We talked about it before being more efficient applying COS and LEED Sigma. And then innovation. We’ve got innovation running as well in building in CWT. And then lastly, this positive price cost spread that they’re seeing should be helpful in the year too. I think we were probably a little bit more to the cost saving side on raw materials in the first quarter than the negative impact in price. So — and we should also see as volume continues to improve that 1% volume, we get more volume to the factors. We see some benefits from that too. So, Kevin, if you want to talk about the walk.
Kevin Zdimal: Yeah. And the seasonality, you know that both our businesses very much — the summer months is the stronger months. But as we look at CWT specifically, it’s really the same as we talked about at the end of the year where we think about 22% of the full year sales would be in Q1. And then Q2 and Q3 are both about 27%. And then you exit with the balance into Q4. As far as EBITDA drop through, we still see CWT in the low to mid 30s for incrementals and CCM there at about 40% on the incrementals.
Bryan Blair: I understand. Very helpful detail. Perhaps offer a little more on the strategic fit of MTL and how the asset strengthens the product suite of the metals platform and growth potential looking forward.
Christian Koch: Right. Well, MTL is just a great company. The leader of MTL, Tony Mallinger, has done a great job over the years of driving some wonderful performance. And it really centers around edge metal, which is we’ve talked about before. Edge metal goes on basically every low slope roof that we put on. And so that’s something that MTL brings to us. We think that’s a big benefit to get that into the Carlisle specification to get that into the Carlisle warranty. You know what happens there? Also, there’s some architectural and other metal products that they have their value accretive. They actually have patents on a lot of things. Something that you wouldn’t expect in a edge metal or perhaps an architectural metal business, but this patented technology just shows you the type of innovation that Tony and his team have been bringing to the market through the years.
So the addition really fits when we look right down the line from the specification, integrating it into our portfolio, being able to train our contractors, being able to offer to our contractors. And we also think there are going to be some good synergies by bringing MTL into the Drexel and Petersen group as well and having a much, much more complete product line and metal, as well as the synergies when we think about raw material purchases, the volume of that metal adds, when we think about shipping and other things like that. So a good addition. And I think, when we look back to what we said, it would be — I think we had about $0.25 accretion in an EPS in ’24 and then something like $0.60 in 2025. So right away, some good benefits there.
And I think our targeted and stated savings and synergies is going to round $13 million. But my expectation and I think as a team gets into it is that we’ll exceed that just like we did with Henry.
Bryan Blair: Got it. Again, very helpful. Thank you.
Christian Koch: Yeah. Thanks, Bryan.
Operator: Your next question comes from the line of Saree Boroditsky from Jefferies. Please go ahead.
Saree Boroditsky: Just a couple of questions here. So first, just to build on the price cost, you talked about a positive $20 million. Could you just provide any detail on how that plays out through the year?
Kevin Zdimal: Yeah. The first quarter, we got about half of that. And then through the balance of the year, it’s pretty much pro rata.
Saree Boroditsky: Perfect. And then building on the MTL, could you just provide more details on the architectural metals market? I believe in the past, you talked about a growing two times GDP, but it would be great to get an update on that.
Christian Koch: Yeah. I definitely think that it’s growing at a higher rate. I think you could probably say — you could probably stick with your two times GDP. One of the things that the metals business brings to us is obviously the flexibility of the product line and that’s something obviously is a huge benefit. The metals market is — I think it was when we had $800 billion markets. There’s plenty for us to go after. We also want to go after more, what I would say, prefab applications where we’re doing it in the factory and we’re getting more standardization on product lines and shipping that out. So I can give you more information, Saree, if you want to ask. That’s about where I would stop or I’ll just keep talking about the metal business.
But it’s a good business. It’s very complimentary. We talked about edge metal. The other thing I would just add, this, that when we look at a lot of the buildings in that flat roofs on them, especially warehouses and small manufacturing facilities and things like that, a lot of the time people will put on an office building on the side and the front. Maybe it’s two stories on the warehouse or three and they’ll put a one-story office building. A lot of the time when they seek to add differentiation there, they’ll do it with an architectural metal set up either on the roof or the roof in the wall. And again, value add highly specified and wrapping it into that whole warranty system that Carlisle can provide really gives us some great expanded market potential to go after.
Saree Boroditsky: I appreciate the color. And then just one last one, just to ever on the same page, you have net interest expense guidance for the year of $20 million. You had $10 million of interest expense this quarter. So just how you’re getting to build that interest income through the year would be helpful.
