with FTC both Graco and Carlisle met with the FTC last week they’re moving it forward. We’re just anticipating that they have been this prior to signing an agreement with Graco.

And we’re just anticipating that that will happen before the end of the year. Nothing that indicates that that’s going to happen, that’s just what we’re anticipating. We also have approvals we have to get from Germany and also from China. In the past, we’ve had no problems getting those approvals acquisitions.

Frankly, we have nothing that competes today. So it should be an easy approval process. But we are waiting on three government agencies around the world to give us approval. We’re just hopeful that we’ll be by the end of the year..

[Operator Instructions] Our next question comes from the line of Rob Crystal with Goldman Sachs..

Dave, I guess, on the questions around CapEx, could you give us a general idea as a percent of sales what you think CapEx would be without expansion?.

Say that again, what percent of sales?.

What percent of sales would CapEx be without assuming new plants, right? So, sort of 2%, 3% of sales or some number like that?.

Just the way to look at it is that it’s going to be probably $70 million, $80 million and revenue is going to be 3 points, if we get the finishing business, it is going to be 3.4 billion, 3.5 billion..

Okay, thank you.

And at this time, we have no further questions. I’d like to turn the floor back over to Mr. Roberts for additional or closing remarks..

Thank you, Jackie. As we draw close to the conference call, turn to slide 18. For modeling purposes, we expect full year sales to be high single digits, corporate expenses will be $52 million, D&A expense will be approximately $104 million and capital expenditures will be right at $120 million.

Free cash flow conversion is now projected to be 90%, again because of the strength of shipments that’s driven our receivables upward. Interest expense is projected to be $32 million and when we do our internal projections, we use a 33% income tax rate.

Let me close the call by saying that we expect 2014 to end with record results, demand for new construction are reroofing product is expected to remain strong. And this momentum will carry us into 2015 as I said earlier.

As we look at the construction business, the only wild card will be weather, as long as the weather holds as it is, we should have a very good finish of the year and a very good start to the year in ’15.

We’re planning for an additional $2 million of startup cost for our new TPO plant in the fourth quarter at CCM, so I would suggest everyone take note of that.

CIT should continue to see high single-digit organic growth in the fourth quarter, while LHi will grow nicely, there shouldn’t be any expectation of profit as we write up the inventory to fill market value and then sell off that inventory at little or no profit. The inventory will be sold in the fourth quarter and early in 2015.

We certainly plan on streamlining LHi’s operations and expect it to be a strong contributor to profitability late in 2015. Startup charges for the new plant at Nogales the CIT should be about $500,000 in the fourth quarter, but we will have more startup cost or move cost that will take place early in the first quarter of 2015.

FoodService is going to grow at low single-digits in the fourth quarter, but we expect to see a slight increase in margins. We also expect to see margins continue to increase in 2015. CBF will have as usual seasonally slow fourth quarter and we don’t expect any pickup in sales until 2015.

In 2015, we anticipate modest growth and we expect to see an increase in margin, as we wrap up our restructuring project. Restricting charges should be approximately $500,000 in the fourth quarter.

We expect to begin plant systematic repurchase of our stock as we move through the remainder of 2014 and into 2015, as we remind that the Board has authorized us to buy up a 3 million shares.

As I bring call to a close, let me say that the past 12 months will be remembered significant strategic change that’s occurred within the company, it took us seven years to get there, but in the past 12 months, we’ve gone from heading a significant portion of our revenue generated by a low margin commodity product to a point where we've become a manufacture of high margin, highly engineered products.

And the work's just begun, we’re on the verge of becoming a premier highly profitable company. Thank you for attending the third quarter 2014 conference call, we’re on record pace for sales and earnings in ’14 and we look forward to reviewing those results with you in February where we review our year-end results. Jackie you may now end the call..

Thank you. This concludes today's conference call. You may now disconnect..