Dale Koch; Chairman of the Board, President, Chief Executive Officer; Carlisle Companies Inc
Timothy Wojs; Analyst; Robert W. Baird & Co., Inc.
Bryan Blair; Analyst; Oppenheimer & Co., Inc.
Good afternoon. My name is Nicole, and I will be your conference call operator for today. At this time, I would like to welcome everyone to the Carlisle Companies third quarter 2024 earnings conference call. (Operator Instructions) I would 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 2024 earnings call. I'm Mehul Patel, Vice President of Investor Relations for Carlisle. We released our third quarter 2024 financial results today, and you can find both our press release and presentation for today's call in Investor Relations section of our website. On the call with me today are Chris Koch, our Board Chair, President and CEO; along with Kevin Zdimal, our CFO.
Today's call will begin with Chris providing key highlights of our third quarter results and some commentary on our progress towards our Vision 2030 goal of $40 of EPS. Kevin will follow Chris and provide an overview on our third quarter and year-to-date financial performance and give an update on our most current outlook for the remainder of 2024.
Following our prepared remarks, we'll open up the line for questions. Before we begin, please refer to slide 2, 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 Carlisle's provide non-GAAP financial information. We 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.
And with that, I will turn the call over to Chris.
Thank you, Mehul. Good afternoon, everyone, and thank you for joining us today on Carlisle's third quarter 2024 earnings call. To start, I'd like to direct your attention to slide 3 of the presentation.
I'm pleased to share the Carlisle continued to demonstrate the outstanding performance we've seen in 2024 into the third quarter, despite facing increased headwinds in the quarter, which negatively impacted sales primarily in our residential end markets.
Despite these challenges and the additional impact of two major hurricanes, the Carlisle team delivered record third quarter results in both EBITDA margin and earnings per share. Carlisle performance throughout this year, underscores the resilience of our business model, the robustness of our key initiatives and the perseverance of our team and the effective execution of our Vision 2030 strategies.
The record achievements and profitability in the third quarter are even more rewarding and that our team has delivered a record third quarter results in an environment that, as mentioned, saw weakening residential market when compared to our second quarter outlook, as well as disruption is tied to weather related the port strike events.
In the third quarter, Carlisle delivered sales of $1.3 billion, representing growth of 6% on a year over year basis. Despite the negative sales impact of CWT. Across both CCM and CWT, we maintained our strong focus on pricing discipline on driving a superior customer interface through the Carlisle experience and continued to deliver operating efficiencies through our well-known approach to driving continuous improvement and the Carlisle operating system.
These factors combined to deliver third quarter record bottom line result, it's with adjusted EPS growing 24% to $5.78 and adjusted EBITDA margin expanding 60 basis points year-over-year to 27.6%, highlighting our commitment to continued margin expansion in both CCM and CWT.
CCM continued the positive momentum generated in the first half of 2024 into the second half of the year with revenue growth of 9% and an impressive 110 basis points expansion in adjusted EBITDA margin, setting a new third quarter record of 32.8%.
This growth was driven by the continued strength in reroofing demand, along with the benefits from inventory normalization in the channel and the acquisition of MTL. As we discussed throughout the year, we anticipated a significant positive impact from inventory normalization in 2024, and we are pleased that have materialized as expected and in the order of magnitude we had forecasted at the start of the year.
In the third quarter, in line with our original projections, we saw an approximately $50 million benefit of sales from CCM inventory normalization, which now completes the lapping benefit we expected this year and that was tied to the prior year's inventory destock.
As a reminder, when we entered 2024, we had anticipated $375 million from a return to normal inventory levels. Now turning to CWT, while we were pleased with the progress of our new product introductions, retail channel expansion and overall share gains within CWT, higher interest rates and affordability challenges resulted in a further slowing in new housing activity and repair and remodel during the quarter.
This negative factors drove a sales decline of 3% year-over-year and CWT, including an expected low single digit price declines. That said, our long-term positive outlook for CWT is unchanged given the well-known need for additional housing, a forecasted return to a better interest rate environment and success in key growth initiatives across commercial waterproofing, new product introductions and expansion in the home center channel.
Overall, pricing in the third quarter remained relatively stable and in line with our expectations for both the CCM and CWT segments. Much of this was driven by our proactive approach, pricing discipline and our commitment to value based pricing. Furthermore, the team's focus on operational excellence and strategic growth initiatives leaves us well positioned to capitalize on market opportunities as they arrive.
Now let's turn to Vision 2030. Our Vision 2030 strategy continues to guide our focus on key growth drivers, including energy efficiency, labor-saving solutions and capturing a larger share of the expanding reroofing market. We're doubling down on organic investments in innovation, more than tripling our historical R&D investments to bring more energy efficient and labor saving products to market faster.
We also remain committed to our pivot to a pure play building products platform and focused almost exclusively on the opportunities presented in the North American markets. Furthermore, we remain driven to be a superior capital allocator and demonstrated our commitment to returning capital to shareholders in the third quarter through our balanced approach of dividends and share repurchases.
