Carlisle Companies Incorporated (CSL) Q4 2015 Earnings Report, Transcript and Summary

Good morning. My name is Patrick and I’ll be your conference operator today. At this time I’d like to welcome everyone to the Fourth Quarter Results Conference Call. [Operator Instructions]. Thank you. I would now like to turn the call over to President and CEO, Chris Koch to begin the conference. Chris?

Thank Patrick. Good morning, welcome to Carlisle Company’s Year-end 2015 conference call. For the first time since 2007, Dave Roberts is not on the call with us. I just like to take a moment to thank Dave for his leadership as CEO over the last eight years. We are also fortunate to have him in his new role as Executive Chairman. On the phone with me this morning are Steven Ford; our Chief Financial Officer; Kevin Zdimal, our Chief Accounting Officer; and Julia Chandler, our Treasurer. On this call I will be discussing our overall performance of 2016 outlook, and Steve will review our segment performance, balance sheet and cash flow. As announced earlier this morning Carlisle reported record results in 2015, with earnings per share up 26% to $4.82. For the fourth quarter, earnings per share were up 53% to $1.24. Before I discuss our results in more detail, I would ask that you review slide 2 of our presentation entitled Forward-looking Statements and the Use of Non-GAAP Financial Measures. Those considering an investment in Carlisle should read these statements carefully, along with reviewing the financial reports we filed with the SEC before making an investment decisions. As we have done the last two quarters, I'll end up reviewing company's overall performance, Chris will review our segment performance, and Steve will review our balance sheet and cash flow statements. These reports explain the risks associated with investing in our stock, which is traded on the New York Stock Exchange under the symbol, CSL. Please turn to slide 3 of the presentation to view our full year 2015 highlights. These results reflect the continued efforts of our employees worldwide and execution of the strategies we’ve implemented over the last eight years. In 2015, we achieved sales of $3.5 billion and an 11% from 2014. We set records in the category of sales, EBIT, EBIT margin and net earnings. In addition, Carlisle generated a record $529 million in cash flow from operations and $457 million in free cash flow. That strong cash generation contributed to our ability to make investments in acquisitions and capital expenditures totaling $671 million. Additionally, we returned $210 million in capital to shareholders through a 17% dividend increase and share repurchases totaling $137 million. With the cash generation capabilities of our business, $411 million in cash on the balance sheet and a $600 million unused credit facility, we are well positioned to invest in our business, fund acquisitions and continue to return to Carlisle shareholders. Now let’s review our fourth quarter performance; turning to slide 4 in the presentation as stated earlier, our earnings per share were up 53% in the fourth quarter to $1.24. Net sales were up 11% reflecting 9% higher sales from the Finishing Brands acquisition in our new CFT division and 3% organic growth offset by a negative impact of foreign exchange of 1%. With respect to our sales in our divisions, let’s begin with CCM; CCM had solid quarter with 6% organic growth aided by favorable weather conditions in much of the US. The CCM team remained price disciplined throughout the quarter. CCM’s continued price discipline combined with lower raw material input cost resulted in CCM’s exceptional margin growth of 520 basis points. Overall, the domestic US commercial roofing market is enjoying favorable market conditions and continued moderate growth, lifted by new construction and solid re-roofing demand. Carlisle FoodService also had a good sales quarter with sales up 4%. Sales initiatives with our large distributors in our e-commerce channel are having a positive impact on revenue, reversing the negative sales trend FoodService reported in the first half of 2015. CIT sales were down 1% on the quarter; these results were lower than expected. In the Aerospace business, timing of orders due to customer inventory management and an ERP implementation at a major customer impacted the quarter. With LHi included, CIT’s medical business performed well in the fourth quarter increasing 6% year-over-year. With our breadth of products and vertical integration capabilities, we are well positioned to win with major medical device OEMs that are looking to consolidate their supply chains. In our core Aerospace market, rapid technological change in the inflight entertainment connectivity market has driven investment in a robust new product development pipeline. As mentioned in our release this morning, we are excited to announce that CIT is the first to market with a universal SatCom antenna adaptor plate which positions us to take advantage of the latest technology in the next stage of inflight entertainment connectivity satellite communication. We expect this new product platform to be a significant revenue growth contributor in the coming years. As expected CBF’s sales declined in the fourth quarter and well publicized issues with demand in the heavy equipment market particularly for mining equipment caused our end markets to remain sluggish. We are monitoring our key OEM accounts, major mining companies and global commodity pricing very closely for any changes in demand. We continue to receive information on a slowing growth environment in China, weak metal prices and OEM reports of continued deterioration in the mining market. While we are not optimistic about a recovery to the markets in 2016, the financial impact to Carlisle will be limited as CBF makes up 8% of our overall revenues. Reported as part of our acquisition growth, Carlisle Fluid Technology sales were $74 million this quarter. Sales were impacted by currency headwinds not surprising given the majority of CFT sales that are outside of the US. Without currency effects, CFT sales of its finishing and system products were in line with our expectations. CFT’s EBIT margin of 15.9% exceeded our pre-acquisition expectations. I’ll discuss CFT margin potential and integration progress when we review the outlook. Overall we reported Carlisle company-wide EBIT margin of 14.3% in the fourth quarter, a 300 basis points increase from last year, driven largely by the strong performance at CCM. Turning to our sales bridge on slide 5, as stated earlier, our 11% net sales growth was comprised of 2.9% organic growth and 9.3% acquisition growth offset by foreign exchange of 1.3%. Lower selling prices had a negative 170 basis points impact to sales primarily from lower pricing at CCM and CIT. Sales volume was up almost 5%. Turning to slide 6 to our margin bridge, EBIT margin increased 300 basis points in the quarter to 14.3%; a net impact of selling price in raw materials had a positive 290 basis point impact to our margins. Volume was positive 30 basis points, COS was positive a 100 basis points, and the higher margin at Carlisle Fluid Technologies had an overall 10 basis points lift to our margin. This was offset by negative impact of mix and other of a 130 basis points. You will recall in the third quarter we reported CIT had favorable mix that we did not expect would repeat in the fourth quarter. We also had additional cost for warranty expense at CCM and unfavorable mix at FoodService. Slide 7 and 8 provide our sales and margin bridges for the full year 2015, as we close out 2015 we are extremely pleased with the results and our record performance. Steve will next review our fourth quarter segment performance, balance sheet and cash flow. After Steve’s review, I will discuss our outlook for 2016. Steve?

