Slide 1: Cautionary Statement Forward-Looking Statements
Cautionary Statement Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those proj
Slide 2: Established Leader in High-End Specialty Alloys
Established Leader in High-End Specialty Alloys Market position supported by high barriers to entry and 125+ years of metallurgical expertise Preferred solutions provider for critical end-use applications Profitable business model diversified by product, customer and market Solid liquidity position
Slide 3: Target High End of Specialty Steel Market
Target High End of Specialty Steel Market Global Steel Production (volume) Specialty Steel Market 100% Ni .2% 90% ial Alloy % 80% ss Long 4% <1% of total steel market 70% Bearing % 60% ess Flat 20% 50% 40% 30% r Alloy Steels 9% 20% 10% 0% Source: SMR GmbH, 2012 (Note: Excludes Ti and Powder Metal) 4
Slide 4: Participate in Attractive End-Use Markets
Participate in Attractive End-Use Markets Industrial & Consumer 17% 7% Distribution FY16 Net Sales $1.8B Transportation of 7% 54% 7% Medical Aerospace & Defense Energy 5
Slide 5: Fiscal Year 2016 Summary
Fiscal Year 2016 Summary annual savings advanced solutions process solutions $139 million 6 Strengthened Carpenter team and actively managed business during challenging market environment Execution of Carpenter Operating Model supported enhanced margins, working capital efficiencies and better manuf
Slide 6: Fiscal Year 2016 Adjusted Operating Income Bridge
Fiscal Year 2016 Adjusted Operating Income Bridge Operating Income excluding Pension EID, Restructuring Charges and Special Items* Operating Income: $111.5 Operating Income: $51.6 * Detailed schedule included in Non-GAAP Schedules in Appendix 7 Cost reduction efforts largely offset impact of volume
Slide 7: Operating Segments
Operating Segments Performance Engineered Products (PEP) Specialty Alloys Operations (SAO) Differentiated solutions including Dynamet titanium, Carpenter Powder Products, Amega West and Distribution businesses Major premium alloy and stainless steel manufacturing operations Integrated approach aimed
Slide 8: Aerospace & Defense End-Use Market Positioned for Continued Growth
Aerospace & Defense End-Use Market Positioned for Continued Growth 1) Solid long-term growth potential given high performance materials used for critical applications Well positioned for transition to new engine platforms and ready for market pull Fastener activity continues to be impacted by supply
Slide 9: Transportation and Medical End-Use Markets
Transportation and Medical End-Use Markets Transportation: Industry Trends Support Growth Potential 1) 2) Market possesses strong long-term growth potential Products deliver against critical OEM needs driven by increasingly stricter emissions requirements Working to expand applications and revenue s
Slide 10: Energy and Industrial & Consumer End-Use Markets
Energy and Industrial & Consumer End-Use Markets Energy: Positioning for the Recovery 1) 2) 3) High durability and corrosion resistant products deliver strategic value to customers Focused on extending service offerings and positioning business for recovery Adjusting costs, building customer relatio
Slide 11: Income Statement Summary
Income Statement Summary Change *Detailed schedule included in Non-GAAP Schedules in Appendix 12 End-use market diversification and operating model execution delivered strong Q4 results $ Millions , except pounds and per-s hare am ounts Q4-15 Q3-16 Q4-16 Sequential Pounds ('000) Net Sales Sales ex.
