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Operator
Good morning, my name is Suzette, and I will be your conference operator today.
At this time, I would like to welcome everyone to the Carlisle Companies Incorporated second quarter earnings conference call.
(Operator Instructions) Thank you, I will now turn the call over to Mr.
David Roberts, Chairman, President, and CEO of Carlisle Companies.
Sir, please go ahead.
David Roberts - Chairman, President, CEO
Thank you, Suzette.
Good morning.
And welcome to the Carlisle second quarter 2011 conference call.
On the phone with me are Steve Ford, our CFO, and Kevin Zdimal our Chief Accounting Officer.
We have provided slides for your convenience and they can be found on our website under the investor relations tab titled Presentations.
The slides will provide you with the back up data that is being presented in today's call.
As we prepare to get started please look at slide two titled Forward Looking Statements.
We encourage you to review this slide before making any investment decisions.
Now, turning the slide three.
As in the first quarter, our second quarter sales were up 27%.
14% of our growth was organic.
12% was the result of the Hawk acquisition, and slightly less than 1% was FX.
Organically we continue to see strength in the construction materials business, interconnect technologies and braking businesses.
The growth experienced in our transportation products and food service segments were driven by price increases that were implemented to offset rising raw material costs.
Company-wide, EBIT was 33% in the quarter.
Our EBIT margin percentage in construction materials was 13.2%, down 160 basis points.
Frankly, we consider 13.2% margins good performance considering what raw material was doing during the quarter.
Margins in braking were 16.2%, up 510 basis points.
And margin within interconnect technologies were 16.3%, up 670 basis points.
Margins were flat within transportation, at 3.3%, and down 190 basis points at food service to 8.4%.
Earnings per share from continuing operations were $0.87 up 40% over 2010.
Tuesday of last week, we announced we entered into an agreement to purchase PDT, a German manufacturer of single ply EPDM roofing.
PDT will add approximately $110 million to $115 million annually in sales, and if we close by mid-August as planned we will realize about $25 million to $30 million of those sales in 2011.
This acquisition provides our construction materials business a manufacturing foothold, and a distribution channel in Europe.
Not only to sell the existing PDT products, but also our current construction material products.
Slide four is a sales bridge which illustrates the $183 million increase we enjoyed in the second quarter; 10% of our growth came from volume, 12% came from the Hawk acquisition, 4% from price, and slightly less than 1% was FX.
We look at slide five, it details our margin bridge for the quarter.
Raw material had a 4.6% negative impact on margin.
We were able to offset approximately 70% of the raw material cost increases with price.
Aiding the increase in margin was volume, COS savings and the acquisition of Hawk.
Our margin dollars grew $21.4 million from $64 million to $85.5 million for a 33% increase.
This increase occurred despite intense raw material pressures we encountered during the quarter.
The intensity of raw material prices has lessened a bit in the latter part of the second quarter.
But the rate of cost increases slowed rather than abated.
We have not seen any significant reductions in our cost of raw materials.
The future is uncertain as to what the remainder of the year holds as we are unsure if the slowing of cost increases it's just a pause before they head upward again, or if they are leveling out at this range.
Our segments that had the highest raw material dollar impact, incidentally which was $36.5 million, was our transportation products segment and our construction materials segment.
Turning to slide six, we begin the review of business segment by business segment.
Starting with construction materials, we had an excellent growth quarter at 19%, as reroofing demand remained strong in the quarter.
Included in 19% was 2.5% price growth.
This is the first quarter we have seen any price growth in CCM.
You may recall we had negative price in construction materials in the first quarter of this year.
CCM EBIT margin was up 6%.
We are not getting any leverage we would expect on 19% sales growth and the reason is basically raw materials, which were negative $23 million in the quarter and $34 million for the year.
As our factories are all performing at a high level of efficiency, we did see increases in our raw materials; EPDM was up 35%, Carbon Black 24%, and TPO Resins 10%.
