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Carlisle Companies Inc (NYSE:CSL)
Q4 2020 Earnings Call
Feb 4, 2021, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, my name is Annie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Carlisle Companies Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions]

I would like to turn the call over to Mr. Jim Giannakouros, Carlisle's Vice President of Investor Relations. Jim, go ahead.

Jim Giannakouros -- Vice President, Investor Relations

Thank you, Annie. Good afternoon, everyone, and welcome to Carlisle's fourth quarter 2020 earnings conference call. We released our fourth quarter financial results after the market close today and you can find both our press release and earnings call slide presentation on our website at www.carlisle.com in the Investor Relations section. On the call with me today are Chris Koch, Chairman, President and Chief Executive Officer; and Bob Roche, our Chief Financial Officer.

Today's call will begin with Chris discussing business trends experienced during the fourth quarter of 2020, views of what's to come in 2021 and context around our continued confidence in achieving Vision 2025. Bob will discuss Carlisle's fourth quarter performance and current financial position. Following Chris and Bob's remarks, we will open up the line for questions.

Before we begin, please refer to Slide 2 of our presentation where we note that comments made on this call may include forward-looking statements based on current expectations that involve risks and uncertainties, which could cause actual results to be materially different. A discussion of some of these risks and uncertainties are provided in our press release and in our SEC filings on forms 10-K and 10-Q. Those considering investing in Carlisle should read these statements carefully and review reports we file with the SEC before making an investment decision.

With that, I will turn the call over to Chris.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Thanks, Jim. Good afternoon, everyone. Entering what is now the second year of operating in this COVID-19 pandemic, I hope everyone is healthy and staying safe. I'd like to open by saying how proud I am of the global Carlisle team for their perseverance and ability to execute in these uncertain times. Our COVID statistics reflect the strong compliance to the CDC guidelines and safety measures all Carlisle employees have followed. In 2020, we suffered 470 infections, 15 hospitalizations and sadly, three deaths. We continue to do our part to combat the spread of the virus in combination with further progress on the vaccination rollout. We anticipate that we will continue to show our safety measures are working because at Carisle maintaining health and safety is always our first priority.

Vision 2025 provided clear direction and consistency of mission during a tumultuous 2020 and will continue to guide our efforts as we accelerate into the recovery. As we passed the mid-year mark and entered the third quarter, we continued to build on the momentum started in late Q2 when our employees, customers and supply chain partners increasingly were able to work safely and efficiently and began to get back to contributing to economic growth. As the global community returned to work, strong underlying deferred demand became more evident, especially in our building products business. While we expect this momentum to continue as vaccines help decrease risk, the construction industry is still contending with uneven regional disruptions due to COVID restrictions, severe weather in certain areas and tight labor dynamics, which is resulting in deferred demand continuing to build the backlog of work.

Turning to Slide 4. 2020 demonstrated yet again the exceptional and sustainable earnings power of the Carlisle business model. Over the past several decades, Carlisle has been categorized as a diversified industrial company and rightly so as evidenced by our portfolio contact -- or content multiple acquisitions in a variety of segments ranging from fluid handling to medical technologies and our legacy strategic goals. However, since CCM introduced the first single-ply EPDM roofing membranes to the market in the early 1960s.

Carlisle's growth and earnings have increasingly been powered by our construction materials business. With over a half century of outstanding performance, CCM's influence on our overall performance has consistently expanded despite our diversification efforts peaking in 2020 when it accounted for over 70% of revenues and over 90% of earnings. In the past three years, CCM has accelerated their world-class performance leveraging consistent organic growth focused on providing the ultimate customer service, the Carlisle Experience, and instituting greater price discipline, developing sophisticated sourcing and purchasing capabilities and maintaining a continuous improvement culture, all aiming to drive increased profitability and shareholder value.

In 2017, when we first contemplated Vision 2025, we turned a critical eye to our capital deployment efforts and started to pivot to a more disciplined ROI focus. It was that critical assessment and objective view of value creation that drove our focus under Vision 2025 to apply a greater investment spotlight on the CCM. A consistent 30% plus returns business, CCM's performance warranted and earn the right to share the majority of investment dollars that were allocated to portfolio diversification. At that time, a key strategy of Carlisle's legacy approach of building out higher growth and presumably higher margin platforms as a path to sustainable value creation.

With the official rollout of Vision 2025 in February of 2018, our evolution was actualized evidenced by our recent extensive M&A and capital investments at CCM. As shown on Slide 5, CCM has continued to evolve from its roots, the early 1960s of a simple, single-ply roofing membrane division to today where we deliver innovative easy to install and energy-efficient solutions throughout -- through the Carlisle Experience for customers who are creating the sustainable building for the future. With our extensive line of building envelope products CCM offers complete set of solutions and systems to aid in the design of efficient building envelope efficient projects backed by industry leading warranties and a focus on green principles.

On Slide 6, you can see how this building envelope concept can deliver substantial energy savings for building owners. CCM products provide a substantial offset to the estimated 40% of greenhouse gases globally generated from the construction and maintenance of buildings and our teams are focused on continuing to support the growing efforts in global energy efficiency.

It is because of this history of innovation, investment and continuous improvement that we have more conviction than ever that CCM's future success is secure. We believe the extensive planning of Vision 2025 identified the strengths of CCM's core markets, demonstrated a consistent reroofing revenue stream and elevated the power of CCM's sustainable business model. 2020 only served to crystallize our confidence.

Turning to Slide 7. I'd like to spend a few minutes talking in more detail about CCM's future and what drives our confidence in the CCM business model. First, as you've heard us speak about it like CCM's core business is predominantly driven by replacement roofing demand. Non-residential buildings built 10 to 20 years ago make up over 25% of current infrastructure and those roofs will need replacing in the next decade.