During quarter three, we repurchased $1.1 million shares for $466 million, bringing our year-to-date total to $1.2 billion. These third quarter purchases put us well on track to achieve our plan goal of $1.4 billion in share repurchases in 2024.
Additionally, we paid out $46 million in dividends this quarter and declared an 18% increase to our dividend in August, representing the 48th consecutive annual increase in dividends for Carlisle shareholders. These actions underpin our ongoing dedication to creating shareholder value and reflect our confidence and Carlisle's growth trajectory.
Our robust cash flow generation and pristine balance sheet continued to provide us with the flexibility to reinvest in our businesses and the ability to deploy capital to drive organic growth, continuously improve our operations, pursue strategic acquisitions and actively returning capital to our shareholders, All while maintaining our focus on driving long-term value creation.
To close out slide 3. While we are slightly lowering our full year 2024 outlook to 10% revenue growth for Carlisle, reflecting the ongoing challenges in the residential markets and the impact of the previously mentioned weather and strike events, we are pleased to reaffirm our expectation to achieve approximately 150 basis points of adjusted EBITDA margin expansion.
I will now speak briefly to slides 4 through eight as I discuss our recent progress against our Vision 2030 goals. As a reminder, our Vision 2030 strategy builds on the success of Vision 2025 and gives us a clear roadmap to drive value creation in the next chapter of Carlisle's ongoing story of success.
Under Vision 2030, we are creating value for our shareholders through our portfolio of high-performing building envelope businesses with attractive secular trends. We are focusing on delivering the most innovative, energy-efficient and labor-saving products and solutions to our customers through investment in our ever improving Carlisle experience.
Delivering well understood and consistent value for price, leveraging a strong leadership focus and operating with a relentless focus on flawless execution driven by our COS culture.
As a reminder, Vision 2030 focuses on six pillars. The first is the Carlisle operating system. Under Vision 2030, we will continue to drive our continuous improvement culture through the consistent application of COS across every function in the enterprise, with a goal to drive savings of 1% to 2% of sales of annually through operation efficiencies.
Second is the Carlisle experience. The Carlisle experience has established us as a premium brand with a recognized value proposition backed by high-quality products and exceptional service. Our commitment to our customers is embodied in the Carlisle experience, which means delivering the right products to the right place at the right time.
We understand that we win with customers through superior products and solutions, exceptional service and labor savings efficiencies. And we price our products to reflect that value.
Third is innovation. We plan to increase our spend on R&D to 3% of sales by 2030 to accelerate the creation of new products and solutions that add value to our customers through advancements in sustainability, energy savings in labor efficiency. We will pursue innovation based on an intimate knowledge of our markets and a focus on innovation that responds to our customers needs and opportunities to improve their businesses.
Fourth is M&A, we will focus on existing and adjacent categories that allow us to enhance our building envelope portfolio. We will seek opportunities to acquire assets that meet our well understood criteria of an embedded organic growth story and opportunity to deliver hard cost synergies, talented management team and the ability to deploy our Carlisle integration playbook.
This is our disciplined approach to capital allocation. Ultimately, a superior capital allocators. We seek to create value for our shareholders and deliver benefits for all our stakeholders. In line with our track record, we will continue to invest our cash responsibly into the highest ROIC opportunities.
And lastly, and perhaps more importantly, our six goal is attracting, motivating and retaining top performers to ensure we have the best talent to execute our strategic initiatives and drive above market growth. By executing on our clearly stated initiatives and strategies reinforced by the progress we've made this year.
We are on target to deliver our goal of $40 of EPS by 2030, while achieving over 25% ROIC and generating free cash flow margins in excess of 15%. Our M&A strategy, a key pillar of Vision 2030 continues to progress as expected.
We have a healthy pipeline of opportunities that can contribute to our Vision 2030 goal to grow and be a leading supplier of building envelope products and solutions. With the sale of CIT completed in May. I am pleased to report that we've been able to deploy capital from the sale proceeds into meaningful acquisitions, demonstrating our ability to execute on our strategic plans and create value through M&A. As part of Vision 2030.
This rapid and strategic deployment of capital underscores our commitment to strengthening and growing our positions within the building envelope. With our solid balance sheet and robust cash flow, we are well positioned to capture additional value through M&A over the Vision 2030 timeframe.
We see opportunities in both existing and complementary categories, including architectural metals, insulation, underlayment, [sealants] and the many whether proofing categories within CWT. As a reminder, our M&A playbook is built on four core criteria and embedded organic growth story, hard cost synergies, a strong management team and the deployment of our Carlisle integration playbook.
Our acquisition of MTL earlier this year and our recently announced agreement to acquire Plasti-Fab are recent examples of this strategy in action and the steady progress in M&A, we are making against our Vision 2030 goals.
Let's focus on Plasti-Fab for a moment. The rationale for the acquisition of Plasti-Fab is straight forward. It aligns perfectly with our Vision 2030 strategy to enhance our best in class building envelope product portfolio.