Let's switch to transportation products.
Slide seven details our sales and margin performance in the quarter.
Our sales were up 6%, led by price of 9%.
We did not see higher unit volume -- or we did see higher unit volume in agricultural and power sports markets, offset by lower demand in construction markets.
Our margins remained flat over the quarter, and we were down sequentially 390 basis points.
Margin was impacted by the start up efficiencies -- or inefficiencies at the new Jackson, Tennessee, plant, and product mix between OE and after market.
You will also see on the slide that natural rubber was up 44% while synthetic rubber was up 52%.
Raw materials were up $13 million in the second quarter on top of a significant raw material cost increase in the first quarter.
I mentioned on our first quarter conference call that the Jackson start up expenses for the year would be approximately $2 million.
But today we are forecasting those will increase to about $6 million.
Bringing Jackson online has taken longer than we had planned and the production efficiencies have been lower and the scrap rates have been higher than we were planning for as well.
In this segment, our challenges in the third quarter and fourth quarter will continue to be rising raw material costs, and start up inefficiencies at Jackson.
Slide eight details our sales and profit performance in our brake and friction business.
Our sales were up 356%, driven not only by the acquisition of Hawk, but by the organic sales growth within our existing break and friction business, which was 33%.
The other component of the brake and friction story is margin performance.
Our operating margins were 16.2%, up from 11.1% last year.
This business segment continues to perform at a very high level, as global demand for product continues to increase and our execution of the Hawk integration activities is well ahead of our pre acquisition time schedule.
Slide nine is a review of our interconnect technologies business.
Sales were up 15%, with aerospace growth from legacy aircraft up 20%, and military growth up 8%.
We are starting to see an increase in ship sets for the 787, and our air sale business was up 70%, driven primarily by Delta Airlines outfitting their regional jet fleet with Wi-Fi.
EBIT was up 95%, a 670 basis point improvement, despite the fact that our key raw materials; gold, silver, and copper, continued to increase in price during the quarter.
Our EBIT margins exceeded our corporate goal of 15%, finishing the quarter at 16.3%.
This is record margin performance territory in this segment.
The start up of our new plant in Cerritos, California, has been nearly seamless and the expansion of our St.
Augustine plant is on track to be completed by the end of the year.
Both facilities will provide the capacity needed to meet the increasing aerospace demand.
On slide ten, you will see the results of our food service business.
Our core food service business was up 11%, aided by 3% effective price increases.
Healthcare continues to experience soft demand with sales down 9% in the quarter.
This segment also uses raw materials that are oil based so consequently, our margin declined from 10.3% to 8.4% quarter over quarter, was impacted by raw material.
Raw material costs have increased at a rate higher than our effective price increases.
This market remains extremely competitive and passing along price increases at a level equal to raw material increases has been challenging.
As I said during the first quarter call, I do not see any dramatic improvement in this business over the remainder of the year.
We need a healthy healthcare market, traffic back in restaurants and new restaurants being built to see a return of revenue growth.
I expect sales to continue to be flat, and margins to remain under pressure throughout the year, unless raw materials costs subside.
I will now turn the meeting over to Steve who will walk us through the balance sheet, cash flow statements, and working capital slides.
Steve?
Steve Ford - VP, CFO
Thanks, Dave.
Good morning, please turn to slide 11 of the presentation.
Our balance sheet remains strong, with a debt to capital ratio of 26%, and we have almost $370 million of availability under our revolver as well as $100 million of cash on hand leaving us well positioned to continue to focus on our growth objectives.
We intend to fund the PDT acquisition using approximately $60 million of cash on hand and the balance by draw against our revolver.
Turning to slide 12, for the first half of the year, our operations provided $13.7 million of net cash, as our accounts receivable increased by almost $180 million from year end due to increase in demand and the seasonality of our construction materials and transportation products operations.
We remain keenly focused on free cash flow generation, and currently expect to convert cash at or above 100% for the full year.