As a reminder, roof replacements are not discretionary. Aided by the Carlisle experience and our market position, CCM should continue to capture placement of installed roofing systems and grow share with new energy-efficient, labor reducing and cost-effective product and solutions in the $6 billion and growing market. While the majority of our core CCM business revenue comes from reroofing, past construction cycles evidenced residential construction as a strong leading indicator of new commercial construction, which augments core CCM growth.

Growing residential construction demand, which accelerated in 2020 coinciding with urban relocation due to COVID will require increased commercial infrastructure, including big-box retailers, hospitals, warehouses and educational buildings to support a growing population of suburban families and workers. Second, as shown on Slide 8, the recent addition of our Polyurethane platform to CCM included spray foam insulation, which is a sustainable high single-digit growth market. Our top performing formulations provide unmatched energy efficiency in both residential and non-residential applications.

Driven by our industry-first concept of the combined material and equipment solution, which we call IntelliSpray, it was developed and introduced with engineering support from Carlisle Fluid Technologies. Carlisle's CCM is uniquely positioned to grow at above market levels in spray Polyurethane foam insulation. This innovative new system will allow us to provide the contractor, builder and homeowner with greater application efficiency and control, savings from application efficiency improvements and ultimately a better foam insulation product.

Third, like Polyurethane, Architectural Metals is an exciting new platform for CCM, it's a $1 billion market growing at approximately 2 times GBP provides an attractive opportunity to diversify into the sloped roof market with a highly sustainable product. Our metals platform is seeing healthy organic growth as it offers a lasting high ROI system solution to building owners, generating solid pull through sales of CCM insulation and other layman products.

To support our regional growth strategy, we are expanding our metals footprint in 2021 by opening three new locations in the U.S. Metal roofing systems also complement our drive to deliver solutions that support the construction of an efficient building envelope. Metal roofs are 100% recyclable, increase energy efficiency of the building up to 20% versus traditional materials and reduce waste in the manufacturing process.

Fourth, we are committed to accelerating growth in Europe, a $10 billion -- or EUR10 billion addressable market. To drive this growth, we recently changed leadership in the region and announced the investment of over $25 million to expand capacity in our German manufacturing facility. Increasing demand and regulations for improved thermal performance along with integrated roofing systems are driving a shift to single-ply membranes in Europe. CCM's leading environmental energy-efficient solutions lend themselves well to trends in the European market.

Recent industry dynamics reinforce our ability, the new ownership of the recently acquired competitor and it announced management addition at another competitor, shows the widespread belief of the strong prospects for the non-residential building product space. The industry dynamics also support our strategy to accelerate growth in Europe.

And finally, as it was widely discussed after the recent acquisition, our increased focus on delivering the Carlisle Experience for the sustainable building of the future is in line with macro industry trends. Before moving to our three other businesses, I want to reiterate how remarkable our CCM business and the team performed in 2020. CCM was largely the story for Carlisle in 2020 and we expect that to continue into 2021 and beyond.

Regarding our other three businesses, on Slide 9, 2020 was obviously a difficult year due to the pandemic. In the face of significant declines, the teams did a commendable job managing through the crisis, taking actions to reduce costs and position their businesses for the future, including leveraging COS, investing in new product development and rightsizing footprints. While the results did not meet our expectations, these remain good -- very good businesses with solid management teams committed to weathering the current macroeconomic challenges. We are optimistic that the actions taken in 2020 to improve CIT, CFT and CBF will position these businesses for a solid recovery, especially in 2021 for CFT and CBF where markets have signaled the bottom.

While we believe CIT will recover over a longer timeline, we are confident that there will be a recovery. With higher inoculation rates from rapid vaccine rollouts, easing of COVID travel restrictions and an improved outlook for both aerospace and hospital capital spending, CIT will drive exceptional leverage with the resumption of growth. Before Bob gives the financial details of the quarter, I'd like to touch on a few other notable achievements in 2020.

Please turn to Slide 10. We've generated $2.5 billion of free cash flow over the last six years and recently accelerating significantly with almost half of that was generated in 2019 and 2020. This track record of success supports our confidence and this team's ability to execute on our capital allocation strategy and to create value. While 2020 was a subdued year for M&A, we are managing an active pipeline for accretive and synergistic acquisitions to rapidly scale our high returning businesses.

As always, our financial strength and cash flow generating capabilities afford us flexibility and we intend to remain opportunistic. Notably, and as we've discussed in the past, when acquisition activity is subdued, we remain committed to returning capital to shareholders. This is evidenced by our deployment of more of than $380 million of share repurchases in 2020, totaling approximately $1.5 billion in share repurchases since 2017. And at our latest Board meeting, our Board approved an incremental $5 million share repurchase authorization for Carlisle.

We also returned over $112 million to shareholders in the form of dividends in 2020, raising our dividend in August for the 44th consecutive year. An finally, we spent $96 million of capex in 2020 and that plans to significantly increase that in 2021.

On Slide 11, we touch on our continued and expanded actions around ESG where Carlisle remains steadfast in our commitment. Supported by COS, we are continually examining ways to improve the design and manufacturing of our products, seeking to better engage our employees and communities and improve an already strong regulatory framework. In 2020, we also made progress in diversity and inclusion exiting 2020 with 50% of our Board of Directors identifying as gender, racially or ethnically diverse and meeting our 2020 target for percent of females in senior leadership positions.

And as we've stated many times before, ESG is part of Carlisle's culture of continuous improvement and we look forward to sharing more progress with you in the future. We also encourage you to read more about Carlisle's ESG efforts on the Sustainability pages of our website.

Please turn to Slide 12 where we cover the Carlisle operating system. In 2020, COS delivered savings of 1.3% of sales, well within our Vision 2025 annual target of 1% to 2%, a remarkable feat considering 2020's challenging conditions and proving that Carlisle employees truly embody and live our continuous improvement culture every day.

Another major milestone in 2020 was the launch of the Path to Zero, which represents our commitment to creating the safest possible work environment and features the goal of zero accidents and zero injuries. COS will continue to be a unifying cultural imperative for our businesses to rely on as they seek new opportunities to make our operations and business processes more efficient.