Thank you Chris. Good morning. Please turn to slide 9 of the presentation. At CCM, sales increased 4% in the quarter, reflecting 6% organic growth and 2% negative impact from currency fluctuations. Demand for commercial roofing improved from the third quarter, sales increased throughout the fourth quarter, in part due to favorable weather conditions. Selling price declined slightly in the quarter minus 1.5%, as the CCM team remained disciplined. CCM’s EBIT increased significantly by 48% and its EBIT margin increased a very impressive 520 basis points to 17.9% on continued selling price discipline, lower raw material costs and savings from the Carlisle operating system. Turning to slide 10, CIT’s net sales decline 1% in the quarter due to lower sales in the aerospace and industrial markets. Sales to our aerospace customers decline 1%, primarily reflecting a lower contractual selling prices and pass-through of lower metal costs. As Chris mentioned, aerospace sales volume while positive, was impacted by order delays caused by an internal scheduling issue of one customer and year-end inventory management at another large customer. Our Medical business which now represents 15% of CIT’s total sales grew 6% in the quarter. Defense and Test and Measurement each grew 2%. Sales to the industrial market representing less than 5% of CIT’s total sales declined 21%. CIT’s EBIT margin declined 180 basis points to 15.7% primarily due to lower selling price from contractual reductions and negative mix in the quarter, reflecting timing difference from the third quarter. CIT’s EBIT in the quarter also reflected $1.3 million in non-recurring expense for product warranty and start-up costs associated with CIT’s new satellite connectivity application. As we announced in our press release this morning, CIT launched its new SatCom antenna adapter plate solution for use by providers of in-flight satellite connectivity. Satellite connectivity has higher bandwidth and provides global in-flight service. We expect this market to develop and grow significantly over the next several years. We are currently expanding our Franklin, Wisconsin facility to meet this expected demand and expect to begin shipments in the second half of the year. As discussed in our previous call, CIT is also expanding its footprint in Dongguan, China, with a new 260,000 square foot facility to meet expected growth for its medical and aerospace applications. Please turn to slide 11; CFT had sales of $73.6 million and EBIT margin of 15.9% in the fourth quarter. CFT’s EBIT includes 600 basis points of amortization expense from purchase accounting. On a pro forma basis, CFT’s sales were down 5% from the prior year, primarily due to foreign exchange fluctuations. Sequentially, sales increased 8.4%. Sales growth was positive in the US and Japan, offset by softer demand in Europe and South America. Slide 12 is a review of CBF’s results for the fourth quarter. CBF sales declined 11% in the quarter, reflecting a 7% organic sales decline due to lower volume and a 4% negative impact from currency fluctuations. Sales for the construction market were down 25%. Sales for the mining market were flat to the prior year and sales to the agricultural market were down by 3%. As widely publicized, global demand conditions particularly for construction and mining remained depressed. CBF’s EBIT margin declined 20 basis points in the quarter due to lower sales volume offset by SG&A expense reductions. For the full year, CBF reduced expenses by $8 million to address the decline in its end markets. Please turn to slide 13, as we review FoodServices’ results for the quarter. Segment sales increased 4% in the quarter. Sales to the foodservice market grew 4% reflecting new sales from e-commerce initiatives and sales improvement with large distributors. Net sales to the healthcare market grew 2%, also from gains with large accounts. Segment sales to the janitorial/sanitation market grew 10% largely due to higher sales to a large super center chain. Foodservices EBIT margin remained leveled at 11.4% as higher sales volumes were offset by negative changes in mix due to more expensive rebate programs with certain large distributors. Slide 14, summarizes full year results by segment in 2015. As Chris noted, we delivered record sales, record EBIT, record margins and record net earnings. At CCM sales exceeded $2 billion, EBIT was $351 million, a 31% increase over last year and EBIT margin improved 360 basis points to 17.5%, all records. Please return to slide 15 of the presentation. At the end of the year, we have $411 million of cash on hand. We continue to have all $600 million of availability under our credit facility. During 2015, we returned $210 million to our shareholders in dividends and share repurchases. We repurchased 1.5 million shares in 2015. We began 2016 with a diluted share count of approximately 64.8 million. In 2016, we plan to continue our systematic share repurchases to offset share dilution from equity compensation and expect to buy additional shares on an opportunistic basis. Our balance sheet remained strong. At December 31, our net debt-to-capital ratio was 13%, our net debt-to-EBITDA ratio was 0.5 times and our EBITDA-to-interest ratio was 18.9 times. In August of this year, our $150 million senior notes are due and we currently plan to repay these notes with cash on hand. Turning to slide 16, our free cash flow from operations for the three months ended December 31 was $152.9 million compared to $105.5 million in the fourth quarter 2014, a $47.4 million improvement. For the full year, we generated record free cash flow of $457.1 million, a 158% increase over 2014. This significant improvement is attributable to higher earnings, cash generated by lower usage for working capital including lower payments for tax, as well as $46.7 million of lower capital expenditure. Our free cash flow conversion rate in 2015 was a very impressive 143%. Turning to slide 17, our average working capital as a percentage of annualized sales for the full year 2015 was 18.2%, a 40 basis points increase from the 17.8% reported for 2014 in part reflecting higher inventory at CCM in the first half of the year in anticipation of higher demand. And with those remarks, I turn the call back over to Chris.