Turning to slide 13, for the quarter, working capital as a percentage of sales was 21.7%, as compared to 21.4% in the second quarter of 2010, and 26.4% in the second quarter of 2009.
And with those remarks, I will turn the call back over to Dave.
David Roberts - Chairman, President, CEO
Thanks, Steve.
Suzette, let's go ahead and open the lines for questions, please.
Operator
(Operator Instructions).
Your first question comes from Peter Lisnic, with Robert W Baird.
Peter Lisnic - Analyst
Good morning everyone.
David Roberts - Chairman, President, CEO
Good morning, Pete.
Peter Lisnic - Analyst
I guess first question on construction, the plus 16% or so, plus 17% on volume, can you give office little bit of color as to reroof trends verses new construction trends?
Realizing that new construction is probably a small piece of the pie.
David Roberts - Chairman, President, CEO
Yes, Pete.
In the quarter we think it was about 80% reroofing, 20% new.
First quarter, if you recall, we were 85% and 15%.
So we have seen a bit of an increase in the new construction build -- or new construction of buildings, but still not to where we were, obviously, three years ago.
Peter Lisnic - Analyst
Okay.
And then if I look at the margin in that business, you are getting price, but the commodity cost impact was I guess stronger than at least we thought.
But on the positive side of the spectrum, getting price -- so understanding your comments about uncertainty, but what's the likelihood, or can you give us some color on at what point we might start to see cost price at parity in that business?
David Roberts - Chairman, President, CEO
Yes.
I would hope that we would start to see it get closer in the third and then into the fourth quarter.
We were chasing raw material up during the first two quarters of the year.
We are starting to see what we think is a more rational pricing environment among our competitors.
And that's when we started to see -- actually started to see price in the second quarter.
I would hope that we get very close to parity certainly by year end, and perhaps see some of that in the sec -- in the third quarter and then more of it in the fourth quarter.
Peter Lisnic - Analyst
Okay, and then the getting to the parity, how much are you assuming in terms of price realization to kind of get there?
David Roberts - Chairman, President, CEO
Yes.
For the full year, Pete, we are looking at almost $40 million of price - for construction.
Peter Lisnic - Analyst
Okay.
David Roberts - Chairman, President, CEO
Again most of that is coming in the second half of the year, and for the second half of the year, we do think we will be at parity.
Peter Lisnic - Analyst
Okay.
All right.
So that assumes price around $30 million-ish in the back half of the year.
Okay, and then the -- just on Jackson going from $2 million to $6 million, how much of that was realized in the second quarter?
In terms of start up costs?
David Roberts - Chairman, President, CEO
Yes.
Between $4 million and $5 million of it.
Peter Lisnic - Analyst
Okay.
David Roberts - Chairman, President, CEO
And really, it was a combination of start up costs and just some sort of plant inefficiencies.
Peter Lisnic - Analyst
Okay.
Presumably, then, those are all behind you, say a pretty good visibility that the second half we should start to see a more normalized margin in that business with the new plant up and running.
David Roberts - Chairman, President, CEO
Well, keeping in mind, though, Pete, is that the second half of the year is generally our softest year in that business.
It really tails off in June, from a volume standpoint.
And then we have to wait until we get to late November, early December, before we see volumes come back.
I would think that the remainder of that $6 million will occur in the third quarter.
And then we should start to see some improvement into the fourth quarter.
Peter Lisnic - Analyst
Got it.
Okay, that is very helpful, thank you for your time.
David Roberts - Chairman, President, CEO
You're welcome.
Operator
Thank you, your next question comes from Ivan Marcuse with Northcoast Research.
Ivan Marcuse - Analyst
Hi guys, thanks for taking my question.
David Roberts - Chairman, President, CEO
You're welcome.
Ivan Marcuse - Analyst
For the PDT business that you bought, are margins of profitability similar to your business now?