Bob will now provide operational and financial details about our fourth quarter and review our balance sheet and cash flow. Bob?

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

Thank you, Chris. Please turn to the revenue bridge on Slide 13 of the presentation. Revenue decreased 7% to $1.1 billion in the fourth quarter. Organic revenue declined 9%. Acquisitions contributed 1.4% of sales growth for the quarter and FX was a 60 basis point tailwind.

Turning to our margin bridge on Slide 14. Q4 operating margin declined 180 basis points, pricing and volume headwinds combined for a 320 basis point decline and acquisitions were a 40 basis point tailwind. Offsetting these declines, freight, labor, raw material, other operating costs netted to a 60 basis point improvement. COS benefits added 120 basis points.

On Slide 15, we have provided an EPS bridge where you can see the fourth quarter diluted EPS from continuing operations was $1.57, which compares to $1.81 last year. Volume, price and mix combined were a $0.74 year-over-year decrease. Partially offsetting, interest and tax contributed $0.09 and raw material, freight and labor costs netted to a $0.16 benefit. Share repurchases contributed $0.09, COS contributed $0.19, and finally, operating expenses were a $0.03 headwind.

While COVID-related volume declines clearly represented the most significant headwind during the quarter, our teams around the world did a commendable job managing costs, leveraging COS-improved efficiencies and taking actions to both position Carlisle for the recovery while mitigating the pandemic impact on earnings.

Now, let's turn to Slide 16 to review the fourth quarter performance by segment in more detail. At CCM, the team again delivered outstanding results with revenues increasing 1% driven by volume and 30 basis points of foreign currency translation tailwind. CCM continued to exhibit its resilience with solid U.S. commercial roofing performance despite the continued COVID-related restrictions in some areas restraining the recovery. Our newer platforms of Architectural Metals and Polyurethanes were solid contributors to the quarter's revenue performance. Operating margin at CCM was a record 20.4% for the fourth quarter, a 350 base improvement over the last year driven by CCM team's superb cost management and COS partially offset by wage inflation. CCM executed well in delivering approximately $15 million of net price cost realization in the quarter.

Please now turn to Slide 17 to review CIT's results. CIT's revenue declined 35.4% in the fourth quarter. As well publicized, this decline was driven by the crisis in commercial aerospace markets. While the recovery in aerospace could be prolonged, we are confident that there will be a resumption of growth with the continued rollout of the COVID vaccines and airlines returning to profitability. In other positive recent news, the 737 MAX 8 has been cleared for returned flights in the U.S., Europe and South America, while TSA, the early checkpoint data continues to improve. In our medical platform, sales continued to be impacted by COVID-related delays in the hospital capex and postponed elective surgeries. However, our project pipeline is robust and the long term trends remain attractive, including increasing preference to minimally invasive surgeries and OEM strategies, consolidated by surgery partners.

CIT's operating margin declined significantly year-over-year to a negative 8.6% driven by commercial aerospace volume declines and accelerated restructuring actions. These declines were partially offset by savings from CLS, lower SG&A and price increases. While the actions taken by CIT in 2020 to rightsize our footprint and reduce our workforce were difficult, we are positioned to deliver improved operating income performance when the volumes return.

Turning now to Slide 18. CFT sales declined 8.3% year-over-year. Organic revenue declined 16.1% and additionally, acquisitions added 5% in the quarter. FX contributed 280 basis points. Stabilization in key end markets driven by an improved industrial capital spending outlook in 2021, coupled with recent management additions, new product introductions, pricing resolve and CFT's efforts to upgrade the customer experience and positioned CFT well as we enter 2021. Operating income of 4.5% was an 820 basis point decline year-on-year. This decline was driven by lower volumes, restructuring and raw material costs, partially offset by price and efficiencies from core CLS and lower SG&A.

Turning to CBF on Slide 19. CBF's fourth quarter organic revenue grew 2.8% and FX had a positive 2.6% impact driving CBF growth of 5.4% in the quarter. Demand for agriculture and construction equipment were the primary drivers, while orders in all regions improved throughout the second half of 2020. Operating income was $8 million or 1.1% operating margin. Flat for the fourth quarter of 2019, driven primarily by unfavorable mix in aerospace markets, wage inflation, offset by COS efficiencies, increased volumes and tight cost controls.

On slides 20 and 21, we show selected balance sheet metrics. Our balance sheet remains strong. We ended the quarter with $902 million of cash on hand and $1 billion of availability under our revolving credit line. We continue to approach capital deployment in a balanced and disciplined manner. Investing organic growth in capex and opportunistically repurchasing shares while also actively seeking strategic and synergistic acquisitions. Free cash flow for 2020 was an exceptional $601 million consistent with '19 results on the lower sales volumes.

Turning to Slide 21, you can see the outlook for 2021 on items affecting comparability in corporate items. Corporate expense is expected to be approximately $105 million for the year. We expect depreciation and amortization expense to be approximately $225 million. For the full year, we will continue to invest in our businesses and now expect capital expenditures of $100 million to $175 million. Net interest expense is approximately -- expected to be approximately $75 million for the year and we expect our tax rate to be approximately 25%.

And with that, I'll turn the call back over to Chris.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Thanks, Bob. In closing, I want to once again express my thanks to our dedicated employees, their families, our business partners and all those associated with Carlisle's success. Without you, we could not have weathered and overcome the significant challenges of 2020.

Entering 2021, we are cautiously optimistic about the outlook for Carlisle. We will continue to benefit from the strength in the Carlisle business model and enhance our strong earnings power by investing in our high returning businesses. We'll continue to deploy capital into strategic acquisitions, share repurchases and dividends, all the while maintaining our commitment to delivering returns on invested capital in excess of 15% and ultimately driving the $15 of earnings per share.