It establishes Carlisle as a leading manufacturer within the $1.5 billion North American expanded polystyrene insulation market and strategically provides vertically integrated polystyrene capabilities to our Insulfoam business, sliding scale, supporting retail channel growth and filling key geographic gaps in the US and Canada. We expect this acquisition to generate approximately $14 million in annual cost synergies and be accretive to our adjusted EPS by approximately $0.30 in 2025.
Recently, our M&A strategy gained recognition and a Harvard Business Review article titled, a better approach to mergers and acquisitions. Carlisle has built a detailed integration playbook with clear milestones and goals.
This approach, coupled with our rigorous due diligence process, gives us a competitive advantage and M&A execution. We were pleased to be able to share our approach to M&A through a well distributed and well respected periodical and hope it helps provide shares orders with more insight into our approach.
Our success in M&A complements our intensified focus on innovation, another key driver in our Vision 2030 strategy, we're significantly increasing our R&D investment to $1 billion over the Vision 2030 timeframe, aiming to derive 25% of our revenue from new products, up from 15% today.
Our approach categorizes innovation into three types, business lifecycle, evolutionary and revolutionary, each receiving equal focus and investment of about 1% of sales. Business life cycle innovation is currently 80% of our efforts, focus on ongoing product improvements and cost reductions.
Evolutionary innovations address specific and real current unmet customer needs. A great example is our new 16 foot TPO line, by doubling the width of the traditional a flip TPO role. We reduced seems in the roof, which reduces the opportunities for leaks over the life of the roof.
It also reduces labor by significantly increasing the square foot applied by the contractors installation team. Revolutionary innovations drive dramatic business inflections with longer term development time lines. New reroofing insulation, like our recently introduced denim based ultra touch product that's available at home Depot's is an example of a revolutionary product development idea.
Our innovation efforts are already yielding results with products like SeamShield and Blueskin VPTech gaining rapid market acceptance. SeamShield reduces cleaning time by 70% while increasing weld strength directly addressing contractor pain points. Blueskin VPTech combines multiple components into a single product, improving energy efficiency and cutting installation time by 30%.
I'm particularly excited to highlight another innovative product that exemplifies our commitment to sustainability and customer value. Henry Roof Guarding, was recently named a finalist for Home Depot's innovative product of the Year award. This recognition not only showcases our progress in innovation, but also reinforces the strength of our relationships with key channel partners like Home Depot.
And it was another example of delivering value to our customers based on extensive market input. Roof Guard represents our next-generation acrylic waterproof roof coatings, enhanced with urethane for improved performance. It's premium hybrid formula offers better weather protection, solar, reflectivity and longevity compared to standard acrylic reflective roof coatings.
This innovation not only addresses our customers needs for energy efficiency, but also aligns perfectly with our sustainability goals. The success of products like Roof Guard have contributed to CWT's Henry brand being awarded Home Depot's building materials Vendor of the Year for the second time since 2022.
This accolade underscores our commitment to innovation and customer satisfaction serving as a prime example of the Carlisle experience in action, and we are very proud of the Henry team for being recognized by Home Depot again. These innovations not only enhance the Carlisle experience for our customer, but also drive margin expansion through pricing to value.
They demonstrate how our focus on innovation is directly contributing to our Vision 2030 goals, positioning us to meet evolving market needs while driving sustainable growth and profitability. I'm extremely proud of our team's performance year to date as we progress towards our Vision 2030 goals. I am confident in our ability to continue delivering value for all our stakeholders.
Our focus remains on demonstrating the strength of our margin resiliency through the Carlisle experience and driving superior returns on capital through our strategic initiatives. With that, I'll turn it over to Kevin to provide additional financial details. Kevin?
Kevin Zdimal
Thank you, Chris. Our third quarter financial results continue to demonstrate Carlisle strength and our effective execution. As shown on slide 9, we delivered a solid third quarter on both the top and bottom lines. We grew sales to $1.3 billion, up 6% year over year, driven by robust reroofing activity, the return to normalization of inventory levels and our channels and the acquisition of MTL.
Which more than offset the negative impact from the slower residential end markets. We leveraged our top-line performance to expand EBITDA margins by 60 basis points year over year to a record third quarter 27.6%.
Furthermore, we grew adjusted EPS by 24% to a record third quarter $5.78, reflecting the strong operating results, margin expansion and the benefits of our ongoing share repurchase program.
Looking at our segment highlights, starting with CCM on slide 10. CCM delivered third-quarter revenues of $998 million, up 9% year over year, reflecting pent-up re-roof demand, the benefit of inventory normalization and the acquisition of MTL.
CCM's adjusted EBITDA increased 13% year over year to $328 million, and adjusted EBITDA margin expanded an impressive 110 basis points year over year to a record third quarter 32.8%, reflecting strong volume leverage on sales growth, favorable raw materials, and continued operational improvements driven by the Carlisle Operating System. Moving to slide 11.
Revenues at CWT were down 3% year over year to $335 million, primarily due to softer residential end markets and expected price declines in selected product categories. Partially offset by growth in our commercial business share gain initiatives and the acquisition of Polar Industries.
