Then if you look at the EBITDA margin, overall, we would expect the — really the incrementals that we’ve talked about to drop through based on those sales numbers at CCM, it’s about 40% incrementals. CWT, low to mid-30s and incrementals. Only difference of all of that is the first quarter for CWT that one just based on just how the numbers are playing out, if you look at a CWT should increase a couple of hundred basis points in Q1. So that’s one exception to what I just talked about. And that improvement is really from the carryover of all the synergies that they picked up in ’23.
Bryan Blair: How does price cost take out for CCM and CWT in 2023? And then what have you baked into guidance on that front? And just running the simple math, we assume that all of growth is well even based and thinking about the normalized incrementals that you just referenced, the 50 basis points seems to come exclusively from growth in that drop through, but I suspect price/cost remains a good guy for you guys coming into the year, and it’s certainly a typically a lever for the Carlisle story. So just curious how you’re thinking about that, but starting with how price cost [indiscernible].
Kevin Zdimal: Yes. For 2023, we had given a range in the third quarter, and we hit the top end of that range where we came in for CCM at $80 million benefit — that’s for the full year, CWT for the full year was $40 million benefit. As we get into 2024 as you said, maybe a little of the numbers were conservative. This is one where we’re pretty much looking at price raws to be flat for both segments. And that’s offsetting that 2%, right, 2% to 3% price down. So obviously, there’s a benefit of the raws take that a flat number.
Bryan Blair: And then last one, staying on the margin bridge, how much of a step-up in R&D expense are you factoring in for this year? We know the 3% target kind of medium to long term. How’s that being phased in? And what’s the near-term focus for the team. We’ve kind of come to the conclusion that it’s more evolutionary focus in terms of product development for the time being and perhaps more revolutionary over time? Just curious about the sale.
Kevin Zdimal: Yes. So R&D expense overall is about 80 basis points as a percent of sales, and we’re looking to nearly double that in 2024. Everyone can hear the operator was dropped from the call. So we’re just waiting to have the operator rejoin and then we’ll resume the questions — so if you can hear, please be patient, and we will get this issue resolve momentarily.
Operator: And your next question comes from the line of Saree Boroditsky from Jefferies.
Saree Boroditsky: Glad we got a technical issue fix. So I want to talk a little bit about cash, you’re about to receive almost $2 billion in proceeds. So just — and you did a lot of share buybacks already, but what’s the appetite this year for share repurchases? And then what are you seeing from an M&A pipeline perspective, ultimately, how are you thinking about the optimal capital structure for your business?
Kevin Zdimal: Yes. So from the cash, one piece we do have in 2024 is $400 million of debt coming due in the fourth quarter. So we’ll use some of the cash there. We have dividends, that’s about $160 million. And then at that point, we’ll invest in the R&D and some of the capital expenditures, capital expenditures, we put out $160 million to $180 million. And then it comes down to share buybacks versus acquisitions. We’ve been doing about $400 million a year in share buybacks. We’d expect to do that plus we’re allocating right now is about half of the CIT proceeds to put that also towards share buybacks this year.
Chris Koch: I can talk about the pipeline, if you want to. Did you want to ask any more about the share repurchases. We get 3 things there. I think maybe just pause and make sure you get everything you need on share repurchases.
Saree Boroditsky: No, that’s good. M&A pipeline next would be great.
Chris Koch: Yes. And then we’ll get this optimal capital structure. Yes. The M&A pipeline has been a little bit, I think, all the way around slow. We are seeing deals. We’d like to see more, hopefully, we see things free up a little bit more as the spring gets here, interest rates change a little bit. But I think we’re following kind of the same pattern you’re seeing with everyone else that just ’23 was not a great year for M&A and probably not a great year for people selling their businesses. So we’re still optimistic there are things out there we can add to the building products portfolio and the envelope. I mean, as a reminder, as we said in Vision 2030, we’re going to be really, we have some really specific hurdles for of them.
We want to have an organic growth story within the asset that we’re buying. We want to make sure that there are really hard synergies like we had with Henry, not just sales synergies and things that are hope for, but real raw material savings and plant savings like we did with Henry. We want to have a really good management team. And this is the one that I think in the Henry acquisition has been the hardest in the past is to get that type of management team that we had coming in with Henry that just right off the bat picks up the integration playbook, which is number 4. And then they run with it, and we get — I don’t know if you’ve heard recently, but the synergies we estimate of $30 million with the Henry deal. Now we’ve exceeded $50 million.
And a lot of that really is to that great management team that great integration playbook and now pause once they were acquired. So when you layer those things on, I think we’re a little bit more picky than most, but I think Henry is a great example of what we want to do with M&A, and I think there are more out there like that, just harder to find. And then Kevin will pick up on the capital structure.