While there are clearly many uncertainties around the pandemic, including the effectiveness of the rollout of the vaccines, we want to keep investors informed on our views of our businesses and markets. As such, we offer 2021 guidance based upon where we are today, while fully acknowledging that we are in uncertain and turbulent times.

For full year 2021, we anticipate the following. At CCM, supported by reroofing project deferrals that occurred in 2020, positive momentum in our newer businesses of Architectural Metals, Polyurethanes, expansion of our European businesses and a decrease in complexity to complete jobs as COVID restrictions ease, we anticipate revenue growth of high-single digits in 2021.

At CIT, we believe that rapid COVID inoculation will drive an improvement in business and leisure travel exiting 2021. Aircraft manufacturers are indicating production rates will rise toward the end of 2021. These trends are coupled with an improved order book for medical products and solutions as hospital capital investments and elective surgeries resume. That said, we anticipate pressures remain near term and given a different -- very difficult year-over-year comparison in the first quarter, we expect CIT revenue will decline in the mid-to-high single digit range in full year 2021. With the order book strengthening for both CFT and CBF and end markets stabilizing, we anticipate low double-digit growth for both businesses. On behalf of the approximately 13,000 employees at Carlisle, thank you, again, for the trust you place in us.

This concludes our formal comments, Annie, we're now ready for questions.

Questions and Answers:

Operator

Thank you, sir. [Operator Instructions] We have our first question from the line of Bryan Blair from Oppenheimer. Your line is open, you may ask your question please.

Bryan Blair -- Oppenheimer & Co. -- Analyst

Thanks. Good afternoon, guys.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Good afternoon.

Bryan Blair -- Oppenheimer & Co. -- Analyst

Chris, you briefly mentioned the major development in the commercial roofing industry about a month ago with the large CCM competitor changing hands. Obviously very early days here, but I was wondering if you could share a little more color on how your team thinks about the high level implications of that deal and balances thoughts on competitive risks and opportunities looking forward?

D. Christian Koch -- Chairman, President and Chief Executive Officer

I think in general, we view the entrance of the European group into the market is being positive. I think obviously well-run organization with solid margin expectations for their other businesses and also I think operating in a perhaps more ESG focused environment in Europe, which should bring good things for the industry as a whole. So I think, in general, it brings out here in -- it brings attention to the good things and I would say the team obviously is highly competitive and will be highly competitive with any entrant but I think it's a neutral at worst.

Bryan Blair -- Oppenheimer & Co. -- Analyst

Yeah, makes sense. And sticking with CCM, how are volumes trending to start the year? And I believe you still face a reasonably tough comp through February, just curious about momentum ahead of the lower bar in March and obviously through the second and third quarters.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Yeah, I think, as you're -- you see how we came out of the fourth quarter and obviously it wasn't huge growth, but it was growth and I think it was very consistent with what we felt about the model and kind of thought would happen and talked about as the year went on. So obviously, things got better sequentially. Obviously, Q1's a difficult comp, I would say that we just see the trends of Q4 continuing and it likely will be something like you saw in Q4.

Bryan Blair -- Oppenheimer & Co. -- Analyst

Got it. And investors are obviously focused on inflationary trends right now and particularly oil and gas based raws with you guys. We know there was pricing in 4Q and you put out a reasonably aggressive increase that I believe kicks in a little later this quarter. How confident are you in price sticking in this environment and how should we think about the cadence of price cost impact for the year?

D. Christian Koch -- Chairman, President and Chief Executive Officer

From my perspective, it was very satisfying to see that the price increases that occurred were quickly embraced by a lot of parties and we also see widespread support in other construction-related products for price increases, so my belief is that we will see traction on price as you said becomes effective in full year but later on, especially with volumes rise, it becomes more impactful as we get further into the end of the year.

And I think on the raw material side, our team obviously sees that there is some inflationary pressures, but we have done a lot as I mentioned in the call on our servicing and appreciating initiatives to set up what we think is a good situation for us vis-a-vis raw material increases. And so, we think it will be relatively neutral as we sit here today for the year with respect to price and raw materials, but again, it's early days, and the first quarter is sometimes no indicator of the future as we saw last year when first quarter was in and then COVID hit.

Bob, you want to add anything to that?

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

Yeah, I think, Bryan, we've talked about this every year that pricing traction usually doesn't happen until we see volumes starting to pick up in the second quarter. So we would expect, while Chris mentioned, we expect it to be flat for the year, we expect a little pressure in the first half and then that recovery in the second half as prices get fully up to speed with volumes pick up.

Bryan Blair -- Oppenheimer & Co. -- Analyst

Understood. Thanks, again.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Yeah. Thanks, Bryan.

Operator

Thank you, sir. We do have another question from the line of Tim Wojs from Baird. Your line is open, you may ask your question please.

Timothy Wojs -- Robert W. Baird -- Analyst

Hey guys, thanks. So nice job, thanks for the color that you guys provided in the slides, it's very helpful.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Well...

Timothy Wojs -- Robert W. Baird -- Analyst

I guess, on Europe in Metal and in Polyurethane, is there a way just to kind of square up how big those businesses are today and kind of maybe where the margins are maybe in aggregate? And if they can kind of get to parity with the overall single-ply business over time?

D. Christian Koch -- Chairman, President and Chief Executive Officer

Yeah, I'll let Bob but get in. Obviously, Europe Polyurethanes and Metals compared to our core roofing materials are smaller. The growth rates -- at least in Polyurethanes and Metals growth rates would be higher than our core growth. Both acquisitions, the margins were where we wanted them to be, we're making progress against that, but we ultimately think they could be in that range we've talked about for CCM and contribute positively.

So Bob, do you want to add anything to that?

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

Yeah. Tim, I mean, we've talked about this before with our European business being in the $150 million range, Polyurethane's in the low-300s and then, Architectural Metals, as when we bought them and put them together and then grew them since then a little over $250 million. And margins are approaching the -- combined on the 10% range as we get them more efficient, grow those businesses, put COS in, focus on pricing, they improve every quarter. So we're positive on them and again as volumes accelerate, we expect margins to increase rapidly.