And is the seasonality similar to it?
David Roberts - Chairman, President, CEO
Yes, we think the seasonality will be very close to what we have in the -- in our construction materials business today.
Margins actually are very good in the roofing products side.
There's a profiles business in there that we got when we bought the roofing business, which has a lower margin profile.
And certainly as we implement COS and other things we expect that to improve.
But the profiles business, best way to think about that is, if you think about the rubber strip below your garage door, it prevents the snow from blowing in or whatever, that's a profile.
It's molded for that application.
And that's what they do.
Ivan Marcuse - Analyst
Gotcha.
And then you talked about Hawk, that you're ahead there in costs savings or synergies.
What have you realized to date, and what do you -- what sort of are your expectation now, now that you have been able to run the business for the past couple of quarters?
David Roberts - Chairman, President, CEO
Well, Ivan, consistent with what we have talked about in the past, when we made the acquisition, we identified close to $20 million of savings that we thought we would realize over about a two year period.
$6 million of those related to the take out of those public company expenses.
And we have been successful in eliminating those costs, very much on plan.
And then the other $14 million or so would be achieved over that 24 month period, and we are maybe slightly ahead of that pace.
But with all of the demand that we are experiencing, some of the eventual consolidations have really been put on pause.
So I would think -- the way I would look at this, is that we are very much in line with where we had projected our savings to be from the outset.
Ivan Marcuse - Analyst
Gotcha.
And then my last question is, you mentioned that you expect total sales to be in the mid 20% -- up in the mid 20%.
David Roberts - Chairman, President, CEO
Right.
Ivan Marcuse - Analyst
-- for the year.
How much of that is organic?
David Roberts - Chairman, President, CEO
I would think that the split is going to be very similar to what we saw in the first half of the year.
I think Hawk will add 10% or so to growth.
PDT will be $25 million to $30 million, and the remainder would be organic growth, obviously some price in there.
Ivan Marcuse - Analyst
Great, thanks for taking my questions.
David Roberts - Chairman, President, CEO
You're welcome.
Operator
Thank you, your next question comes from Wendy Caplan with SunTrust.
Wendy Caplan - Analyst
Thank you, good morning.
David Roberts - Chairman, President, CEO
Good morning.
Wendy Caplan - Analyst
Steve, can we talk a little bit about cash flow for the year.
Your expectations, and obviously working capital is working capital is looking fine.
How should we expect working capital for the balance of the year, and I guess that's my first question.
Steve Ford - VP, CFO
Well, there's a lot of seasonality in our business.
And particularly when you are comparing our receivable balances as of the end of the year with where they are at June 30.
Obviously the receivables that we are reporting at the end of the year that reflects November and December sales which are low sales months for us, and the June 30 amount is reflecting our main -- and June sales which are high sales months for us.
That will come down significantly in the second half of the year.
And we will have significant cash flow generation in the third and primarily in the fourth quarter, and we are forecasting for the full year that we will convert cash at or above 100%.
Wendy Caplan - Analyst
Okay.
David Roberts - Chairman, President, CEO
Wendy, one of the things that as we look at the business, the DSO is just about where it was -- I think we are one day further out than we were, but our international business was up 80% in the first half of the year, and generally terms globally are longer than what they are in the US.
Wendy Caplan - Analyst
Sure.
David Roberts - Chairman, President, CEO
So that had some impact on it, but as Steve said, we frankly collect all our cash in the second half of the year, and we don't see anything that would change that.
Wendy Caplan - Analyst
Okay, and its -- okay, that was my question.
And the issues with Jackson -- should -- as we think about it, can you give us a little more specificity in terms of the nature of the issues there?
I mean is it simply start up, is it continued redundancies, how should we think about that?
David Roberts - Chairman, President, CEO
Yes, there are a couple of things, Wendy.
First of all, getting the tire builders up to speed, basically.
Their efficiency is still much lower than we anticipated we would be by now.
