Good afternoon. My name is Xin, and I will be your conference operator today. At this time, I would like to welcome everyone to The Carlisle Company's Second Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. Call.
After the speakers' remarks, we will conduct a question and answer session. I would like to turn the call over to Mr. Jim Genakourous, Carlisle's Vice President of Investor Relations. Jim, please go ahead.
Thank you, Zen. Good afternoon, everyone, and welcome to Carlyle's Q2 2021 earnings conference call. We released our Q2 financial results call after the market closed today, and you can find both our press release and earnings call slide presentation in the Investor Relations section of our website, carlyle.com. Call. On the call with me today are Chris Koch, Chairman, President and Chief Executive Officer and Bob Roche, our CFO.
Call. Today's call will begin with Chris discussing business trends experienced during the Q2 of 2021, views of what's to come conference and context around our continued progress toward an unwavering commitment to achieving Vision 2025. Bob will discuss the financial details of Carlyle's quarter performance and current financial position. Following Chris and Bob's remarks, we will open up the line for questions. Call.
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 call today. Based on current expectations of future events and their potential effect on Carlyle's operating and financial performance that involve risks and uncertainties, conference call, which could cause actual results to be materially different. A discussion of some of these risks and uncertainties is provided in our press release call and in our SEC filings on Forms 10 ks and 10 Q. Those considering investing in Carlisle should read these statements carefully
conference and review reports we
filed with the SEC before making an investment decision. Today's presentation also contains certain non GAAP financial measures. We have provided reconciliations of these non GAAP financial measures to the most directly comparable GAAP financials in our press release and in the appendix of our presentation materials. Call. With that, I introduce Chris Koch, Chairman, President and CEO of Carlyle.
Thanks, Jim. Good afternoon, everyone, and thank you for call for joining us on our Q2 2021 earnings call. While we recognize that there are still many people suffering from the continued effects of the pandemic globally and in uneven recovery, we hope all of you, your families, coworkers and friends are healthy and you are reengaging as global economies open. I'm also pleased to report Carlyle's COVID-nineteen infection rates approached 0 in the second quarter, which wouldn't have happened without our team's strict adherence to our safety protocols and commitment to each other across our global footprint. I'm also very pleased that Carlisle's performance continues to strengthen call as we further accelerate into the economic recovery.
Please turn to Slide 3. Vision 2025 has provided the clarity and consistency of direction 2021 and beyond. Vision 2025 provides Carlyle and our stakeholders a clear and direct vision that unites us in a collective goal, call, which in turn drives our priorities and everyday actions. We are very much on track to exceed the $15 of earnings per share targeted in Vision 2025. Our performance in the Q2 of 2021 illustrates our continued solid execution towards our stated goals.
Several highlights of this continued progress include: the CCM's continued rebound in sales from the bottom of the pandemic in the Q2 of 2020. As a reminder, CCM sales were down approximately 20% in Q2 of last year. As we entered the Q3 of last year, we had already begun to see improvement sooner than many industries, And that has continued sequentially through today. That positive momentum drove 28% organic growth year over year at CCM in the Q2 of this year and added to a significant and growing backlog. The rapid recovery from the lows of 2020 reinforced our confidence in this business.
As we commented on in the Q4 2020 earnings call, we envision 2021 being a year of challenges as pent up reroofing demand returned rapidly the company's financial results. Our and meet customer expectations. Our conviction in the late fall of last year that all of the fundamental drivers of growth we saw prior to the pandemic were still in place led us to take significant action on securing raw materials, ensuring production facilities were fully capable and putting in place pricing actions to offset what we anticipated to be significant raw material headwinds in the year. The Looking at the future, we continue to believe that the multi decade trends in reroofing demand, increased emphasis on energy efficiency and public and private equity markets. We will continue to invest significant capital into our building products businesses.
A few recently announced examples of our steadfast commitment to CCM's future include our plans to invest more than $60,000,000 to build a state of the art facility in Sikeston, PPA to Missouri, where we will manufacture energy efficient polyiso insulation. We're also constructing our 6th TPO manufacturing line in Carlisle, PA, which will produce the commercial roofing industry's first 16 foot wide TPO membranes. We're breaking ground on Phase 2 of the €8,000,000 expansion of our CCM Walzershausen, Germany facility, which as a reminder, produces our unique EPDM based Resterix product. And lastly, a significant investment in our R and D capabilities and manufacturing capacity in our Cartersville, Georgia spray foam insulation business. Shifting gears to other parts of Carlisle, we continue to leverage the Carlisle operating system to drive efficiencies across platforms and geographies.