Timothy Wojs -- Robert W. Baird -- Analyst

Okay, OK, that's helpful. And then, on the medical business within CIT, could you just kind of level set us there in terms of where you are in terms of growth in margins? Because I think that's a pretty sizable contributor to 2025 to get that business to $1 billion in in fact 2020 -- 20% margin. So just trying to think through where that business is today and kind of the levers you need to pull to be able to reach those targets?

D. Christian Koch -- Chairman, President and Chief Executive Officer

Yeah, I think, Tim, Bob is going to want to jump in on this for more detail. I think you're absolutely right, the medical is going to be a big contributor. We've talked about -- and then unfortunately, it didn't get there prior to the aerospace decline here with COVID, but medical is highly -- that MedTech segment has strong margins in excess of what we had expected for CIT core aerospace business, so it will be definitely be a contributor.

And I think, we've got to continue to build out the new products, work with the OEs, which we're doing. And in fact, COVID really set that back. I think we had less than the early discussed projects. I think we had 70-plus new projects with medical OEMs and really when we -- we're forced to do the -- deal with the work from home situation for a lot of them as it slowed things down.

So Bob, do you want to give some more commentary on...

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

Yeah, Tim, I mean, overall, the business is give or take a little over $200 million, $225 million for 2020, the total medical business, including Providien in the core. The core medical business before we did the acquisition approaching mid-teens, so we're very happy. Once we get these things integrated, get them running well, both CLS and that their valuable business is obviously with Providien coming in, the purchase accounting and everything going on, that's closer to breakeven. But we are very positive in the margins going forward as volumes start picking up and we're able to get the efficiencies that we contemplated in the deal model.

Timothy Wojs -- Robert W. Baird -- Analyst

Okay, OK, great. And then, just on the pace of growth within Interconnect, you do have a pretty tough Q1 in terms of the comp. How would you think about that business kind of building through the year? Let's say, I guess, base -- kind of baked into the mid-to-high single-digit decline forecast?

D. Christian Koch -- Chairman, President and Chief Executive Officer

Yeah. We'd expect the first quarter to be tough. I know I think in the fourth quarter recalling that probably at the bottom, we expect a $5 million decline from Q4 to Q1. And then growing from there, a little bit of decline decline year-on-year in Q2 as overall with aerospace not fully be in Q3 and Q4.

Timothy Wojs -- Robert W. Baird -- Analyst

Okay, OK. Appreciate it. Have a good rest of the week and good luck on the year, guys.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Hey, Thanks, Tim.

Operator

Thank you, sir. We do have another question from the line of Saree Boroditsky from Jefferies. Your line is open, you may ask your question.

Saree Boroditsky -- Jefferies -- Analyst

Thanks. So going on the last question on CIT, could you just reiterate what you saw on the aerospace side versus medical in the quarter and then within your outlook for 2021?

D. Christian Koch -- Chairman, President and Chief Executive Officer

So what are we seeing in aerospace?

Saree Boroditsky -- Jefferies -- Analyst

Versus medical in your -- in the fourth quarter and then in your outlook.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Yeah, I mean fourth quarter we're down in aerospace over 50%, so it's continuing to be down and then the difference made up is test and measurement in medical. So medical is still not overall growing great due to the capex in the hospitals, but aerospace is down significantly as you know.

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

And it overwhelms...

Jim Giannakouros -- Vice President, Investor Relations

Yeah, yeah.

D. Christian Koch -- Chairman, President and Chief Executive Officer

The medical part is just so big than aerospace.

Jim Giannakouros -- Vice President, Investor Relations

So yeah, you have the -- Hey, this is Jim. Medical flattish in the quarter and other areas specifically down. So hopefully that helps you get there.

Saree Boroditsky -- Jefferies -- Analyst

Okay. Then it looks like you're going to continue to have restructuring charges in that segment, could you just talk about some of the cost actions you're taking and expected savings going forward?

D. Christian Koch -- Chairman, President and Chief Executive Officer

Yeah, Saree, those are largely carryover costs from this year from what we announced in Kent, Washington enclosure because as you know and we've talked about before the moving in aerospace facility takes a long time, we expect that not to be fully moved and shut until the second half of this year and all those charges related to the Kent closure.

Saree Boroditsky -- Jefferies -- Analyst

Okay. And then, just last for me, there is great color on your ESG positioning and impacted roofing on energy savings in the slides and in your comments. I was just wondering, are you seeing any customers pull ahead reroofing projects in order to increase energy efficiency? And outside of Europe, are you seeing any government policies to help spread that demand? Thank you.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Yeah, I think on the pulling forward, we've always said this, it's really difficult to pull anything forward in this environment with the tight labor that we've got in the United States here. So I wouldn't say anybody has pulled anything forward from a -- an order perspective, obviously, they can get things done quicker, they'll do that. I think just in general, there is an overall movement that as we continue to evolve each year, we get new products and solutions out there immediately applied to those projects where they can be.

So I think the speed at which people are putting in new innovation and helping is moving at a good pace. The -- from the legislative perspective, I don't think there's any doubt there when we see a letter like we did from Larry Fink and we see the actions like the California instructions on Board of Directors and female content. I think we know that there is -- definite concrete action is occurring. We've been very pleased that we like to think in some ways we've been at least on the curve with others and we want -- hope to accelerate that. And so, we appointed Vice President of Sustainability this year. It's obviously a focus for our Board of Directors and for our management team.

And as we've said all along, we don't do it in response to legislative mandates -- of course, we comply with them, but really we want to get ahead of it because for Carlisle being more energy efficient in our plants and facilities saves money and benefits the shareholder with higher returns and applying innovative products that help our customers use less and recycle and make their operations more energy-efficient, it's just good business for us. And certainly, diversity and inclusion, we know benefits the entire workplace for better decision making and things like that. So while there is legislative movement we think there is also just solid common sense movement from an economic perspective to do these things.