CWT's adjusted EBITDA decreased 14% year over year to $69 million. Adjusted EBITDA margin contracted $270 basis points year over year to 20.7% attributable to strategic investments in the business to support longer term growth initiatives as well as lower sales in the quarter as a result of broader residential market weakness from higher interest rates as consumers take a wait and see approach to home purchases and R&R.
For your reference, slide 12 provides a year over year third quarter adjusted EPS bridge. Moving to slide 13, our cash flow performance remained strong. Free cash flow from continuing operations for the first nine months of 2024 was $597 million, up $22 million year over year, reflecting robust earnings growth and disciplined working capital management. We have invested $64 million in capital expenditures year to date.
Moving to slide 14, our balance sheet remains solid, with $1.5 billion in cash and $1 billion available under our revolving credit facility as of quarter end. This solid liquidity, along with a net leverage ratio of 0.5 times, gives us the flexibility to invest in value-creating opportunities while staying committed to delivering returns to our shareholders.
Moving to slide 15. In line with our Vision 2030 capital allocation strategy. We're reinvesting in our high ROIC building product businesses through growth CapEx and strategically deploying capital towards synergistic M&A opportunities to grow and enhance our building envelope portfolio while also returning significant capital to shareholders.
In the third quarter, we paid $46 million in dividends and repurchased $466 million shares, bringing our year-to-date share repurchases to $1.2 billion. We have $4.5 million shares remaining under our current repurchase program. Carlisle's financial strength, underpinned by consistent cash flow generation and prudent capital management remains a key competitive advantage.
It enables us to balance investments and organic growth, strategic M&A and shareholder returns, while maintaining the flexibility to navigate evolving market dynamics. This financial resilience, combined with our operational excellence that's driven by the Carlisle Operating System, reinforces our confidence in achieving our Vision 2030 objectives.
Now moving to our full year financial outlook on slide 16. As Chris previously noted, we now expect our full year 2024 outlook for revenue to grow approximately 10% over the prior year, and we are reaffirming our expectation for adjusted EBITDA margins to expand by approximately 150 basis points. This outlook includes an expectation for fourth quarter revenue to grow low single digit with an adjusted EBITDA margin of approximately 25% in the fourth quarter.
As such, we expect record full year EPS in 2024, with growth in excess of 25% compared to the prior year. Additionally, we maintain our expectation to deliver free cash flow margins of at least 15% and ROIC in excess of 25%.
This is directly aligned with the objectives outlined in our Vision 2030 strategy. To provide a tighter band on the outlook, I will provide outlook by segment for the fourth quarter.
For CCM, we expect revenue to grow mid single digit through a combination of volume growth and the benefit from the MTL acquisition offsetting slightly lower pricing on year over year comps. For CWT, we expect Q4 revenue to decline low single digit versus a fourth quarter of 2023. The main drivers for CWT is key growth initiatives, partially off offsetting the software residential end markets.
In summary, our third quarter results of revenue up 6% and adjusted EPS up 24% year-over-year to a record third quarter $5.78 demonstrate the strength and resilience of our business model as well as our ability to execute effectively an idea, dynamic market environment. The progress we have made year to date reinforces the momentum we're building towards our Vision 2030 goals.
As we look ahead, we are excited about the opportunities to further leverage our operational excellence, drive innovation and win in our end markets. With our strong financial position, disciplined capital allocation strategy and commitment to continued improvement through the Carlisle operating system. We believe we are well equipped to deliver long-term value creation.
With that, I'll turn it over to Chris for closing remarks.
Dale Koch
Thank you, Kevin. In conclusion, I want to reiterate our confidence in Carlisle strategic direction under Vision 2030. As we move forward, our ability to innovate with a focus on energy efficiency and labor saving solutions puts us on the right path to drive above market growth and superior financial results.
Our record third quarter results cash flow generation and overall 2024 performance continue to give us confidence that we are firmly on track towards our Vision 2030 goals of $40 of EPS, 25% ROIC, 15% free cash flow margins, 25% EBITDA margins and mid single digit organic growth.
The pivot of Carlisle's business model to an easier to understand and higher returning building products portfolio continues to provide many strong catalyst for growth. When combined with our robust free cash flow engine, strong balance sheet, enhanced phone focus on innovation, a robust pipeline of potential acquisitions and a proven M&A integration playbook.
Carlisle is clearly positioned to create significant additional value for all our shareholders and reach our goal of $40 of EPS under Vision 2030. I would also like to take this opportunity to express my continued thanks to all of Carlisle's employees for their exceptional efforts and perseverance in this challenging environment.
And once again, let me extend my sincere congratulations to the Henry team on their Home Depot award. Thank you all as well for your continued support investment and interest in Carlisle. That concludes our formal comments. Operator, we are now ready for questions.
Operator
(Operator Instructions)
Timothy Wojs, Baird.
Timothy Wojs
Hi guys, good afternoon. Thanks for the time. So maybe just on volumes on in the CCM business, if you could maybe kind of take a step back and tried to give us some color on where you think maybe either industry sales are or kind of where industry volumes are kind of in the third quarter and maybe a year to date.