And in the Q2, COS delivered 1% savings as a percent of sales and continued to further its role the call today. As a culturally unifying continuous improvement foundation for Carlyle employees globally. In seeking to the the return profile of Carlyle Companies, we continue to focus on optimizing our business portfolio. During the quarter, we announced the divestiture of CBF. And earlier this week, We announced an agreement to acquire Henry Company, which we will talk about later.
Both changes to our portfolio will enhance long term value creation call for our shareholders. We continue to be a consistent and meaningful returner of capital to our shareholders. Since 2016, opportunistically repurchasing shares when appropriate. We also anticipate continuing our long history of consistently raising our dividend and when completed in August
conference call. It will be our 45th consecutive year.
We're very proud of this symbolic act and the nature of nearly half a century of stability of our business model, financial profile and commitment to our shareholders. Moving to Slide 4. Driven by the growing strength in our CCM business the Q1 of 2019. We continue to focus on the momentum building at CFT, our revenue increased 22% year over year. CCM had outstanding performance growing revenue 28% year over year.
CFT continues to drive new product innovation and operational efficiencies to better leverage improving dynamics in its global end markets. Partially offsetting this growth was commercial aerospace, which continues to weigh on CIT with revenues declining 8% year over year in the quarter. That said, aerospace orders have stabilized and we have line of sight to continued sequential revenue improvement in 2021. While aerospace markets have been depressed, our team at CIT has remained focused on innovation and continuing our long term commitment to our customers And most importantly, preparing for the inevitable recovery. Please turn to Slide 5.
Carlisle Construction Materials segment continues to demonstrate its extremely durable business model and to execute very well in the face of numerous challenges. CCM volumes in 2021 are benefiting from work postponed in 2020 due to the COVID-nineteen pandemic. And given both material and labor constraints, We believe even more deferrals experienced in the first half of this year will only add to the pipeline of roofing contractors' workload in the second half of twenty twenty one. The We maintain our strong conviction in the sustainability of reroofing demand in the U. S, where we continue to expect the market to grow from $6,000,000,000 to $8,000,000,000 in the Q1 of 2019.
We continue to be very proud of the CCM team's ability to keep the Carlyle experience intact, Managing a record level of incoming orders, ensuring we keep our contractors working and maintaining our commitment to being the best partner in the industry. And I'd like to take a moment to acknowledge our procurement, manufacturing, logistics and customer service teams for their tireless and extremely dedicated work, call, without which the Carlyle experience wouldn't be possible. And as a reminder, by the Carlyle experience, we mean ensuring delivery of the right product at the right place the right time. We do this by deploying industry leading investment in production and R and D capabilities. These investments have totaled over $300,000,000 the past 5 years.
We also continue to invest in best in class education for our channel partners on the latest roofing products and installation best practices, conference call, including over 20000 hours of virtual learning courses during the pandemic. I mentioned our world class customer service team conference that processed over 65,000 orders in the 2nd quarter, a remarkable feat at nearly 2 times in normal quarter's activity. We continue to innovate and provide value added products that ensure quicker, more efficient and safer installation of our building envelope systems and solutions call in an increasingly labor and material constrained environment. Finally and importantly, we continue to focus on producing products that contribute to a better environment call for all stakeholders. A few comments on our other businesses.
CIT's 2nd quarter results were in line with subdued expectations given the ongoing disruption in the commercial aerospace market. Despite a difficult past 18 months, the CIT team is taking significant actions to position CIT to be stronger when the market rebounds. We acted to create more a more rational footprint in 20 2020 and 2021 closing 3 of our facilities. And while these decisions are not taken lightly, they were necessary to position CIT to return to and exceed our legacy profitability levels when demand returns. Also during this time, we have continued to invest in R and D Aerospace, including the expanding vaccine rollout, numbers of TSA daily screenings increasing from a low of 20% of normal last year to over 80% in July, the growing activity at our aircraft manufacturers and corresponding improvements in CIT's order books.
All of this gives us confidence that CIT is positioned for sequential improvement going forward. CFT delivered improved revenue profitability performance in the Q2 driven by its reenergized commitment to new product introductions, improved operational efficiencies, price realization from earning the value that comes with innovation and an improved customer experience. I'm very heartened by the progress the team has made over the the team to continue executing on its Vision 2025 Growth Strategy and to deliver continued improvement moving to the second half of twenty twenty one. Turning to Slide 6. Hopefully, everyone had the opportunity to listen to our call on Monday during which we introduced our agreement to acquired Henry Company, a best in class provider of building envelope systems that control the flow of water, vapor, air and energy in the and a building to optimize building sustainability.
