Slide 1: Fiscal Year 2013 3rd Quarter Earnings Call
Fiscal Year 2013 3rd Quarter Earnings Call April 25, 2013
Slide 2: Cautionary Statement
Cautionary Statement 2 Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act. These statements, which represent the Company’s expectations or beliefs concerni
Slide 3: 3rd Quarter Summary
3rd Quarter Summary Bill Wulfsohn President and CEO 3
Slide 4: FY13 3rd Quarter Summary
Market conditions changed significantly during third quarter Increased customer deferrals Weak sales to distribution customers and defense-related mix In this context, we: Achieved sequential sales and adjusted EPS growth Saw solid demand for Premium and Ultra-Premium products sold to the Aerospace
Slide 5: Financial Update
Financial Update Tony Thene Senior Vice President and Chief Financial Officer 5
Slide 6: 3rd Quarter FY13 Financial Overview
Net income of $32.9 million or $0.62 per share Excluding impact of restructuring and other special items: Net income $36.7 million or $0.69 per share Net sales of $581.4 million In the first comparable month, Latrobe Manufacturing achieved year-over-year improvement, driven by stronger than expected
Slide 7: Income Statement Summary
Income Statement Summary Income Statement ex. Pension EID had multiple special items in the current period 7 * Detailed schedule included in Non-GAAP Schedules in Appendix $ Millions, except per-share amounts Q3-12 Q2-13 Q3-13 Sequential Change Net Sales 539.9 533.5 581.4 47.9 Sales ex. Surcharge *
Slide 8: Restructuring and Other Special Items
Restructuring and Other Special Items 8 Athens-related expense of $1.4M in the quarter not called out as a Special Item Given current economic climate, further restructuring is currently under consideration $ Millions, except per-share amounts Q3-13 Income Statement Classification Net Income 32.9 Di
Slide 9: Free Cash Flow Summary
9 Free Cash Flow Summary Cash Flow from Operating Activities of $105 million, before Discretionary Pension Contribution Actual $ Millions Q1 Q2 Q3 YTD Net Income + Non-cash Items 82 76 115 273 Inventory (79) (10) 47 (42) Other working capital 8 (17) (47) (56) Total Net Working Capital (71) (27) 0 (9
Slide 10: Business Update
Business Update Bill Wulfsohn President and CEO 10
Slide 11: Q3-13 Net Sales ex. Surcharge by End-Use Market
Q3-13 Net Sales ex. Surcharge ($M)* vs. Q3-12 vs. Q2-13 Comments Aerospace & Defense 214.7 49% 20% 10% Aircraft builds up in the quarter Sequestration impacting defense in CRS mix CRS outpaced industry growth due to inclusion of Latrobe and strong demand in titanium fasteners and engine materials En
Slide 12: SAO Segment Summary
Aerospace demand solid but other markets / mix negatively impacted operating income SAO Segment Summary 12 Q3 Operating Results SAO Segment Q3-13 Results and Q4-13 Outlook Q3 Business Highlights Volume up 12% vs. Q2, Aerospace engine demand remained strong Greater penetration in Oil and Gas completi
Slide 13: Latrobe Segment Summary
Latrobe Segment Summary 13 Integration complete, first year above plan Q3 Operating Results Latrobe Segment Q3-13 Results and Q4-13 Outlook Q3 Business Highlights Integration complete with earnings and synergies significantly above plan Operational enhancements substantially improving nickel-based a
Slide 14: PEP Segment Summary
Q3 Business Highlights 20% increase in titanium fastener demand vs. LY Slight recovery in CPP demand vs. PQ Q3 directional rig count 5.5% below last year Amega West earnings up vs. LY and PQ on weaker sales due to increased mix of rentals PEP Segment Summary 14 Q4 Outlook Aerospace titanium fastener
Slide 15: Carpenter is Driving Innovation
Temper Tough TM Alloy Ongoing development agreement with US Steel Weld-less rocker panels currently being trialed 10% productivity increase by eliminating welds Allows thinner gage metal resulting in weight savings for future models New Rolls Royce Contract Advanced materials for jet engine componen
Slide 16: Operational Capability & Expansion
China Expansion China bar finishing facility to support local needs Leased site Equipment being ordered Projected capital investment of $10M-$20M Commercial sales in FY14 Dynamet Capacity Two new titanium wire finishing lines in Florida to be operational this summer Represents a 22% increase in tota
Slide 17: 3rd Quarter FY13 Summary
Summary In-quarter deferrals and weakening mix resulted in a Q3 below our January expectations, leading to a downward revision in our expected FY13 operating income Strong long-term demand trends in key strategic markets Operational improvements and Athens addition provide capacity to grow as the ma
Slide 18: Appendix of Non-GAAP Schedules
Appendix of Non-GAAP Schedules 18
Slide 19: Non-GAAP Schedules
19 Non-GAAP Schedules Q3-12 Q2-13 Q3-13 Net sales 539.9 $ 533.5 $ 581.4 $ Less: surcharge revenue 120.9 102.8 110.2 Consolidated net sales excluding surcharge 419.0 $ 430.7 $ 471.2 $ Operating income 55.7 $ 52.7 $ 53.0 $ Pension earnings, interest & deferrals 3.8 8.0 8.0 Operating income excluding p
Slide 20: Non-GAAP Schedules: Impacts of Special Items
20 Non-GAAP Schedules IMPACTS OF SPECIAL ITEMS Q3-12 Q2-13 Q3-13 Inventory reduction initiative costs - $ 1.0 $ 0.9 $ Restructuring costs from footprint optimization initiatives - 0.2 2.0 Additional interest expense - - 1.1 Acquisition-related costs (from transaction) 7.9 - - Inventory fair value co
Slide 21: Non-GAAP Schedules: Free Cash Flow
21 Non-GAAP Schedules FREE CASH FLOW Q1-13 Q2-13 Q3-13 YTD Net cash provided from operating activities (36.7) $ 38.9 $ 29.5 $ 31.7 $ Purchases of property, equipment and software (56.4) (80.5) (86.6) (223.5) Proceeds from disposals of property and equipment 0.0 0.1 0.3 0.4 Purchase of subsidiary sha