And I guess as you look at next year, I mean, I know it's early, but how do you think about the volume and kind of puts and takes in to next year with with new construction. And then it seems like re-risk continues to have some some decent momentum.
Mehul Patel
Yeah, I think you're right, Tim, on the I'll just take a look at into '25 for those who don't want to stay about Q3, but I think '25, we continue to be optimistic on that from a couple of perspectives. I think obviously a lot of economic uncertainty going into the elections.
Obviously, there is a hope for more of interest rate cuts you didn't materialize. I think people may be sitting on the sidelines there. We also were going in the fourth quarter after just having, basically got back to normal on the inventory restocking and know what it was going to really a restock into the like quarters a year to heavily, Than we had a little bit of weather.
I think things stabilize after the election industry because we think there may be some opportunity for some pricing. Obviously, you still see inflation and labor medical costs these things, as well as more innovation that we have coming out, the effects of some positive things on acquisitions, some new channel opportunities for us.
So I think '25 for us, we would say it looks good. And then last, I say we haven't had a load into the construction season and in quite a while and as possible is it accurate. But I would say probably hasn't been since COVID and that used to be a nice boost to the year.
So I think there's some opportunities for some inventory improvements was people have confidence in the in the economy again. So with that, I'll turn the Kevin and see it would be like similar to third quarter volumes.
Timothy Wojs
Yeah, in Q3 I would say the industry was up about 30%, which would have been the same for our CCM business. There was some things at the end of the quarter, as you know, with some of the weather events with the hurricanes as well as the port strike that impacted us a little more than 1% in the quarter. So that would have been against that 30% volume that we would have seen. (multiple speakers)
Dale Koch
Just one thing, if I look across the verticals, you know warehouse as educational office, that kind of things really when we look in '24 the big one, that's been a drag and it was kind of that way and '23 as well as data warehouses. Everything else is not too bad a shape as far as how the volumes getting distributed, I think you can you're probably already aware that we've seen that.
Timothy Wojs
Yeah, I mean, to your point, like new construction is down this year, right? So I mean, a lot of it essential, a lot of it is kind of center on the warehouse vertical, right?
Dale Koch
Yeah. (multiple speakers)
Timothy Wojs
So that's why that's totally fine. And then just on just the M&A kind of funnel and the pipeline and I guess, kind of pace. I mean, you've done kind of a few acquisitions or through tuck-in acquisitions here in the last couple of quarters.
Is there a pretty sizable pipeline of these tuck-in type acquisitions at pretty attractive financial profile is because if you're able to do a couple of years here, I mean, you can really start to get some momentum on that. The synergies and the capital deployment?
Dale Koch
Yes, actually, you know, I still think prices are a little bit high versus what they were a few years ago. But after we get our synergies, synergies adjusted numbers, they've been looking really good. It goes back to before things we're looking for renal and liver, that organic growth story. We're looking for hard synergies, good management team we've got those both in MTL and Plasti-Fab.
The other thing is, you said at the tug you have that ability to get the synergies but also added dimension to the two businesses. And I think it's really nice that entails a good acquisition for our existing CCM business are under excellent person, got a great manager and Tony manager and things through bringing efficiencies are bringing to the existing business by adding MTL.
And then you have a good Plasti-Fab, and it really real forces that Frank raised systems built around national distribution on being a national brands and really enhancing the Carlisle experience. I mean, part of is a core competency to Home Depot is a 24-hour delivery anywhere in the countries to really get Plasti-Fab, will begin to build out that EPS network as well.
So they're real the good fits, and we do see more of those. We do see more RFPs around the building envelope. And I think you'll see more of that from us certainly in '25 and beyond.
Kevin Zdimal
Yes, it's been great at the scale, the scale and size of them, we would expect that to continue to deploy about $3 million to $500 million into these bolt-on acquisitions a year for the next few years.
Dale Koch
Okay, great. And then, Kevin, just a clarification. That's 3% industry volume number that you quoted, you guys were closer to mid-single digits, just to make sure the math works.
Kevin Zdimal
Yeah. When you take into account some of the destocked that is a higher and there was excluding FX impact.
Dale Koch
Got you. Sounds good. I'll head back in queue. Thanks guys.
Operator
Saree Boroditsky, Jefferies.
Saree Boroditsky
Hi, good evening. And so maybe just turning to he see our margins, I think, is very strong performance in the quarter. You said it's compositive raw material environment. Could you just talk about the price contribution to margins for the quarter and anything else that drove expansion?
Kevin Zdimal
Yes. So price cost was neutral in the quarter for CCM. And as you said, it was a very good margins, up over 100 basis points to a record. And for us that really demonstrates the power of the business where we can get these record margins, expand the margin without getting price.
Because that's been a lot of that story in past years is we needed the price to get the margins. But now with utilizing the Carlisle operating system throughout CCM, that's driving these higher margins.