Henry delivered revenues of $511,000,000 and adjusted EBITDA of $119,000,000 or 23% margin in the last 12 months ended May 31, 2021. Bob will review more of the financial details related to Henry later in the call, We expect Henry to add more than $1.25 of adjusted EPS in 2022. All of us at Carlyle are very excited to work with the Henry team, which has a proven track record of growth, a very strong brand and a long history of new product innovation. The announced agreement to acquire Henry is another clear example of how we are executing on our Vision 2025 strategy to optimize our portfolio, which includes our efforts to expand further into the building envelope. For those of you new to Henry, let me give you a few examples of how in practice Henry complements CCM.
Henry's large direct sales force who have been focused on helping architects specify waterproofing and air and vapor barriers can now assist in specifying CCM single ply roofing solutions on the same buildings. Additionally, Henry has a presence in the residential and big box marketplaces, markets not previously a substantial part of CCM's business. Moving to Slide 7, Our ESG efforts also continue to gain momentum. In April, we published our 2020 sustainability report, which built on the foundations of our first report in 2019. And for the first time, the 2020 report disclosed in detail how Carlyle is tracking on the Global Reporting Initiative or GRI standards.
We're also in the process of establishing achievable water, energy and emission reduction targets based on detailed audits of our global facilities. Turning to diversity, during the course of April, Carlisle employees participated in the CEO Action for Diversity and Inclusion Day of Understanding. The Day of Understanding created a singular focal point in our year and is an opportunity for leaders to guide open dialogue about diversity in their workspace. Carlisle has been a member of the PwC Led CEO Action for Diversity and Inclusion since 2018, an organization that now includes over 2,000 CEO signatories. In order for Carlyle employees to participate in our ongoing success, we issued a special stock option grant or equity equivalent of 100 shares to employees on May 2, 2018.
Those shares vested in the Q2 of 2021 having appreciated almost 80%. For each participating employee, this meant a gain of over $8,000 I'm very pleased the shares performed so well for our employees because Carlisle's success wouldn't be possible without their efforts. Finally, one area where we have made significant improvement is in our industry leading safety record. Our incident rate of approximately 1 quarter of the industry average demonstrates the work that has been done by all employees to ensure a safe workplace. While staying ahead of the industry is important, in the past 6 years, our incident rate has fallen 52%.
Of all of our track metrics, this is especially meaningful because reducing employee injuries by 50% has had a tangible benefit the positive and meaningful impact on people's lives. To continue to drive the importance of safety in our operations in early 2020, we announced Path to 0, which represents our commitment to creating the safest possible work environment and features the goal of 0 accidents and 0 industries. This program was launched globally the Q2 of this year. And now Bob will provide operational and financial detail about the Q2, review our balance sheet and cash flow. Bob?
Thanks, Chris. As Chris mentioned earlier, we had a very solid second quarter. I'm especially pleased about the margin expansion at CCM, CIT coming off market lows and position to deliver sequential growth for the next few quarters CFT's order book improving Our disciplined approach to capital deployment in the form of share repurchase and dividends, continued investment in our high ROIC businesses to drive organic growth And our portfolio optimization actions, including divesting CBF and the announced agreement to acquire Henry Company. Please turn to the revenue bridge on Slide 8 of the presentation. Revenue was up 22% in the 2nd quarter, call, driven by CCM and CFT, offset by the well documented commercial aerospace declines at CIT.
Organic revenue was up 20.7%. CCM and CFT each delivered greater than 25% organic growth in the quarter. Acquisitions contributed 0.4 percent of sales growth for the quarter and FX was a 90 basis point tailwind. On Slide 9, we have provided an adjusted EPS bridge where you can see 2nd quarter adjusted EPS was $2.16 conference call, which compares with $1.95 last year. Volume, price and mix combined were $1.30 year over year increase.
Call. Raw material, freight and labor costs were $0.95 headwind. Interest and tax together were a $0.01 headwind. Share repurchases contributed $0.07 and COS contributed additional $0.12 Higher OpEx was a $0.32 headwind year Perlaxtra last year, half of which is related to the May vesting and cash settlement of stock appreciation rights granted to all Carlisle employees outside the U. S.
In 2018, with the remainder reflecting the resumption of more normalized expense level versus last Sears cost containment measures taken in the depths of the pandemic. Now let's turn to Slide 10 where you second quarter performance by segment in more detail. At CCM, the team again delivered outstanding results with revenues increasing 27.5% call, driven by volume and price, along with 70 basis points of foreign currency translation tailwind. Call. All of CCM's product lines delivered 20% growth with particular strength in Architectural Metals and Spray Foam Insulation.
