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Carlisle Companies, Inc. (CSL)’s 2014 Earnings Update Conference Call Transcript

We also saw our sale decline in Europe as the European economy began to slow. Compounding the impact of the slow economy was the strengthening of the US dollar. Both had a negative impact on our first quarter results. Thankfully, Europe represents less than 10% of CCM sales. So while the impact of the weakening European economy, by itself, would have been minor coupled with the weather that slowed sales in November and December, both earnings and sales were affected.

With slower demands in the US and Europe, our facilities fell overhead absorption issues as the quarter progress. Along with slowed demand, we also had a few large extraordinary expenses flowing to the income statement in the fourth quarter. Before we talk about 2014 fourth quarterly expenses let me remind you that we had $5 million, or positives, that we had in the fourth quarter of 2013.

Included in the fourth quarter of 2013 earnings was the $5 million gain broken down as such. The sale of our Cantt Washington building generated approximately $2 million. The sale was very equipped that we should have been written down in previous years was a positive $2 million, and the reduction of the medical expensive crude generate about $1 million.

In the fourth quarter of 2014, we had PVC and PPO plants startup expenses of approximately $3.5 million. We closed the Smith’s field EPS plant, costing us about a $1 million. We had some customers confessions for non warranty related issues approximately $1.3 million. We have medical costs above what we had occlude for at $1.3 million, and above $300,000 with due to effective change with strengthening U.S. dollar.

The $5 million of 2013’s positives, compared to $5million of negatives in 2014, it’s $10 million difference. For your information, the CCM factory startup cost incurred in all of 2014 will be approximately $8 million. These costs should not repeat in 2015. The good news is that the slower sale activity – or the extraordinary expenses that we incurred in the last two months of 2014 – do not, in any way, signal of slowing of U.S. demand for non residential roofing.

Quite the contrary, the general consensus among our U.S. distributors, architects and the sales organization is that the market will grow high single digits in 2015 despite weakness in Europe. When combined with positive raw material cost influenced by declining oil prices, we expect 2015 to be a very good year. At CBF, in the fourth-quarter we saw a continued decline in the sale of breaking systems to agriculture equipment manufactures, and a continued recession in the production of mining equipment. The result was the decline of revenue compared to fourth quarter 2013. Reacting to declining revenues, we do start work force incurring several costs of about $1 million.

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