Saree Boroditsky
And then you guys don't usually talk a ton of storm activity, but just given some of the recent hurricanes and ahead of thinking about the potential for additional construction demand? Very having though I gave on the rails in the short term.
Dale Koch
Probably neutral, I would say I think we definitely had some impact at the end of someday. I think, we definitely had some impact again in September and then in October are factors primarily forwarded around the gulf. But obviously, get some pickup from that. I mean, we hope people recover quickly. There was a lot of damage.
And that's I think, more importantly than if we talk about whether the bigger impact is, those washout is probably around what tend to be no November, December, we have across the country history and whether we get a nice a dry warm fall or we get wet weather and more snow early in the north.
So that's always a factor. But I think for the most part, the opportunity and the impact kind of washed each other out the fourth quarter.
Saree Boroditsky
Appreciate. And I would just add one more. You've talked about the ramping of the R&D and investments of 3% of sale view. Can you talk about how we see that spending step up and maybe what the contribution will be for next year? Thank you.
Kevin Zdimal
Yeah, we would expect to increase at around 50 basis points a year as we move forward to 2030. So we're not going to get the 3% next year or even the following year. It's more of this steady increase of that throughout the next five years.
Saree Boroditsky
Appreciate the color. Thank you.
Operator
Susan Maklari.
Susan Maklari
Thank you. Good afternoon, everyone. My first question is are digging into the right side of things again. Can you talk a little bit about what the latest survey of your contractors has shown. Has that changed any over the last quarter?
And how you're thinking about their positioning as they look to the fall and year end? And then how do you all also within that, think about the opportunity to capture some of that business given the MTL and the other acquisitions?
Mehul Patel
Right. Well, there a way that we do really reflected everything I think you've written and others have written about more pressure on new and more pressure on the revenue side of the business. And obviously, that's been reflected in more numbers and just ours. And I think it's pretty well understood.
Very kind of positive on reroofing, you know, as we look out and we kind of bifurcate this into a near term, look at what reroofing is doing. But on the long term, all those routes that we've seen and we've talked about this before that are put on in the 2008, 2009 and 2010 does as well, you know, these all come back in the higher price.
And then after we reverts within 20 years. So outlook for the Q4 has been positive across the board, as we've talked about, the impact will weather can do and there can be some impact on the margins. And then going into 25, I was actually surprised that the kind of initial indicators we're positive both on return to volume.
And I think, again, I spoke to the uncertainty now and the macroeconomic conditions that are here, uncertainty, people being concerned. But the '25 look more positive in this surprisingly, there was some positive expectation around price that would be a positive as we headed into '25.
So early days, these are projections is that across a wide group books, contractors. But I think good news on that commercial side.
Susan Maklari
Okay. And it can you talk about your inventory within CCM, how those are going into the end of the year? And any thoughts on your production?
Mehul Patel
Yeah. And see before you to the interest, we you asked about MTL and what's happening. You know, MTL continues to make great strides to integrate into the specifications at CCM. As a reminder, MTL has patents and things like this, and we're bringing those into our warranty. We're bringing our sales force teams together.
I mean, it's a little bit about six months, but we're getting good traction there. We're seeing places where even Henry now is getting into the game, we're a little bit on a national chain, and we'll certainly see that Henry might be in there and they're bringing MTL and are bringing CCM or vice versa.
So there's really good synergies there. And I'm really pleased with how quickly Brian and his team, the of integrated and really just started to push the whole idea of the building envelope platform that we want.
On inventories, inventory turns have been better, we're fine. Our deliveries continue to increase in terms of an on-time delivery rate. It's always been good, but it has gotten better as we move through the quarter. And you know, that's OTD to promise and then for central rate. So I think we'll continue to have pretty good service and it continues to get better in the quarter.
Susan Maklari
Okay. All right. Thanks for all the color and good luck with everything.
Operator
David MacGregor, Longbow Research.
David MacGregor
Yeah, good afternoon and thanks for taking my questions. Hey Chris, can you just talk about the [polyisol] market, and it seems as though you've got a lot of new capacity, that's a lot of relatively large increase, I guess in the amount of new capacity come to market last year, it seems like pricing has been a little sloppy. How you are thinking about that market right now and how it can absorb that capacity over the next year or so?
Dale Koch
Well, I think you know, when we look at additions or maybe we take it into two different groups, you know, we look at the big three that you know us and our two big competitors who've been here for a long time and use it as part of an integrated system. I mean, we look at the reroofing volumes over the coming years.
We look at North America, getting some relief, assuring we look at what we're doing with the need for energy efficiency. I think we'll be fine with with what's been added some. We do have others that have announced they're going to come in.
I think this is an interesting statement. I think it's going to be polyisol in the market, but it's not the same type of capacity is, I would say, out of those players that have a fully warranty system, national coverage in our training centers, tying it together with, as I just mentioned, I assume, you know, bringing in the metal and that kind of stuff.
So we still are looking to be the provider, the building envelope solution. We're looking to add features like Plasti-Fab, which is an installation company, obviously. And so I think there's been some capacity added and or at least talking about being added. And I don't understand how that might integrate into the markets we serve.