CCM effectively managed raw material inflation headwinds experienced in the quarter with disciplined pricing, proactive sourcing and allocating products to Strategic Customers. Adjusted EBITDA margin at CCM was 21.5% in the 2nd quarter, A 60 basis point decline from last year driven by higher raw material prices, partially offset by volumes, price and COF savings. Despite raw materials being a headwind in the second quarter, we continue to anticipate net neutral price raws for the full year. Adjusted EBITDA grew 24 percent to $201,200,000 again demonstrating the earnings power of our CCM Please turn to Slide 11 to review CIT results. CIT revenue declined 8.2% in the 2nd quarter.
As has been well publicized, this decline was driven by the pandemic's continued impact on commercial aerospace markets. We still anticipate a prolonged recovery in aerospace, but are optimistic there will be resumption in growth as we enter the second half of the year. CIT's medical platform continues to build a robust pipeline of projects with an increasing backlog. We continue to expect sequential improvement from pent up demand as the impacts of COVID on hospital CapEx and postponed elective surgeries ease. CIT's adjusted EBITDA margins declined year over year Q1 of 2019 to 8%, driven by commercial aerospace volumes, partially offset by price, COS and lower expenses.
Given the positive indicators, we are optimistic that CIT will deliver sequentially improving financial performance into the second half of twenty twenty one. Turning now to Slide 12. CFT's sales grew 54% year over year. Organic revenue improved 44.3 percent and acquisitions added 3.6% in the quarter. FX contributed 6%.
CFT is well positioned to accelerate through the recovery due to continued stabilization in key end markets, call. Driven by an improved industrial capital spending outlook in 2021, coupled with new product introductions, would have included $4,100,000 Adjusted EBITDA margins of 15.9 percent were over 100 basis point improvement from last year. This improvement primarily affects volume, price and mix. On Slides 13 and 14, we show selected balance sheet metrics. Our balance sheet remains strong.
We ended the quarter with $713,000,000 of cash on hand and $1,000,000,000 of availability under our revolving credit facility. We continue to approach capital deployment in a balanced and disciplined manner, investing in organic growth through capital expenditures call and opportunistically repurchasing shares while also actively seeking strategic and synergistic acquisitions. In the quarter, we repurchased 643,000 shares for $116,000,000 bringing our 2021 year to date total to 1 $600,000 shares for $266,000,000 We paid $28,000,000 of dividends in the 2nd quarter, call, bringing our 2021 total to $56,000,000 We invested $32,000,000 of CapEx into our high Turning businesses to drive organic growth, bringing our 2021 total to $55,000,000 A few examples of these investments include our new Missouri polyiso facility, expansion of our TPO line in Carlisle, PA and investment in our spray foam capabilities in Cartersville, Georgia. In addition, as has been noted, we announced an agreement to purchase Henry Company for 1 point $575,000,000,000 Henry generated revenue of $511,000,000 and adjusted EBITDA of $119,000,000 Representing a 23 percent EBITDA. Additionally, Henry Lee is expected to deliver $100,000,000 of free cash flow in our 1st year of partnership.
We also expect meaningful cost synergies of $30,000,000 by 2025. Finally, we expect Henry to be immediately accretive to Carlyle's EBITDA margin, adding over $1.25 of adjusted EPS in 2022. Free cash flow for the quarter was $64,600,000 a 54% decline year over year due to increased working capital call usage related to our high sales growth of 22%. Turning to Slide 15, you can see the outlook for 2021 in corporate items. Corporate expense is now expected to be approximately $125,000,000 up from the previous estimate of 120.
The increase is wholly related to the vesting and cash settlement of our stock appreciation rights discussed earlier. We expect Depreciation and amortization expense to be approximately $210,000,000 We still expect free cash flow conversion of approximately 120%. Call. For the full year, we continue to invest in our business and expect capital expenditures of approximately $150,000,000 Net interest expense is still expected to be approximately $75,000,000 for the year, and we still expect our tax rate to be approximately 25%. Finally, restructuring is expected in 2021 to be approximately $20,000,000 And with that, I'll turn the call back over to Chris.
Thanks, Bob. Entering the Q3, we continue to be very optimistic about the remainder of 2021 From record backlogs at CCM to supportive trends in CIT Aerospace Markets to growing strength at CFT, Company. Coupled with excellent sourcing and price discipline and significant traction on our ESG journey, we are confident in our ability to deliver solid results call for all Carlyle stakeholders. For full year 2021, we anticipate the following. At CCM, as previously mentioned, the trends that began in Q3 2020 gained momentum as we moved into 2021.