Thanks Steve. Please turn to slide 18 as we cover our 2016 outlook. For 2016 we expect Carlisle’s total sales growth to be in the mid-single digits. By segment, at CCM we expect the market for commercial roofing to grow at a moderate pace in 2016 with solid growth in new construction and relatively steady re-roofing demand. As we enter the first quarter, pricing remains relatively disciplined in the market and raw material tailwinds continue. Overall, we expect CCM to have another outstanding year in 2016. CIT is expected to continue its strong performance in 2016 with growth in the mid to high-single digits. We also expect initial sales from CITs new SatCom adapter plate product to begin in the second half of 2016. CITs first quarter growth rate is expected to be lower than the full year, as comparable to last year will not account for the full AOC pricing impact as well as some order pattern carryover from Q4 2015. With its expansion project, CIT is going to have start-up costs in both Dongguan, China and Franklin, Wisconsin. These are expected to be 4.5 million in 2016, with about 2 million occurring in the first quarter primarily from the Franklin expansion. At CFT consistent with expectations, we are planning for mid-single digit growth. Foreign currency is expected to be a continuing headwind offsetting some of this growth. Higher sales will come through new product introductions entering new market segments and global sales share gains. CFT has acquisition cost of $9.3 million primarily related to inventory step-up in its 2015 EBIT that will not repeat. As we communicated when we first announced this acquisition, CFT is expected to become our highest margin business. During 2016, we will invest significant dollars in vertical integration, additional sales personnel and CFT’s move to a new global headquarters. There are a number of well understood initiatives underway that will allow us to reach our goals but will impact short term margin results. At CBF, the demand for heavy duty mobile equipment continues to be unfavorable and may decline further. We are in our fourth year of this global mining recession and the outlook from our major OEMs indicates a near term recovery is unlikely. But the team at CBF continues to focus on sales initiatives to offset the lower demand as well as actively pursue further cost reductions. At Foodservice products, we expect growth in the low single digit range with corresponding EBIT improvement. As indicated on slide 18, corporate expense is expected to be $59 million and D&A is expected to be $136 million. We are planning for capital expenditures of between a $100 million and a $125 million. We expect to continue our strong cash generation with cash conversion of greater than 100%. Interest expense is expected to be $31 million reflecting repayment of $150 million of bonds maturing in August 2016. Our tax rate is expected to be 33% in 2016, versus an effective tax rate of 31.7% in 2015. 2016 looks to be another record year for Carlisle, CCM is well positioned in its markets for continued strong performance. CIT is expected to grow and leverage the significant investments we have made in this business. The significant investments underway at CFT will enable us to expand our global sales and increase our productivity, and in addition, we continue to look for Bolton acquisition candidates to build on both of these key growth platforms. In closing, I again want to comment our 12,000 employees for their excellent performance in 2015 and their continued dedication to delivering value in 2016. This concludes our formal comments on our 2015 results and 2016 outlook. Patrick, we are now ready for questions.