Saree Boroditsky -- Jefferies -- Analyst

Appreciate the color. Thank you.

D. Christian Koch -- Chairman, President and Chief Executive Officer

You bet.

Operator

Thank you. We do have another question from the line of Adam Baumgarten from Credit Suisse. Your line is open, you may ask your question.

Adam Baumgarten -- Credit Suisse -- Analyst

Hey guys, good afternoon, and thanks for taking my question.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Hey, Adam.

Adam Baumgarten -- Credit Suisse -- Analyst

Maybe I wanted to start out on CCM sales guidance.

D. Christian Koch -- Chairman, President and Chief Executive Officer

I mean, if our best -- new construction declines for the year, I think, obviously we put that into the equation. We also put in things into the equation like the restocking that did not occur last year, we put into that our new products growth and our different platforms. And so, I would say that, yeah, we've contemplated any modulation and new construction that would occur in 2021.

Adam Baumgarten -- Credit Suisse -- Analyst

Okay, got you. And then, just switching gears in CCM to input costs, I mean how should we think about the relationship between sort of the more publicized spot prices for raw materials like MDI and how it sort of translates to your buys and maybe what kind of visibility do you have and sort of -- maybe some of the changes you've made in how you buy MDI over the last couple of years?

D. Christian Koch -- Chairman, President and Chief Executive Officer

Well, the way I think about it is a little bit more -- well, more stability let's say and a little bit of a more stability, more certainty and ability to extend the time frame on those modulations in pricing that may occur on the spot market on a day-to-day or week-to-week or month-to-month basis. So we are a very big consumer of these products. We have over the last couple of years as our team at CCM along with our legal team and our centralized sourcing team have done a great job of going back and leveraging our volumes as well as our long term relationships and the prospects for new products to put ourselves we think in a better position to have a long term view as well as setting our pricing parameters around that 90-day target, where we have stability through the quarter and we're very familiar with what can happen in the spot market.

When you reflect back and when we bought a cell, I think we closed, and it was in a month or two later, the four measure were declared and while our CCM business -- and I think this is actually a good comparison, our CCM business whether those force measure and didn't see a spike due to the purchasing strategies and contributing to the employees the sale of business but got absolutely hammered by that spot price and I think that's a great example of the difference between how we're buying in the spot price market.

Obviously, since then the sell is now on our type of contract, but I think that's a good example of how CCM's purchasing strategies and purchasing and sourcing actions really mitigate a lot of that up and down of fluctuation. That doesn't mean that we're not going to see changes in raw material pricing when they occur, it's just going to be I think more modulated and we're going to have a better control, more stability and see it in advance.

Adam Baumgarten -- Credit Suisse -- Analyst

Great, thanks a lot.

D. Christian Koch -- Chairman, President and Chief Executive Officer

You bet.

Adam Baumgarten -- Credit Suisse -- Analyst

Thanks a lot.

Operator

Thank you, sir. We do have another question from the line of Kevin Hocevar from Northcoast Research. Your line is open, you may ask your question.

Kevin Hocevar -- Northcoast Research -- Analyst

Thanks. Good afternoon, everybody.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Hey, Kevin.

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

Hey, Kevin.

Kevin Hocevar -- Northcoast Research -- Analyst

Quick one on the tax rate you're guiding to 25%. It looks like the last three years, it's been basically right around 20%, so wondering why you expect such a big step up in the tax rate this year?

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

Yeah, Adam -- Kevin, first of all, it's discrete items, right, that's driving our tax rate down in a couple of the years, different items coming through and tax planning things that have been done to drive the rate down. The reason it's up in 2021, a couple of things going on. You got to remember a lot of our international business is where you might have a lower tax rate related to the CIT business as that's shrinking and essentially unprofitable now. So if you just think about most of the profits generated in the U.S., the U.S. has a 21% statutory federal rate, you got 3% to 4% of state and local taxes, there is how you got the 25% and that's kind of where our most profit is right now. And we're always going to do our best to bring that down but based on the visibility we have and what's going on in the world, we think 25% is a good starting point.

Kevin Hocevar -- Northcoast Research -- Analyst

Yeah. Okay, makes sense. And then, you guys gave great color in terms of the expectations for sales growth in 2021. Wondering if you could help not just a little bit on margins to either the type of incremental margins you're expecting out of the different segments or it looks like you should see nice year-over-year sales growth in three of the four segments. There is some inflation though you kind of address that expecting kind of neutral-ish in CCM. But whatever color -- if you could help us on the margin front how to think of that in the business would be helpful.

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

Yeah, Kevin, I don't think anything on the incremental -- we talked about our incremental margins on volume upside for a long time as price costs were guiding flat, incremental margins are going to be based on the volume. And then, the same thing for CFT and CBF, we're looking to volume upside and then CIT, it's way down even lower than it was on breakeven. So we expect that to be a tough year for CIT.

Kevin Hocevar -- Northcoast Research -- Analyst

Okay, all right. Thank you very much.

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

Thank you.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Thank you.

Operator

Thank you. We do have another question from the line of a Garik Shmois from Loop Capital. Your line is open, you may ask your question please.

Jeffrey Stevenson -- Loop Capital Markets -- Analyst

Hi, this is Jeff Stevenson on for Garik. Thanks for taking my questions. My first one is just on what you're seeing from a backlog and bidding perspective in CCM and which end markets are performing well or are expected to perform well this year?

D. Christian Koch -- Chairman, President and Chief Executive Officer

I think we laid out some of the markets that we think are going to perform well. When we laid out that idea of more suburbanization, if I can call it that, and I think we'll continue to see that. I think the Biden administration and their talks about infrastructure and obviously, we saw that from the previous administration to the America First, I think there is some ideas that we'll see more infrastructure projects. So when we look -- to your other question, I'll turn that to Bob.