We hired a number of new people that we trained as tire builders so it is taking them longer to get up to speed in building a tire.
The second thing is that the scrap rates are up, we didn't anticipate the scrap rates to be at the level they are.
And then the third thing is we thought we would have our mixer online by now, and we are actually mixing in our other EPDM plant, so we are getting mix product out of Greenville, which is our construction materials business, and some is also coming out of Clinton.
So we have transportation costs and so on until we get the mixer up and running, which should be later in this quarter or very early in the fourth quarter.
Wendy Caplan - Analyst
Okay.
And that $6 million that you are now saying you think it will cost you, could that be a conservative number as well?
Or how should -- or more aggressive?
David Roberts - Chairman, President, CEO
I think it's fairly realistic.
It could honestly -- it could go slightly higher than that.
It really depends upon the mixer and how fast we can get it up and running, but it's not going to be dramatically higher.
Steve Ford - VP, CFO
And Wendy, there's two numbers.
There are sort of start up restructuring expenses, and for the full year we are forecasting those at about $3.4 million.
Wendy Caplan - Analyst
Okay.
Steve Ford - VP, CFO
And then in addition to that, is the $6 million of inefficiencies.
So we are talking almost $10 million of these sort of costs at Jackson, and we were anticipating having significant savings this year from our restructuring efforts at Jackson.
And we're not realizing those savings.
So it's having a big impact to what our planned results were for this business.
Wendy Caplan - Analyst
But have -- do we essentially just move our expectations to 2012 here?
That --
Steve Ford - VP, CFO
We still think that there are $16 million in savings that we will realize from this facility.
Again, we thought we would get $8 million of it this year, and $8 million of it next year, and now we are really kind of pushing everything out into 2012 and 2013.
Wendy Caplan - Analyst
Okay.
And that's still is kind of how we should think about it in 2012 and 2013?
Steve Ford - VP, CFO
Well we think it may be a little bit more in 2012 than in 2013, but to keep it simple $8 million is probably not a bad way to look at it.
David Roberts - Chairman, President, CEO
Right.
Wendy Caplan - Analyst
Okay, okay.
And then on your bridge, your margin bridge -- the other op piece, can you tell us what is in there?
Steve Ford - VP, CFO
Yes, that is -- again, some of that is this Jackson inefficiency.
Some of this is mix.
Again, related to the transportation product business, we really did not have product to service the after market and we had some mix issues.
And there also was about a $2 million inventory reserve that we took at that segment.
So most of that was a negative impact to that construction -- Carlisle transportation product segment.
Wendy Caplan - Analyst
Okay, and your expectations in terms of the mix should reverse itself by next year?
David Roberts - Chairman, President, CEO
Yes -- well, next year and at the end of this year, Wendy.
What happens is that as the OE's start to wind down for the season, we change our production to after market and that's usually what occurs in the third and the fourth quarter.
Wendy Caplan - Analyst
Okay.
Thank you very much.
You're welcome.
Operator
(Operator Instructions.)And our next question comes from Stuart Benway with Standard & Poor's.
Stuart Benway - Analyst
Yes.
Good morning.
David Roberts - Chairman, President, CEO
Good morning.
Stuart Benway - Analyst
In your roofing business you talk about global initiatives helping sales somewhat, what are you referring to there and what countries are you expanding into?
David Roberts - Chairman, President, CEO
Well, we are certainly still selling in the Middle East, in Europe, and in Asia.
So growth is coming across the entire globe, basically.
There's nothing specific in a given region, it's just a focused effort in the rest of the world that we're attempting to sell product into.
Stuart Benway - Analyst
What would you say your overall sales -- overseas sales are as a percentage of total sales in that business?
Steve Ford - VP, CFO
10%.
Stuart Benway - Analyst
10%.
Steve Ford - VP, CFO
Right.
David Roberts - Chairman, President, CEO
And that will go up $100 million with the acquisition of PDT.