[Operator Instructions] Your first question comes from the line of Joel Tiss.

I wondered if you could get a little more granular on the aerospace industry, what’s going on there. And I think you won a new Airbus contract for 2016, so just sort of a little more detail on what the Boeing build plan are and how the business flows through the year.

Yeah Joel, the Boeing builds are consistent with what we’ve said in the past I think for the 787. To give you an example, we are 10 and the projection from Boeing that they’ll go to 12 month this year. We see basically the continuation of what we’ve seen in 2015 on the aerospace front, with a slight blip there in the fourth quarter on some inventory ordering patterns as we discussed.

And then I just wondered if you could give us a little sense of what’s left to do on the Carlisle Operating System, seems like you’ve been getting a lot of returns out of that for a long time? I just wonder what’s left to do there.

Yeah, it’s an ongoing process. What I’d like to say is, we’re in early stages and we will see continued opportunity with COS in the future. We don’t see this as ending in the near term. The performance this year was consistent with the growth we’ve seen in the past, and we would look in the future to higher savings as we roll out that COS product in our business processes. Today they’ve really been focused on the factory and we think there’s a lot of runway as well in the business process side.

Our next question comes from Ivan Marcuse, KeyBanc Capital Markets.

A couple of quick questions on roofing, I understand that weather helped out this quarter. Is there any way you could quantify what kind of benefit that was for the quarter?

Yeah Ivan I don’t think we can quantify. Certainly the weather was more cooperative that the fourth quarter this year than it was last year. So there was a benefit, but it’s hard to sort of identify and assign a dollar value.

And then the price raw material on the bridge for EBIT, I’m assuming the vast majority of that was in roofing or was there another segment that had sort of a raw material benefit as well?

Yeah, we had a little bit of a benefit within the CIT segment. But as you know, the vast majority was within CCM.

And then if you look at the antenna, the Wi-Fi antenna for your [plans] as you talked about. What kind of sales benefit are you expecting out of, and is that going to cannibalize anything existing that you’re already sort of selling that market, I’m assuming they’re already using some sort of antenna. So how does that impact you and what sort of expectation’s for this business.

Sure. It’s early days. I think we’d expect something in a first year’s sales of around $10 million and then ramping up over three years to something let’s say in the $20 million to $30 million range. As you look at the technology, I think we’re going to see an expansion, I think you will see us growth through share gains and there may be some attrition in our current product, but I don’t expect much.

Right. And jumping right back to roofing, great margins this year, I was talking about raw material. Historically it’s always been talked to about 15%, 16% type margin business. Do you think that’s changed structurally and will it return to that overtime or is there something that history won’t repeat going forward and we’ll start to see sort of this 16 to 18 type of margin going forward.

I think we’d like to think there’s been a structural shift. Dave Roberts has talked about it in the past; you know our efforts to try to move the industry up. Obviously this year the price discipline by CCM had a lot to do with that and we don’t see any change in our philosophy going forward on our pricing. So we’d like to think that we are changing that structure and moving it up permanently.