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

On where it's coming from? I missed the other question, sorry.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Jeff, what was your first question for Bob you had?

Jeffrey Stevenson -- Loop Capital Markets -- Analyst

Sorry, it was just on backlogs and bidding.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Yeah, Bob...

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

All right. I'll just take it. And I'm sorry about the confusion. On backlogs, the quoting process is interesting, especially as we get into the first quarter. We've always had I think a pretty strong despite what you read in the newspapers, a pretty strong backlog there. It is held relatively consistent through the year dipping a little bit up from our traditional levels coming back. And so, we come into the fourth quarter, obviously, there is the weather has an impact, but I would say quoting is good, but we also have a big backlog.

And so, in the reroofing side as we talked about 70% of our business there, I think it's ongoing and really doesn't slow down because obviously with the backlog there and the labor situation as you know you're just trying to get someone to give you a quote. On the new construction side, yeah, it has a little bit of a decline there and I think people are cautious and they want to see what's going to happen with the COVID restrictions that have been placed on them as well as things like rents and business prosperity and whether people will continue to expand.

But for the most part, we're still seeing strong activity, tight labor markets across the construction base and then when we see things like the weather happen or other things that differ that reroofing, it just adds to the backlog and obviously makes it a good situation for us.

Jeffrey Stevenson -- Loop Capital Markets -- Analyst

Okay, that's great. And then, just wanted an update on kind of balance sheet priorities now and then what the M&A pipeline, just kind of what you're seeing and how core was it and any updates on other priorities? I know you mentioned some on CCM side, but any update there would be great?

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

Yeah. Balance sheet priorities are always first capex -- and we have some big projects coming in 2021 going up to over $150 million of projects we see coming in, most of those being in CCM. So we're pretty happy about that, continue to fund our R&D, increase our dividend, which we've been doing all along, we would expect to do that again this year for the 45th year. And then, finally, we want to have a nice balance between M&A and share repurchases, synergistic M&A being our priority out of those two. I think the pipeline clearly weakened with 2020 going on and COVID and the disruption we saw, but the pipeline starting to grow again, we see opportunities out there. We're working every day to try to make sure we get some good synergistic opportunities. We looked at a lot in 2020 just didn't get a lot closed, so we're going to continue to be balanced between the two.

Jeffrey Stevenson -- Loop Capital Markets -- Analyst

Thanks, and best of luck moving forward.

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

Thank you.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Thanks.

Operator

Thank you. We do have another question from the line of Joel Tiss from BMO. Your line is open.

Joel Tiss -- BMO Capital Markets -- Analyst

Hey, guys. I was...

D. Christian Koch -- Chairman, President and Chief Executive Officer

Hey.

Joel Tiss -- BMO Capital Markets -- Analyst

Something on your acquisition commentary. Can any of the deals get through the much tighter goalpost you guys have set up in terms of returns and all that or is private equity still pushing the price a little too hard?

D. Christian Koch -- Chairman, President and Chief Executive Officer

No, I -- Joel, I think it depends on the segment -- I mean, we're still seeing some good opportunities in construction materials, I think maybe even aerospace when you find a deal, you might find some good deals there in the Aerospace business, so we'd still be interested in expanding our content per plane. So we see this down market as an opportunity to perhaps pick up some assets there that ultimately would have some pretty high return profiles when we get them into the CIT business so let the team go to work there. I think when you look at things like MedTech, obviously, you have to be a little bit more discriminating and we have to make sure they are good fits and we can leverage the infrastructure now we put in place with Providien in that, but I think we could find deals to deal for sure.

Joel Tiss -- BMO Capital Markets -- Analyst

And bigger versus smaller or the valuation -- is there enough of the difference like maybe if you go a little bit bigger, can you find things that are a little cheaper or not necessarily?

D. Christian Koch -- Chairman, President and Chief Executive Officer

Well, the last year, we saw that was close to our construction materials business had a pretty good multiple on it. So I don't know that size is big a difference as just what the asset is and what the prospects are for the business and the management team with what they've done. So I tried to give you an answer like that, but I think it just depends. I would say our preference would be for things that were a little bit bigger. We think they bring perhaps more market presence, they integrate better, we can pick up some management talent and things like that and hopefully, they have some innovative products and maybe some access to Europe or things like that. So there are some definite specific things we're looking forward that we think we can leverage and we'd be willing to pay for.

Joel Tiss -- BMO Capital Markets -- Analyst

Okay. My last one is just on -- you mentioned a bunch of new kind of niches you're going after or end market expansions and you were nice enough to give us the size of the Architectural Metal business, can you give us any sort of a framework on how big some of these Polyurethane and some of these other initiatives you have are, or they're not really distinctive opportunities that you can break out, it's more just like additive to what you're already doing?

D. Christian Koch -- Chairman, President and Chief Executive Officer

We could break out some of the products. I mean we can and maybe not on this call, but maybe it's better for a longer conversation around things like new products, we know that IntelliSpray, just from the equipment perspective, we think that globally might be $150 million market. We know it's dominated for the most part by one player and we think we offer an alternative there. So that's in one product line a tens of millions of dollar opportunity over a five to seven year time horizon. When we look at what IntelliSpray does for our Polyurethane spray foam, that business is more -- the spray foam business is more on $100 million market and we think that the seller has a very strong market position and can build on that and certainly with the combination of the equipment can do better.

Metals has opportunities that are Architectural Metals insulated that you can do on a building that are new from screens and things like that and we think those are tens of millions of dollar opportunities. The three new locations we put in have significant market sizes attached to them again, definitely above $10 million, $20 million there each. So -- but we'll -- we could follow up with you and maybe even on the next call try to characterize some of those...

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

Yes. And Europe is a massive opportunity, $10 billion, so -- with the roofing space.