We anticipate this momentum to carry over into the 3rd and Q1 of 2021. Considering this momentum coupled with record backlogs stemming from project deferrals that occurred in 2020, positive momentum in our newer businesses of Architectural Metals and Spray Foam and expansion of our European business, we are increasing our anticipated revenue growth to high teens conference call. Given a very difficult year over year comparison in the 1st and second quarters, we continue to expect CIT revenue will decline call in the mid to high single digit range in full year 2021. In CFT, With end market strengthening and improvements in the team's execution of our key strategies, we now expect mid teens revenue growth in 2021. And finally, for Carlyle as a whole, we are now increasing our expectations to mid teens revenue growth in 2021.
As we pass the midpoint of 2021, we are tracking to deliver our Vision 2025 goals of $8,000,000,000 in revenues, 20% operating income and 15% ROIC, all driving to exceed $15 of earnings per share by 2025. Call. Despite lingering uncertainties around COVID, supply chain constraints and what we perceive as near term raw material inflation, Carlyle's employees across the globe remain focused on the execution of the strategies and key actions that support Vision 2025. Call. Our team continues to embody a positive and entrepreneurial spirit, a commitment to continuous improvement and a focus on delivering results for the Carlyle shareholder.
Call. Given our 100 year plus history and the resilience this company has shown in times of adversity and uncertainty, we remain confident in Carlyle's outlook, Our strong financial foundation, cash generating capabilities, unwavering commitment to our Vision 2025 strategic plan to providing products and services essential to the world's needs. This concludes our formal comments. Zen, we're now ready for questions.
Your first question comes from the line of Brian Blair of Oppenheimer. Thanks. Good afternoon, guys.
Good afternoon, Brian.
Great performance in CCM. See, I mean, actually we're flirting with normal seasonality, sequential seasonality, which I didn't think was possible. Given the supply chain constraints that you called out and that are so pervasive, to what extent did Raw material availability, freight, other constraints impact CCM's ability to meet demand in
the quarter.
Well, as we discussed, the team did a great job managing it. I don't think it really impacted their ability to beat the demand that was present in the quarter. Obviously, the surge in orders takes into account some orders that are for the Q3 and Q4, and we continue to work to fulfill all of those, but the team did a great job in meeting all the demand that was put to it in the 2nd quarter.
Understood. And thinking about the Q3, are there any incremental watch items in terms of the The listed constraints that we should think about in terms of CCM's ability to meet demands and An extension of that, what kind of growth rates are you assuming as we bridge to the high teens guide?
Yes, Brian, we don't see any again. There's a lot going on in the world with Delta variant and everything else, but we don't see a lot of Changes from what happened in the Q2 going into the 3rd. We would expect raw materials to, I'm going to say, loosen up a little. They've been loosening up Since the beginning of the year, more and more, since the problems in Texas and the freeze and everything, so we can we see that continuing slightly. So we don't see a lot of watch out items on our list going in today.
We'd expect, I'm going to say normal growth, you expect Q3 to be somewhat higher than the Q2. So I think the growth rate will continue going into the 3rd with normal like you said, normal seasonality where 3rd quarter is Larger than the second and then shrinking a bit in the 4th as always happens into the winter months.
Yes. And Brian, I would just add one thing that I think we The results were encouraging and it's interesting to talk about normal seasonality, but we really are still in the midst of an extraordinary time just as impactful Going down was last year into the declines we had. I think coming back has been something that is not normal. And I think the CCM team has done superb job of managing through all of that, like you said, and getting close to normal seasonality, but we still want to communicate the fact that it's a very difficult environment throughout the business from supply chain all the way to order entry as we discussed.
Completely understood. One last one for me. In the revised high teens sales growth guide for CCM, how should we think volume first price contribution for the year.
Yes, Brian, that's mostly going to be price, but there is some volume increase in there as well.
Okay. So the step up from low double digits to high teens is mostly
Yes, mostly price. As raws continued to increase, we as discussed needed to continue to increase price to keep up with that.
Got it. Okay. Thanks again, guys.
Thanks, Brian.
Your next question comes from the line of Tim Wojs Baird Equity Research.
Good afternoon.
Good afternoon, Tim.
The Nice work. I guess, first question, could you just talk a little bit about How you're managing the backlog? Just there's chatter that like people are double ordering and trying to get Products from anybody they can. So how are you kind of controlling that just to make sure that you actually have real backlog?
Well, certainly, we can't we don't know because we don't have the customer's mind as to what's a real order and what's not a real order. We treat all the same and then what we're really doing is just prioritizing them based on the necessity of shipping. And in addition to that, Obviously, a customer, an existing customer that's been a long time customer for Carlyle is going to be prioritized over someone that's being opportunistic. So I think, in ensuring that the contractors that need it have that product there and making sure that we're not having any Inventory or products sit around somewhere on a job site or in a warehouse, but the people that need the product to put on the roof are getting it done. And I think the team is doing a good job of that.