We've had this happened where the three years ago, maybe four years ago, we had a competitors with Canada come down and put a facility in Maryland and it was a TPL polyisol facility. And I think it's a time we'd had some questions around what's that going to do the market. Obviously, we don't ever talk about that on our calls.
And I would say the impact was negligible. So obviously, there's a lot more to being in this building envelope business is showing up with the TPL line, and I polyisol aligns well, that's a great certain for someone.
We've got a lot of years of relationships and other things. It's again, I'd like to think about a middle and Frank talks about this to be PTX, a great idea. That's so I'd just add in the piece of Blue scanner, the labor barrier, the EPS for the Board is putting all together and then selling through a highly talented sales network architects and contractors, some builders.
And I think we've got a great outlook for North American construction markets. And so I think what we've added well seems to be quite a bit compared to what we're used to it, I think we will be okay with that.
David MacGregor
Good. Thank you for that detail. Let's agree to answer. Can you just walk us through your outlook for each, your principal raw material inputs, just in terms of price trends and what you're seeing there?
Dale Koch
Yeah. I think we had talked about MBI for the year. I'm being a little bit on I know our TPL resins were a little bit of EPDM resins or I should say farmers down. So when we look overall, that's where we're getting to some savings, that those that are down or overwhelming at that, the most participants have been stable through the year and much we expected.
I think some of it obviously depends on demand. And in the rising markets obviously has been down, but overall was relatively stable.
David MacGregor
Last question for me is just on the CWT and you talked about EBITDA, adjusted EBITDA being down 14%. Can you just bifurcate for us the investments that were made there versus the volume deleverage?
Dale Koch
Yeah. When we looked at we've tried to break it into something that we all get there's a lot of moving parts. But basically about a third of that was the deteriorate continued deterioration in the ROCI markets. You know, both the ROIC of the new in the R&R were both down about mid-single digits.
Obviously, I'll say a majority note, it's interest rates, portability election uncertainty. And then we had a little bit of an impact from the spray foam side of the business where a little bit of irrational pricing from some competitors that a bit of an impact.
But let's say that made up of third and then the second third really was the investments. And maybe I'll let my whole go into what those investments or is there our residential or I should say, CWT expert.
David MacGregor
Thanks, Chris. Hey, Dave, how are you?
Kevin Zdimal
So you've heard us talk about share gain initiatives within CWT across our expansion in the Home Depot retail side of the business, as well as expanding into the national builders are therefore system offerings and then advanced waterproofing penetration. So those are areas where we're in investing into sales organization, adding people as well as equipment to drive our strategy there.
In addition to that, we've had additional marketing and ad co-op programs at the retail channel as we expand into additional categories. And then you hear us talk about R&D as part of Vision 2030. So on CWT, you heard about the products like Blueskin VPTech, we're investing in that in R&D.
And then lastly, as part of our of cross-selling and sign a pull system across the defense CWT businesses, and we've been investing in IT and systems and tools to make it a better customer experience. So that kind of gives you an idea of, we're spending additional money and it's going to support further long-term growth, as we continue to beginning to grow. We should get a good return and see margins improve going forward.
David MacGregor
Great. Thanks for the detail. Good luck.
Operator
Bryan Blair, Oppenheimer.
Bryan Blair
Good afternoon guys. Chris, you mentioned likely neutral Q4 impact from the hurricanes. Obviously, there's some headwind from the first when that hit in Q3. Just to level set, what was the total impact between the port strikes and the initial impact of the first hurricane, that top line and margin to the extent that can be quantified?
Kevin Zdimal
Yeah. The top-line it's about $10 million to $15 million of impact in the third quarter. And to the bottom line you can do or incremental for that to 40%, is the impact there for the third quarter. And then as Chris said, we don't see it coming back in the fourth quarter getting that pick up.
But 2025 is when you will see more of the recovery of that piece that was slowed down due to the hurricanes right now. Obviously in the Southeast, the focus is on the essential jobs and the repairs. They're not doing as much work on new projects, but that's what we think will kick in 2025.
Bryan Blair
Okay. Understand. And Chris, you'd walk through some of the puts and takes for CCM looking into 2025, maybe do the same with the CWT. How are you thinking about recovery prospects, continue to watch items related swing factors, et cetera?
Dale Koch
Yeah. Well, I think you've got a lot of really positive things. The whole mentioned a couple of them. We've obviously expanded our retail channel. That was a great synergy that we don't build into the $30 million of synergies that we can had in the Henry deal that came as a bonus facility expansion into the retail channel has been good.
We've talked about some of the different products, like I mentioned, the whole ultra touch, denim insulation. We've got some other projects that are going on. So I like that Frank's VPTech, really this this new product, the whole innovation pipeline thing and I might because in the CWT that team has done a pretty good job is even indicated by the Supplier Recognition at Home Depot.
I think the bigger thing, for us are really just around the the economy and this affordability. I think a couple of interesting because it will be needed will help. We've got to get people movie and that affordability is an issue. We do know there's a backlog and housing stock, so it's good to see that happen. CapEx is deployed.