Joel Tiss -- BMO Capital Markets -- Analyst

And is that for your kind of roofing or is that the total roofing? That was my last little clarification question.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Yeah, I know it's not all single-ply roofing membranes like we traditionally have here, Joel. Our product line actually in Europe is this RESITRIX product, which is growing at double-digits and is a combination of a bitumen with a EPDM and it has a really unique function to it. So that's the roofing space, maybe our total available market and we look at things like sealants and adhesives, we look at our fasteners, we look at edge metals, we look at metal roofing, things like that. So this whole move that CCM made over the last five to 10 years to become more in the building envelope, that's what that opportunity really represents. It's a much bigger opportunity set than just a single-ply roofing membrane solution like we would have had back in the '80s.

Joel Tiss -- BMO Capital Markets -- Analyst

Okay, well thank you very much. I don't want to take up all the time. Thank you.

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

You bet, Joel. Thank you.

Operator

Thank you sir. We do have another question from the line of Mr. David MacGregor from Longbow Research. Your line is open, you may ask your question.

David MacGregor -- Longbow Research -- Analyst

Yeah, so good afternoon, everybody. Just to build on this most recent conversation around M&A, I guess what is your best guess on the level of acquisition activity you will need to complete to achieve your Vision 2025 goals?

D. Christian Koch -- Chairman, President and Chief Executive Officer

I think we contemplated Vision 2025 somewhere $2 billion to $3 billion of acquisitions, I think that's good. We put out the $8 billion of sales. And Bob and I even at the time thought we could do more than that from a growth perspective with acquisition, we still feel that way, there's more opportunities that continue to present themselves. I think the bigger focus for us to complete our Vision 2025 goal is really to hit that $15 of EPS and I'm not sure we need to do the same level of acquisitions to get to the $15 EPS. In fact, I think our preference would be to drive our internal organic projects as fund capital expenditures to get that because we know -- those as we've seen with CCM over the years, when you do it internally and you do it organically, and you build that infrastructure, your ROIC gets to those CCM levels of 30%. So I know that maybe confused you, but our primary goal on Vision 2025 is the $15 a share and I think we could probably do less on the -- maybe the lower end of our original acquisition framework to get there.

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

And we're always focused on returns. So yeah, if we can get the returns on the acquisitions, we're going to do them.

David MacGregor -- Longbow Research -- Analyst

That makes sense. And then, I guess, Chris, I wanted to just circle back and ask you pretty much the same question I asked you last quarter and that was the extent to which you thought business had been pushed out from 2020 into '21 and if there was any way to kind of size that? At the time, you thought it might be anywhere from the $200 million to $300 million, but I thought I'd circle back and just get maybe an update in terms of your thinking on just how much business got pushed forward and how that might contribute to growth in 2021?

D. Christian Koch -- Chairman, President and Chief Executive Officer

Yeah, I think it's going to be a good -- on the reroofing, I think it's a story, we still see tight labor markets, we still see the story of them[Phonetic] and the reroofing. Obviously, the inventory build out that didn't occur last year, we characterized that in that number I gave you. And now we have a year of heightened COVID restrictions and I'm not even sure any of us really understand how much was delayed because of the protocols in the second quarter and third quarter that a lot of our roofing contractors had to deal with. I know there have been some job sites where there were hand sanitizing stations and social distancing and masks and which a lot were wearing anyway, but it's got to be something north figure that it's -- that is added to the backlog.

And again, as we've said earlier too, there is just a limited supply of people that can do this and the demand is there. And so, what doesn't get done, you can't defer and you try to get by but ultimately have to do it. And I know here in Phoenix, the ability to get projects done or even quoted is -- it's -- I've never seen anything like it before. I mean, it's just really hard to get a contractor to even quote something. So I think it's -- as we said, it depends on where you are in the region, it depends on obviously in the northern regions, there is more weather and there's less work being done. So it's probably just...

David MacGregor -- Longbow Research -- Analyst

Yeah. I guess it's kind of hard to put in the spot for a number. So maybe the way to ask the question is just are you feeling like that number might be a little bit bigger than what I asked you a quarter ago or just I guess directionally, how are you thinking about it?

D. Christian Koch -- Chairman, President and Chief Executive Officer

Yeah, definitely, I think it is supported by we keep referring to as some of the graphs we've shown on reroofing and we know the projects that are coming due, we referenced the buildings are 10 to 20 years old, we saw that build out. We got that on the front end as did our competitors as we built up and expanded and now these roofs are currently doing, they need to be replaced. And so, I would say anything that slows that down whether it was COVID or it's weather, it adds to the backlog simply because of the constraint on labor. We're just can't get through it...

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

And a simple way to look at it, right? CCM sales were down 7% for the year in 2020 and the reroofing demand based on everything we know should've grown 30%, so.

David MacGregor -- Longbow Research -- Analyst

Got it. Thanks very much. Good luck.

D. Christian Koch -- Chairman, President and Chief Executive Officer

You bet. Thank you.

Operator

Thank you, sir. There are no further questions on the line. Presenters, you may continue, please.

D. Christian Koch -- Chairman, President and Chief Executive Officer

Thanks, Annie. This concludes our fourth quarter 2020 earnings call, I want to thank everybody for your participation, great questions. We appreciate you taking the time. Stay healthy, and we look forward to speaking with you at our next earnings call.

Operator

[Operator Closing Remarks]

Duration: 60 minutes

Call participants:

Jim Giannakouros -- Vice President, Investor Relations

D. Christian Koch -- Chairman, President and Chief Executive Officer

Robert M. Roche -- Vice President, Chief Financial Officer, Investor Relations

Bryan Blair -- Oppenheimer & Co. -- Analyst

Timothy Wojs -- Robert W. Baird -- Analyst

Saree Boroditsky -- Jefferies -- Analyst

Adam Baumgarten -- Credit Suisse -- Analyst

Kevin Hocevar -- Northcoast Research -- Analyst

Jeffrey Stevenson -- Loop Capital Markets -- Analyst

Joel Tiss -- BMO Capital Markets -- Analyst

David MacGregor -- Longbow Research -- Analyst

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