But Obviously, that involves a lot of heavy lifting on the part of the sales force, on the part of customer service to coordinate, A lot of work there. So I think as we to your point on the extra ordering as we get through the year, we don't see it impacting the projections that we've made. That will sort itself out as we begin to continue to fulfill these orders. And then I'd say just we'll check-in as we get closer to the winter And we'll know where we are. So as I mentioned to Brian, it's such an evolving environment and this recovery has been so And the demand has been in a lot of industries so strong that I think we just focus on the near term and make sure again that we're delivering on that car lot experience to the contractor that needs it today.
Okay, good. And then I think you guys are definitely Where would you kind of peg the market at relative to your high teens sales growth? And I guess, what's your confidence that once some of these supply chain issues settle down that you can hang on to some of that share gain longer term?
Well, I'll take the last one first. I think we view these last year and this year, the These disturbances, these really trying times as opportunities and probably the best opportunity for contractors, distributors, End users, architects to see the really true Carlyle experience and the work that our team does. I mean, when everything is going smoothly, the You don't understand that how powerful that experience is. And so what I would hope is that as we are introduced to new customers as people that are with other suppliers decide to try Carlyle that they are overwhelmed by the experience and decide to make permanent shift. Does that always occur?
I can't tell you what level of people or what percentage of the people that the get material from us for the first time, stay with us. But my guess is that it's contributed to our growth over the last few years and we'll continue to do that. So that's our goal, continue to perform well, continue to perform better than anyone else and make sure that People see that and want to be part of that team. I think on the other side, the growth side, Bob may have some comments on that. But I think that the industry right now and the recovery probably market shares have not moved much relative to overall demand just because demand has been so heavy.
So again, what I would look for is to run through the year, Let's sort out those orders you talked about that there may be some over ordering and then get into 2022. Hopefully, we'll have a more normal year And then we'll be able to assess our progress versus the industry and versus our competitors. Bob, do you want to add anything?
Call. Okay, good. We'll hop back in queue. Thanks guys.
Yes.
Thanks Tim. Thanks Tim.
Next question comes from the line of Joe Tiss from Bank of Montreal.
The All right.
So I'm going to switch gears a little bit. I wonder it's kind of an off the wall question, but you think it would make any sense for you guys to think about like spinning out everything that's not CCM. That would kind of accelerate your move to 2025, maybe not on the revenue side, but certainly on the margin side.
Well, I don't think
it would make any sense right now. And the only reason I say that is I think that certainly valuations It would be very hard to find a valuation from purely pragmatic perspective on any business given CCM's declines and given the fact that CST has not probably reached its full potential after the years of work we put into it, but there's still more to come. So what I would yes, I would just say that's probably not a thought right now in our mind. I mean, we want to continue to boost the building products portion of our business around CCM. Adding HENRY does that.
That gives us a lot to digest and to focus on. I think we wait till things get through the sustainable growth recovery that and runway that we see in CIT and CFT. And then, Joel, as we've always done, we just assessed the portfolio, and I think that's something that's gone back as long as I've been at Carlisle, everything from divesting of Carlisle Tire and Wheel, Motion Control, Food Service and making additions like Casella, Peterson and that we're always looking at the portfolio and obviously we make all our decisions based on what's best for the Carla shareholders. So it's something we always look at, but I don't see any actions in the near term.
And then as you build out your building envelope and it's starting to get pretty serious, is there any way or to team up with like a carrier or a train or someone who's doing sort of building assessments to help the buildings get more efficient and lower their costs and all that. Is there any way to team up with those guys to get like specked in to being part of that energy audit and helping them get to their goals.
Sure. And I think I don't know about those two company in particular, but I do know that every day our teams in CCM through their connections with the industry organizations, through their Connections to architects through large building owners, people who are putting in warehousing, Data centers, things like that, you can't help but think that as ESG, as energy efficiency becomes a bigger priority for all those end users and building owners that they're going to almost drive cooperation, so that we're getting we're making sure that As we're putting on that building envelope and ensuring that it's a it's got great insulation, vapor, water, air barriers, things like that, They're also asking the provider of that energy unit that's either heating and cooling to participate and ask some coordination. I think a lot of that occurs at the design level with architects and specifiers. And as we mentioned, both with Carl and with our Henry team, They're going to spend a lot of time with those organizations. So I think you're on the right track.
I just I can't comment on carrier or train because I just don't know, but I would imagine those conversations are being had.
Well, that's great. Thank you very much.
You bet, Joel. Thank you.