Your pricing strategy may be changed, but do you think the industry’s changed?

Well I would say that as we look at what’s happened through the year, the market has exhibited what we think is some strong pricing discipline. So obviously I can’t project what our competitors are doing, but we would hope the trends we saw here in 2015 in the market would continue.

Our next question comes from Jim Giannakouros from Oppenheimer.

On the CapEx, sorry if I missed it, but can you bucket your CapEx plans between maintenance, growth and then calling out the new facilities or expansion that you announced today.

Yeah, Jim the maintenance piece is between 65 million and 75 million, and anything above and beyond that would be for these growth platforms. Our range for the year is 1 to 1.25.

Great, got that. And the debt pay-down, should we expect that to be mid-year or this summer rather, when it comes due was there any --?

August 15 is when the notes come due.

And then appreciating that it’s quite a small piece of your EBIT, but in CBF and I understand that it’s a continue challenge that you see there. But can you give us a better look in to what your topline decline assumptions are in your plan and on margins can we assume that you can hold margins just on either incremental restructuring or just blocking and tackling on COS initiatives etcetera.

Coming in to the year, our plan was to sort of remain revenues leveled just to 15, certainly some of the news that it has reported so far this year is going to create some challenges for us. I think the business has done a nice job taking cost out, and we continue to focus on cost reductions, again as these end markets continue to remain soft. So it’s more at the same that you’ll see in ’16 and our focus on cost reduction continues.

Our next question comes from Kevin Hocevar for Northcoast Research.

Why don’t if you could comment on how your raw materials particularly in CCM trended throughout the quarter and how they are trending now given oil’s taking bit of another let down here 2016.

We saw raw materials throughout ’15 continue to decline and there will be some continued decline I think going in to Q1. There may be a little bit of a lag in terms of how those raw material cost changes on oil or are captured in the business and in the end products we use, but we see Q1 as a continued decline in raw material cost.

Got you, and then could you elaborate too on your comments about your expectations for moderate growth in CCM in 2016, does that imply low single digit type growth, mid-single digit, just wondering if you could help put some parameters around that comment.

Kevin I’d say low to mid. I think we don’t see really much change coming out of the Q4. You know Q1 is really a very low volume quarter for us obviously and so picking that up in Q1 is up I think is an indication for the year. But we see things in that low to mid-single digit range.

And then a question on for Steve on cash deployment, you really did boost the repurchase activity in the fourth quarter, makes sense given that this year price movement during the time. So just wondering, is that pumped up in terms - priority in terms of cash usage and also curious in terms of M&A pipeline, how that’s going and kind of when you guys think you’d be ready to particularly on the CFT platform when you think you’d be ready to start making acquisitions because I know that’s a key driver for that business, so curious your thoughts on that.

Kevin our first priority remains to grow the business both organically in acquisitions and we are excited about the acquisition opportunities and that’s where we hope to deploy cash in ’16. In addition to that, share repurchase continues to be a focus, but I think you’ll see in ’16 a similar program that we employed in ’15. We will buy back systematically to minimize the dilutive effect of equity awards and we will also look to be opportunistic to sort of buy on top of that. So I think what you saw in ’15 is what I’d expect to see in ’16 and beyond.

Our next question comes from the line of Neil Frohnapple from Longbow Research.

Congrats on a great quarter and Chris congrats on the new role. For CIT could you just help us with the margin expectations for 2016, what the few different moving parts, such as some of the startup costs for expansion, but you guys do expect mid to high single digit on that sales growth which would presumably be favorable to profitability, and may be further COS opportunities particularly within LHI. So could you provide an outlook at least directionally versus the 18% operating margin you achieved in 2015?

Yeah I think you’re going to see for 2016 that operating margin in the range that you saw for ’15; I think that 18% to 19% is probably a pretty good range.

Alright that’s helpful. And then Chris could you may be just talk bigger picture on your vision for Carlisle over the next few years, as in you see anything you plan to approach differently or longer term targets you plan to initiate, I think Dave alluded to maybe upside to the long term margin goal last quarter and just any more thoughts you could provide there.