Stuart Benway - Analyst
Right.
I think in the past you viewed the food service business as a growth business.
Do you think that's delayed now?
Or do you still feel that way about that segment?
David Roberts - Chairman, President, CEO
Yes, I think that business once volume comes back in restaurants it certainly will be back to a growth rate probably slightly above GDP.
Really what we are dependent upon is new restaurants being built, and there's just not a lot of activity out there for that to happen.
So that really is the driver of growth greater that GDP in that market.
Stuart Benway - Analyst
You also said I think healthcare is important there, how do you break the two down?
As far as importance.
I mean, what percentage of each one, roughly?
Is it half and half?
David Roberts - Chairman, President, CEO
No, healthcare is about -- just about a third of that business, the remainder is core food service.
We break our food service -- core food service down into food service and Jan/San.
But combined it is about 70% of the total between the two, and they're selling to the same markets, basically.
Stuart Benway - Analyst
And as far as corporate expense goes it's been up so far this year, do you expect it to continue to trend higher this year?
Steve Ford - VP, CFO
Yes, in the second quarter, year over year expenses were up almost $3 million.
Half of that related to an acquisition initiative, where we were a finalist, spent a lot of money to get there.
Ultimately were not the successful bidder but we incurred about $1.3 million in expenses and that's reported at corporate.
There is some foreign exchange that was beneficial last year that was negative this year that had a negative impact in the quarter of about $1 million.
And we have had some management and employee deployment initiatives that we are incurring the expense at corporate.
This quarter the expenses were high, again.
I don't anticipate the foreign exchange or the acquisition related experiences to repeat.
So I do think we will see that number come down in the third and fourth quarters.
Stuart Benway - Analyst
Thank you.
Operator
Thank you, your next question comes from Deane Dray with Citi Investments.
Jessica Mullen - Analyst
Good morning.
This is Jessica Mullen on for Deane.
Thank you for taking my questions.
Just talking about the M&A pipeline a little more, can you give any more color -- I know you just did the PDT acquisition.
What's in store for the rest of the year and what kind of assets are out there?
David Roberts - Chairman, President, CEO
Yes, Jessica, we think that there are still some opportunities for us.
As we have stated in the past, we continue to look in the braking business, and also in the interconnect technologies area.
I would think that if you would see anything that we would acquire it would be in either of those two segments.
Now, the PDT acquisition is not closed yet.
We are waiting for government approval in Germany to go ahead and buy that asset.
Frankly, we don't see that as an issue, but it's just a formality we have to get through.
We expect that to close sometime in mid August.
But beyond that, we think there's probably opportunities in both braking and interconnect technologies.
Jessica Mullen - Analyst
Okay, thank you.
And you mentioned in CAPEX there was some purchase of a trademark in transportation products, can you elaborate a little more on that, and if there could be anything similar to that going forward.
David Roberts - Chairman, President, CEO
That was the -- yes, we have a styled wheel business.
The brand was Cragar that we didn't own.
We had been manufacturing for years and what we did was buy the rights to the brand.
Jessica Mullen - Analyst
Is there anything outstanding in that segment going forward?
David Roberts - Chairman, President, CEO
No.
Not that I'm aware of, no.
Jessica Mullen - Analyst
Okay, thank you.
David Roberts - Chairman, President, CEO
Okay.
Operator
Our next question is from Rob Crystal with Goldman Sachs.
Rob Crystal - Analyst
I just -- I just want to make sure I understood the difference between the start up costs and inefficiencies at Jackson from sort of Q1 to Q2.
I don't know if you have a bridge that you can do for that for me?
Steve Ford - VP, CFO
In Q1 we had Jackson inefficiencies of about $2 million, and in Q2 we had Jackson inefficiencies of about $3 million.
And with respect to restructuring expenses, in Q1, it was about $2 million, and in Q2 it was about $1 million.
Rob Crystal - Analyst
Great.