Next question comes from the line of Sari Boroditsky of Jefferies. Hi, good afternoon.
Good afternoon.
So within CIT, could you just talk about what you saw in the quarter from medical versus aerospace? Call. And then how do those growth rates are expected to look for the remainder of the year? And then any color as we start to think about 2020 Q.
Yes. I'll take the last one first, Saree. I mean, I don't think we're ready to talk about 2022 yet. Now certainly, we expect growth at CIT and continued ramp in our profitability, but we're a long way from what's going to happen with Aerospace Getting into 2022 at this point in time. Medical versus Aerospace in the quarter We're almost the same decline and that's largely due to the massive orders or I'm going to say revenue we saw last Q2.
Remember, we talked about a big spike in orders when COVID hit in shipments in the quarter, so In medical, so that's why it was relatively flat, but we expect acceleration faster acceleration in medical
the going to the end
of the year than we do in Aerospace, but we expect some growth in Aerospace.
Got it. And then you raised the outlook for CST. Could you just talk about the outlook for industrial CapEx and projects. What are you hearing from customers? And then again, I'll just ask, should that strength continue as you think about Q1 and to next year.
Well, I think we see the industrial space continuing to improve out of to the depths of 2020 and improvement in production. And that I think the other thing that I would remind you is CFT, We did have some difficulties when we first bought that business and there were share losses. And I think part of the gains are giving back what is what I would call, their rightful share through their innovation and new products and really good work by the teams in communicating the value proposition. So I think it's a combination of that, that markets are improving, industrial markets are improving. We think they'll continue to improve globally as we go throughout the year.
And then I think there's a piece of Q2 that is just CFT getting its stride back and becoming a solid Carlyle company. Bob, do you want to add anything? No.
Okay. Got it, Chris.
Thanks for taking my questions. I'll pass
it on.
Thanks, Rick.
Next question comes from Kevin Hocevar of Northcoast Research.
Hey, afternoon everybody. Nice job there.
Chris, I'm trying to wrap
my head around one of
the comments you made, I think in your prepared remarks. I think you had mentioned in the In the CPM business, you had received 65,000 orders in the quarter, which is double the usual amount. So I guess I'm just trying to understand What that means? I mean is that again a sign that there's some double ordering going on? Is it maybe distributors trying to Build some inventory, even maybe contractors get some product on the job site even if they don't need it yet just because Things are so tight.
Is it backlog building in a pretty material way? I guess I'm and does that mean there'll be less orders in the 3rd and fourth quarter. Is it some panic buying? I guess I'm just trying to understand because that seemed like a pretty interesting stat. Yes.
I'm just wrapping my head around. I'm curious if you can just elaborate on that a bit.
Yes. Well, I think one of the things that we probably will need to do later is give the reference point of 2019 because without that reference point of Double the previous period, you don't have a good reference for where we were in 2019 to gauge that. I think the other thing is On the double ordering, I'd be careful about that because as we know, last year, people were not ordering. We talked at length about how Distribution going into the season had cut back on orders. People were concerned about whether they'd be on the job.
I mean, it was only a year ago That states like Pennsylvania and in cities like Boston weren't allowing contractors on the job site. In certain cases, they were increasing the PPE and the other protocols making it more difficult. We were having, inspections occurring virtually. It was hard to get permits call because governmental agencies were shut down. So, you know and we think that now we're in the second quarter, but You have to remember that was some of that stuff, there was still concern in the Q1 that things weren't happening.
And we did get ahead of it in production, as we mentioned. We got ahead in our pricing, but there is still some lag there on the market until the confidence came back that the contractor and the distributors that would be able to function somewhat normally. So I think there is a surge there. And I think a lot of those orders, I have no reason to believe that most of them actually that occurred in the quarter aren't real Because I do think there's pent up demand, people were waiting. That's what we talked about as demand to continue to build.
And if you think about call. Even not including 25% of the orders in a year and letting them build in the back half of twenty twenty and then the Q1 of 2021, 1 would expect a pretty substantial surge in the Q2 of this year. And then we'll just need to monitor. When we get to the Q3 of this year. It will be a we can do that same check and then have a comparison because we've been through the heavy last part of the season getting into the winter months.
So, I won't read too much into it other than demand is strong and We are coming out of this pandemic strong and people are gaining confidence and they're placing orders and they're getting back on the roof and they got a lot of backlog to make up. Yes.
Okay, that's helpful. And in terms of the increased guidance, just one quick question there. So the low double digit to high teens increase in CCM, Sounds like the majority of that is pricing. Is that pricing increase based on what you've currently kind of realize between price increases that have already taken effect or I know there's also like an August increase you have out there for a lot of roofing products. Is there some assumptions of future pricing as well baked into that guidance?
