Slide 1: 4th Quarter and Fiscal Year 2014 Earnings Call
4th Quarter and Fiscal Year 2014 Earnings Call July 29, 2014
Slide 2: Forward-Looking Statements
2 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 projected, anticipated
Slide 3: 4th Quarter & Fiscal Year 2014 Summary
4th Quarter & Fiscal Year 2014 Summary Bill Wulfsohn President and Chief Executive Officer 3
Slide 4: 4th Quarter Summary
Specialty Alloys Operations (SAO) operating income up sequentially Sales up 5% vs. Q3-14 Disciplined cost control Performance Engineered Products (PEP) operating income up 37% vs. Q4-13 Backlog growing with improving mix EBITDA margins improved to 22% Positive free cash flow of $35 million 4th Quart
Slide 5: Fiscal Year 2014 Summary
Executed strongly in a challenging market environment SAO Grew pounds sold by 7% Improved manufacturing performance Increased Latrobe efficiencies Implemented price increases PEP drove initiatives which improved financial trajectory Completed important growth enabling initiatives Constructed Athens
Slide 6: End-market results by sector
Aerospace & Defense 212.2 43% -7% +5% Overall revenue declined year-over-year (YOY) due to continued demand weakness for engine and defense materials Titanium fastener revenue was up 6% YOY Demand was stable for nickel fasteners and structural components Energy 73.4 15% -10% +1% YOY revenue decline
Slide 7: 4th Quarter FY14 Financial Overview
Tony Thene Senior Vice President and Chief Financial Officer 7 4th Quarter FY14 Financial Overview
Slide 8: 4th Quarter FY14 Financial Overview
Q4 Net income of $38.1 million or $0.71 per share Sales, excluding surcharge, of $488.9 million. Aerospace and Energy comprised 58% of sales Operating margins (ex pension EID) up 140 basis points sequentially from Q3 Cash Flow from Operations of $95.5 million and positive Free Cash Flow of $34.9 mil
Slide 9: Income Statement Summary
Income Statement Summary Higher volume and similar operating margin sequentially 9 * Detailed schedule included in Non-GAAP Schedules in Appendix ** Q3-14 includes approximately $8 million of weather related expense $ Millions, except pounds and per-share amounts Q4-13 Q3-14** Q4-14 Sequential Chang
Slide 10: Free Cash Flow Summary
10 Free Cash Flow Summary The clerical accuracy of certain amounts may be impacted due to rounding. Positive FCF in Q4 due to strong cash from operations and reduced Athens spend $ Millions FY13 Q1 Q2 Q3 Q4 FY14 Net Income + Non-cash Items 331 76 69 76 73 294 Inventory (15) (47) (12) (1) 23 (37) Oth
Slide 11: Key Metrics for FY15
11 Key Metrics for FY15 $ Millions FY14 FY15 Depreciation and Amortization 112 124 Interest Expense, net 17 30 Net Pension Expense 60 46 Effective Tax Rate 32.4% 34.5% Pension Contributions 6 16 Capital Expenditures 349 160-175
Slide 12: SAO Business Update
SAO Business Update Andy Ziolkowski Senior Vice President Commercial, Specialty Alloys Operations 12
Slide 13: SAO Segment Summary
Q4 Operating Results Q4 Business Highlights Q1-15 Outlook Volume was up in all end-markets vs. Q3-14 with a similar sales mix Overall weaker sales mix relative to Q4-13 Adjusting for Q3-14 weather impacts, operating margin was flat Over 1,000 tons of saleable material processed at Athens in Q4-14 Ba
Slide 14: PEP Business Update
PEP Business Update Gary Heasley Senior Vice President Performance Engineered Products 14
Slide 15: PEP Segment Summary
Q4 Operating Results Q4 Business Highlights Q1 -15 Outlook Sales, ex. surcharge, up 4% from a year ago Strong demand for titanium fastener material Solid growth in oil and gas Flat distribution sales Operating income, ex. EID up 37% from year ago Higher production levels Better product mix Lower ope
Slide 16: Forward Outlook
Forward Outlook Bill Wulfsohn President and Chief Executive Officer 16
Slide 17: Growth Enablers
17 Growth Enablers Athens Operations Dynamet Titanium Wire Capacity Produced 1,000 saleable tons in Q4-14 primarily for Aerospace and Energy markets Production costs/ton to reduce over the year Facility will support growing demand from legacy customers and open up opportunities in new markets Intern
Slide 18: Closing Comments
Closing Comments 18 FY14 Highlights Challenging year with soft demand for Aerospace and Energy products SAO increased sales volume by 7% and improved manufacturing performance PEP changed trajectory toward improved profitability Q1 and FY15 Outlook Key positive indicators: Backlog increasing with im
Slide 19: Appendix of Non-GAAP Schedules
Appendix of Non-GAAP Schedules 19
Slide 20: Non-GAAP Schedules: Operating Margin Excluding Surcharge and Pension
20 Preliminary Non-GAAP Unaudited Schedules (in millions) OPERATING MARGIN EXCLUDING SURCHARGE AND Three Months Ended Year Ended PENSION EARNINGS, INTEREST AND DEFERRALS March 31, June 30, 2014 2013 2014 2014 2013 Net sales 604.6 $ 611.8 $ 566.3 $ 2,173.0 $ 2,271.7 $ Less: surcharge revenue 115.7 11
Slide 21: Non-GAAP Schedules: Free Cash Flow
21 Preliminary Non-GAAP Unaudited Schedules (in millions) Three Months Ended Year End June 30, FREE CASH FLOW 2014 2013 2014 2013 Net cash provided from operating activities 95.5 $ 179.2 $ 239.6 $ 188.5 $ Purchases of property, equipment and software (51.0) (109.1) (349.2) (310.2) Proceeds from disp
Slide 22: Non-GAAP Schedules: Adjusted EBITDA
22 Preliminary Non-GAAP Unaudited Schedules (in millions) Year End June 30, March 31, June 30, ADJUSTED EARNINGS BEFORE INTEREST, TAXES, 2014 2013 2014 2014 2013 DEPRECIATION AND AMORTIZATION (EBITDA) Net income 38.1 $ 40.9 $ 30.6 $ 132.8 $ 146.5 $ Interest expense 6.2 6.3 2.7 17.0 21.0 Income tax e