Thank you very much, Steve.
Operator
Thank you, you have a follow up question or comment from Ivan Marcuse with Northcoast Research.
Ivan Marcuse - Analyst
Hi guys.
I have a quick question on the interconnect technologies.
Do you -- with the ramp up of Boeing and more -- I guess more airplanes going to Wi-Fi, would you expect this sort of, this mid-teen revenue growth year over year for the next few quarters?
And also the profitabilities to sort of maintain where it was in the second quarter, or would you expect that to track down a little bit going to the second half?
David Roberts - Chairman, President, CEO
Yes, Ivan, I would expect that we continue the trend that we saw in the first half of the year, both in sales growth and in margin growth.
I think we exceeded that 15% that we set as a goal for the business this year, and I would certainly expect that we would run above that 15% going forward.
Ivan Marcuse - Analyst
On growth on both the revenue and profitability or are you just talking specifically profitability?
David Roberts - Chairman, President, CEO
On profitability currently, but certainly revenue growth.
We are just starting to see some ship sets for the 787.
And they are getting to the point where they are delivering aircraft, and I would expect at least 15% maybe slightly higher in the revenue growth area.
Ivan Marcuse - Analyst
In the back half of the year?
David Roberts - Chairman, President, CEO
Yes.
Ivan Marcuse - Analyst
And then would you continue to -- expect that to continue to track into 2012?
David Roberts - Chairman, President, CEO
Yes, I would think that if you look at the interconnect technologies business, I think the trends that we're seeing today, these are not just short term trends.
I think they will continue certainly over, we expect, 2012, and I would hope that it would carry into 2013.
Ivan Marcuse - Analyst
Okay.
Great, thank you for taking my questions.
David Roberts - Chairman, President, CEO
You're welcome.
Operator
Thank you, there are no further questions in queue.
I will now turn the call back to Mr.
David Roberts.
David Roberts - Chairman, President, CEO
Thank you.
Just to wrap up here, despite raw material pressures, some of the start up problems that we are continuing to have at Jackson, and a sluggish food service business, we all remain very optimistic for our outlook for the remainder of the year, and actually as I just said to Ivan into 2012.
Second quarter was a good quarter despite some challenges.
Our Hawk acquisition continues to perform at very high levels.
And the addition of PDT really gives us a foothold in Europe that we have been looking for over the last four years in construction materials.
We've got a very solid manufacturing base for single ply roofing with PDT, along with a distribution channel that actually offers us an opportunity to sell not only their products but our products.
We think margins will improve certainly in the profiles business, and you will see that break down as we get into the third quarter and release third quarter information.
But this is a -- frankly a very good business that we are buying.
CIT has come off a great quarter and this will only get better as sales increase over the next 12 to 18 months.
I mentioned just earlier that 787 is ramping up and the demand for legacy aircraft is very strong.
This is a market dynamic that should really drive this business in the foreseeable future.
The braking business is and will enjoy strong demand for their products as our customers continue to have back orders and book orders for mining, construction, and agricultural equipment worldwide, so we are still very optimistic about the braking business.
And as I stated on the call, raw material will continue to be a challenge for us.
We're not quite sure if it's leveling at this level, or if it is at a pause, and it is getting ready to ramp up, but we think that price will begin to offset some of the raw materials.
Particularly in the construction materials business as we go into the remainder of the year.
Start up at Jackson has taken much longer than we planned, but frankly, this is a temporary situation.
It will get to a point where it was supposed to be, and we think 2012 will be a very good year in the -- not only all of Carlisle, but also in the transportation products area.
Frankly, the rest of 2011 still looks pretty darn strong.
We'll get through the Jackson situation, and frankly, we think we'll have decent results for the remainder of the year.
So with that I want to thank you for attending our second quarter 2011 earnings call.
Operator, you may now end the call.
Operator
Thank you this concludes today's conference call.
You may now disconnect.