Slide 12: Cash Flow Summary
Cash Flow Summary The clerical accuracy of certain amounts may be impacted due to rounding. *Detailed schedule included in Non-GAAP Schedules in Appendix 13 Nearly doubled Free Cash Flow Cash Available Borrowing Under Credit Facility 70 31212382 493453468493 493 Total Liquidity 563 524474491575 $ Mi
Slide 13: SAO Segment Summary
SAO Segment Summary 14 Q1 Outlook • Normal volume seasonality with YOY decline in energy to mute growth in other end-use markets • Continued focus on cost discipline and execution of Carpenter Operating Model Q4 Business Results • Year-over-year (YOY) volume decline driven by continued weakness in o
Slide 14: PEP Segment Summary
PEP Segment Summary versus Q4-16 * Pounds related to manufactured tons for Dynamet and Carpenter Powder Products only 15 Q1 Outlook Operating income expected to follow traditional seasonality in demand for Titanium products • Oil & gas demand expected to remain relatively flat • Concentrating on str
Slide 15: Pension Freeze Announcement
Pension Freeze Announcement Effective December 31, 2016, General Retirement Plan (“GRP”) frozen with no additional service accruals GRP currently includes approximately 1,900 current salaried and hourly employees Decision consistent with focus on addressing cost basis and aggressively managing busin
Slide 16: Selected Fiscal Year 2017 Guidance
Selected Fiscal Year 2017 Guidance * As a result of the pension freeze that will be effective December 31, 2016, we currently expect a reduction in net pension expense to be realized in the second half of fiscal year 2017. The actual net pension expense that will be recorded is subject to the result
Slide 17: Investing in the Future: Powder Products
Investing in the Future 18 Powder Products Powder Products Capabilities One of the world’s largest suppliers of spherical gas atomized metal powders Manufacturing facilities: Pennsylvania, Rhode Island, Alabama and Sweden Currently producing superalloy powder in Athens facility Powder Products Oppor
Slide 18: Investment Summary
Investment Summary $40 - $45 million annual savings starting second half FY17 for select end-use markets efficiencies and process improvements revenue opportunities across all end-use markets spending discipline 19 Continued focus on actively managing our business and optimizing our long-term cost s
Slide 19: Appendix of Non-GAAP & Supplemental Schedules
Appendix of Non-GAAP & Supplemental Schedules
Slide 20: Non-GAAP Schedules: Adjusted Earnings Per Share
Non-GAAP Schedules (Unaudited) Adjusted Earnings Per Share * Beginning in Q1-17, consulting costs of $2.1 million per quarter will no longer be added back as a special item. ** Discrete income tax benefit recorded in Q2-16 as a result of a tax law change. Discrete income tax charge recorded in Q3-16
Slide 21: Non-GAAP Schedules: Operating Income and Margin Excluding Surcharge
Non-GAAP Schedules (Unaudited) Operating Income And Margin Excluding Surcharge Revenue, Pension Earnings, Interest and Deferrals "Pension EID", and Special Items Management believes that removing the impacts of raw material surcharge from operating margin provides a more consistent basis for compari
Slide 22: Non-GAAP Schedules: Free Cash Flow
Non-GAAP Schedules (Unaudited) Free Cash Flow Management believes that the free cash flow measure provides useful information to investors regarding our financial condition because it is a measure of cash generated which management evaluates for alternative uses. 23 $ MillionsQ4-15Q4-16 FY15FY16 Net
Slide 23: Supplemental Schedule: Net Sales By End-Use Market
Supplemental Schedule (Unaudited) Net Sales By End-Use Market In the quarter ended June 30, 2016 in connection with our commercial organization realignment, we changed the manner in which sales are classified by end-use market so that we could better evaluate our sales results from period to period.
Slide 24: Capital Structure – Strong Liquidity Position
Capital Structure – Strong Liquidity Position Note: Available borrowings under revolving credit facility reduced $7 million for outstanding letters of credit 25 Ample liquidity with no meaningful near-term obligations $700 $600 $500 $400 $300 $200$250 $100 $0 FY16FY17FY18FY19FY20FY21FY22FY23 Positiv
Slide 25: Capital Structure – Strong Liquidity Position
Capital Structure — Strong Liquidity Position $700 $600 Revolving Credit $500 j $400 | $300 I | I $200 $250 — FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 | ] $300 I = Positive free cash flow in fiscal year 2016 = Solid liquidity of $575 million ($82 million of cash and $493 million of available borrowin