Kevin Zdimal: Yeah. It’s really comes down to the timing of CIT when we close. We’re expecting to close at the end of May sometime in that range. As far as CIT, hard to say with regulatory approvals out of our control, but all is going well there. And we have no concerns. But as far as forecasting interest income when you’re getting $2 billion makes it a little bit more challenging. So what we have this year, we did have the acquisition of MTL for $410 million. So we have to take that into consideration as well that we expect to close early May. And then the interest rates, we’re not expecting the cuts now that we might have been looking at, at the beginning of the year. So that will increase our interest income. So net that positive against the MTL use of cash. We still think the net interest expense around $20 million is a good number to use.
Saree Boroditsky: Okay. Thanks for the color.
Operator: Your next question comes from the line of David MacGregor from Longbow Research. Please go ahead.
David MacGregor: Yeah, good afternoon. Thanks for taking the question. Congratulations on a great quarter.
Christian Koch: Thank you.
David MacGregor: Yeah, really, strong results. I guess on the CWT, excuse me, business, I just wanted to get a sense of the lower carryover prices for 2023. What percentage of segment revenues would that represent?
Christian Koch: So as far as the carryover in the first quarter was down mid single digits.
Kevin Zdimal: Hey, David, from the segment side of it’s probably roughly 30% of the business. That’s where the selected price decreases were last year.
David MacGregor: Okay. That was the question. 30%. Thanks. And then, Kevin’s provided a little bit of granularity around kind of the price cost. And you talked a little bit about the volume levers, but just piece it all together. Let me just ask you if you could just talk directly on that 66% EBITDA growth, how much of that was volume leverage? How much of it was favorable price cost? Can I get you to go back and just provide some numbers around that?
Kevin Zdimal: You’re looking at Q1.
David MacGregor: Q1, yeah. A – Kevin Zdimal Yeah. So on Q1, yeah, substantially all of it on the CCM side, you can just put the 40% incrementals in there and then price costs pretty much offset each other on the CCM side. And that number would drop right to the bottom line on EBITDA and the 40%. And that explains that segment on the CWT side. Also, that slight volume increase, but then most of their pickup was combination of these operating efficiencies with the synergies that we talked about. And then the balance is price costs. So that they had positive price costs that CWT in the first quarter, close to $10 million.
David MacGregor: $10 million. Yeah, you referenced that earlier. Okay. Terrific. That’s it for me. Thanks very much.
Christian Koch: Thanks, David.
Operator: Your next question comes from the line of Adam Baumgarten from Zelman. Please go ahead.
Adam Baumgarten: Hey guys, thanks for taking my question. Just thinking about the full year outlook and maybe how it tracks back to 1Q. It looks like you’re expecting kind of a flat-ish end markets, ex the destocking and pricing. And if I back out the destocking in 1Q and CCM and there’s some little modestly negative price, it looks like volumes were up maybe 5% or so or mid single digits. So do you expect that to kind of — as you get tougher comps, maybe come down throughout the year? Just giving the strong start to the year.
Christian Koch: So as you removed the destock number, we won’t talk about that, but just talking end markets, we’re expecting reroof to be up mid single digits. And then we do expect new construction down high single digits. So overall, that might be a slight positive on the end markets.
Adam Baumgarten: Yeah, I’m just trying to get it. I think the 1Q was a bit better than that, it seems, right?
Christian Koch: Yeah, we had some positive weather in the first quarter as well. I think if you take that out, then it’s going to be pretty consistent.
Adam Baumgarten: Okay, got it. And then just on pricing, it sounds like it’s playing out as you expected. Things have been stable since year-end last year throughout the first quarter.
Kevin Zdimal: Yeah, I think pricing is playing out. I mean, there’s a couple of things. One, the destock, we’re super pleased that it ended up being around 200. We think our projections there on the pricing was right in line, the carryover, and things seem to be — there’s a lot of turmoil out there around in the broader economy that you know about. I don’t need to tell you about that from GDP or that, but our markets, things are progressing pretty much just planned and I’d say stable.
Adam Baumgarten: Okay, got it. Thanks.
Operator: There are no further questions at this time. I’ll hand the call over to Chris Koch for closing remarks. Please go ahead.
End of Q&A:
Christian Koch: Thank you. This concludes the fourth quarter and full year — I’m sorry. It concludes our first quarter, excuse me, call and thanks for your participation. And obviously, we look forward to speaking with you on our second quarter call coming up. Thank you.
Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.