Sure. Dave and I’ve worked together a long time and we worked together on the construction with the other team members of the current strategies, and so there’s going to be a lot of consistency moving forward in the whole framework of Carlisle. But with that being said, I think Dave and I alluded in the last year too, as we have eluded some higher growth expectations as we have reached some milestones. Certainly getting close to our 15% EBIT margin for Carlisle means we’re probably going to take a look at that again, and end of course we have pretty high expectations, so there’ll probably be some changes there as we continue to build up the CFT platform, the margin profile changes as well and CIT with new products like the connector plate that are innovative and bring good margin, I think that just reinforces that. I think you’ll see continued growth like I said in CIT and in CFT both of them platforms for acquisition. We’ll probably be opportunistic with CCM, that’s been a great business and we talked earlier about hopefully having moved up that margin profile in the industry. So I think it’s not just more of the same, it’s probably additive to the same and continuing to reinforce the strong financial management, the conservative balance sheet, the opportunistic acquisitions and moving the business forward. So we think good things ahead.

[Operator Instructions] The next question is from Tim Wojs from Baird.

Just on the CCM business, just with volumes up in 2016 according to your expectations and just where we are in raw materials, is it fair to assume that we should see margins kind of flat to up in that business for next year.

Tim obviously the pricing is the other part of that equation, but if pricing continues to hold and we continue to see the discipline within the industry that we’ve enjoyed really throughout ’15, yeah, we expect raw materials to be a tailwind and we do expect to have some topline growth.

Okay. And then I guess just in the fluid business I think in 2015 there were some larger equipment orders that might have been back half rated, and so I was just curious how we should think about the revenue cadence in that business in ’16, is that kind of repeat or does the revenue a little bit more evenly spread through the year.

Tim, you’re right, with the project business being a part of CFT and that will continue every year. The systems business is hard to really forecast in month-to-month granularity because obviously the automotive companies and other large OEMs operate on their timeframe. But I think you’ll see growth in CFT, you’ll see system growth in standard product and we’ll just - I can’t really give you a lot of clarity on that systems business other than to tell you it will be there and it will be part of the revenue mix going forward and just to expect it.

Your next question comes from Liam Burke with Wunderliche.

Just staying on CFT, since you purchased it, how has the -- did you inherit a strong new product pipeline or have you been able to accelerate it since it’s been brought under the Carlisle umbrella?

I would say both. We did inherit a strong product pipeline. One of the examples I would give you that we’re having a lot of success with right now is our smart pump technology, it’s an electric pump for applications like automotive paint systems. It’s been very well received worldwide. It was already launched, when we took over it had been recently launched, and we are continuing to see just solid penetration globally and especially in major automotive OEs. And then we’ve come in and we have organizational added some assets, we have changed the structure to be more responsive and as we look to 2016, you’ll see an accelerated investment in new products. That is an absolute essential part of this business and it continuing to deliver customer solutions that are innovative and have that high margin profile.

Great, and just on the acquisitions, how has the pricing been in the market as you look to add product and geography?

I think with that’s going on in the overall market, there’s been 20% decline in equities in general and I think we are seeing some of that in the market place. It’s becoming a better time to be a buyer than maybe it was a few quarters ago.

And we do have one follow-up on the line from Jim.

When thinking about how you view your - what drives your CCM business topline, [non-res] demand and full appreciating that, maybe 60%-70% of that is driven by replacement. Looking back on entering in 2015 I recall, you were thinking mid to high single digit type of growth predominantly volume as pricing was kind of flattish to maybe even some pressures there. That’s stepped down, just reflecting on your ’15 can you give us your thoughts on what drove the step down in growth expectations. Was there a certain bucket in new construction that didn’t grow as expected or is it just general replacement demand not as robust as you had previously thought.

I don’t think I could break it down for you by individual segment within the market. So I would just say that as the year went on, there was some moderation in the growth rate. So I think we had some significant discussion around the third quarter and what the surprise that was, I think Dave did a great job of characterizing it. We didn’t see that coming and that had an impact on ’15 growth rate. And then as we moved in to Q4 with the warmer weather, we saw some nice growth and I think we’re seeing a Q1 that is pretty consistent with the growth rates in Q4. So as you look at ’15, you’ve got to take that through a quarter in account and think about what that did for overall growth rates for the year. And as we look at ’16, we think the outlook is for moderate growth and we think that’s consistent with what we saw in the fourth quarter.

There are no further questions at this time. I’d now like to turn it back over to the presenters for any closing remarks.

Thanks Patrick. This concludes our fourth quarter 2015 earnings call. Thanks to everyone for your participation and we look forward to speaking with your at our next earnings call.