So I think that as well as CapEx, and we haven't talked about too much on this call, but we did invest a lot and automation into CWT, things like auto brief, autofill, taking really labor out of the equation, automating that and increasing both the quality, reducing the waste and increasing the efficiency of our factories and Frank's done a nice job there.
So again, to me, when we look at the quarter and we think about that two-thirds, I think that one-third of the beginning was to may not have been as impactful as these investments. Lastly, as the volume is there to run through the incrementals, we've been pretty good and we were on a good pace to do that before we saw that further deterioration.
So usually for this rebound in the ROCI and repair and remodel markets, and I think it'll have a little bit there, whether it happens in the first quarter or not. I think I would look more towards this second half of the year, but we're confident we'll be there.
Operator
Adam Baumgarten, Zelman.
Adam Baumgarten
Hey, guys, good afternoon. Just on price cost, any change to the outlook of flat for the year at this point?
Dale Koch
No. Not on I assume you're targeting a on the CCM side.
Adam Baumgarten
Yeah, just today, I'd say I think you said was flat, but you're right.
Dale Koch
Yes.
Adam Baumgarten
Okay, cool. And then just on CCM, specifically on pricing, just curious what you saw throughout the quarter, especially kind of later in the quarter and into 4Q and maybe what you're hearing from your distribution customers around price competition?
Dale Koch
Yeah. And I think it's been, I wouldn't say it's widely disseminated. But I think for pricing we're seeing relative stability, I mean, I think back to two years ago when there was no raw materials will go down and we would you see the pricing data, raw materials. And I think as we've pushed price discipline and as we push price to value, it's been pretty good.
To see our competitors investing in new factories, investing in innovation, investing in their sales teams and really ensuring that they get paid for those investments they're making. So again, I think just what we got as I said earlier in the call where we got out of our survey, was a relatively stable pricing environment throughout the year.
I think Kevin said at the beginning of the year, we'd probably be down 2% for the year. And I think we're pretty close to that. Despite all the issues have gone out through the year. And then I think going into '25, the feedback was that there might be some upside to pricing from our survey.
So we'll see how that plays out. But that is a good thing when our contractor base and our other expense in our value chain are thinking like that.
Adam Baumgarten
Great. Thanks a lot.
Operator
Garik Shmois, Loop Capital.
Garik Shmois
Good afternoon. Thanks for squeezing me in. Just two questions on CWT. Just first on pricing, it remain down your aggregate fairly consistent with what you saw earlier in the year. But just wondering maybe some more to the earlier question on CCM, if the pricing trading fees changed at all in CWT.
Kevin Zdimal
Yeah it's steadily improved throughout the year. Where in the back half of the year is about 2% down. First half of the year was a little bit higher than that at CWT. So it has improved, but we're expecting them couple of percent, both Q3, which we had as well as in Q4.
Mehul Patel
Garik, one thing I will add is going back to our last earnings call when we talked about additional pricing pressure on spray foam. Outside of that, everything is in line. There's no pricing pressure. We're holding prices stable similar to CCM and declines that Kevin mentioned, that's pretty much in line with what we said in the last earnings call.
Garik Shmois
Great. Appreciate the color there. And then just on the trend in CWT during the quarter and the outlook, just given the disconnect on what you're looking for coming out of 2Q, and I think it implies maybe mid single digit type revenue growth in the back half of the year.
I appreciate the residential remains weak. But any more color and throughout or any specific product line or channels that I have just haven't materialized to the degree you expected?
Dale Koch
Yeah. I think, you know, when we look at each segment it's been pretty good, as (inaudible) said, I mean, relative to what our expectations were and come to the year and then even in the second quarter, and I really don't think we can underestimate the impact of the residential markets, affordability effect, people are moving.
And I think earlier in the year, we had a lot of talk about even three interest rate cuts. And then we got one and that was it. And I think that has helped. But it's hurt people because they're saying, maybe I'll just stick around and wait and see if things get better in 2025.
So why [ag]? Now when I can maybe do it later. And then I think the bigger impacted from a product line perspective has just been probably a little more deterioration and spray foam than we thought. And that one segment, and again, that's a tough one.
It's a very compelling market that's got a lot of energy efficiency benefits to it. A much better product from and our value perspective from a vapor barrier perspective, we're seeing at the wide adoption and homebuilding, the sound bidding benefits units or it's a great product.
But we've had some industry changes over the last five years where there's been acquisitions by one group and some regional players that have maybe take us some different actions. And so pricing has been a little bit worse there than we saw. And I'd say that would be the one thing that are those two things are the things that really impacted that sort of beauty pricing in the third quarter and looking into the fourth.
Garik Shmois
Okay. I appreciate that. Thanks.
Operator
There are no further questions at this time. I'll hand on the call over to Chris Koch for closing remarks. Please go ahead.
Dale Koch
Thanks, everybody. This concludes the third quarter call for Carlisle. Thanks for the participation is actually very questions. Look forward to speaking with you all on our next call. Thank you.
Operator
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.