No, that includes obviously the announced price for August, but no, nothing beyond that at this point.
Okay, got you. And then just last question, what was In terms of the price cost dynamics, what was that in the second quarter? And it sounds like the expectation is a continuation of call. So is there any change in the expectation of 3 I mean, obviously, there's been a lot of moving pieces since 3 months ago In terms of the inflation expectations and the pricing expectations. So, but maybe is the Kind of the trajectory, it sounds like might not be the expectation of the net of that might not be all that different.
But yes, curious what it was in the quarter and then kind of the how you see
Yes, certainly the net is not different, but certainly with our increase in revenue based on price, we've gotten a lot Costs have continued to rise and be up there. We are a lot more confident that we need the price to cover it. Q2 was about $25,000,000 negative as we expected, and we expect to make that up in the second half of the year, More in the Q4 than the Q3, but positive in both those quarters to make up for what we are short this quarter.
Next question comes from the line of Gary Shmois of Loop Capital.
Thanks for taking my question today. Chris, just curious, you made a comment in your prepared remarks around allocating products to strategic customers. Just wondering if you could expand on that. Is it really more of a function that because you're effectively at full capacity, you can be selective in service or I I guess, higher margin, higher quality customers or any kind of additional color on that comment would be helpful.
Yes. I think that our customers, we have some a lot of very loyal customers that work very hard to make sure Carlyle is specified and chosen throughout the world actually. And we don't want to make decisions in a quarter and we want to have share gains and we want to make sure that the work we're doing with people because it is pretty call. Always want to strategically give our efforts to those of us those distributors, contractors and those that are with for the long run and have invested significantly in the Carlyle brand. So I don't think it's anything while we stated that, I don't think it's anything other than our normal practice there that we expect a lot out of our partners and they would expect a lot out of us in terms of loyalty as well.
Okay, Thanks. And just on the building envelope business, you called out spray foam and metal roofing running over 40% in the quarter. Sounds like the entire building envelope business was up over 20% in the quarter. What's the outlook there? I guess what I'm asking, given that business A bit more exposure to housing.
Is there any pause that you might be seeing at all just with the pause in new housing, just given the inflation in the market and the builders pulling back a bit. Any help on
the Building envelope side would be helpful.
No, I think on the metal side, Petersen is pretty much a commercial metal business. And I think there We're seeing a lot of movement into metal as it becomes architecturally more attractive, as it has some renewable and recyclable Aspects of Tuohy, we're just finding it's gaining traction. There's some very positive trends there. Ann Petersen has done an excellent job Of adopting the Carlyle experience, which they probably called it the Petersen experience beforehand, but it's a great brand with great coverage and good relationships. And on the Drexel side, which is a little bit more On the residential side, again, we're seeing people are choosing metal roofs in a lot of cases.
There's more interest and Drexel Has a very unique value proposition where they are actually preparing that work right on-site and driving a lot of value. So as that team gets out and It demonstrates our value proposition. They're gaining a lot of traction. On the spray foam side, when we originally bought Acelo, we talked about that high single digit industry growth rate as people would adopt Foam as far superior insulator and some In certain cases, vapor barrier components to it. And what we're really just seeing is that continued traction versus other forms of insulation.
The And certainly here in the Southwest with the heat and even in the North, I know being from Minnesota and living in Arizona, spray foam insulation just provides a superior solution the space and the wall cavity and just drives great performance and we see it just continuing to gain share in the marketplace. So I think the trends are positive for both and then we on top of that, we're adding very positive unique value propositions with these business and I would be remiss if I didn't say that partnership between CFT with their newly launched spray foam equipment, which provides superior on ratio performance. It's It's got better heating capabilities than the competition. A much better performing product coupled with our spray foam coming out CCM has also created a lot of interest with end users and is helping us drive a preference for our brands. So actually, we're excited about all of those businesses and what they've done.
Okay. And I guess just one follow-up. In the guide, you took your CCM guidance off largely on price. Was there any change to the underlying assumptions on the envelope side of the CCM.
No, Garik, They're mostly in line and those are up in price as well, right? The commodities that go into metal roofing and the spray foam Are just as volatile as the flat roofing commodity. So we need to get price in those as well to keep up with our flat price cost.
Okay, fair point. Thanks again.
Yes. Thank you, Gerrick.
There are no further questions at this time. I would now like to turn the call back to Chris. Please go ahead.
Thanks, and thanks everybody. This concludes our Q2 2020 earnings call 2021, excuse me. And thanks for your participation. We look forward to speaking with you at our next earnings call.