Carpenter Technology Corporation · NYSE:CRS
Carpenter Technology — Q2 FY2018 Earnings Presentation
19 slides from Carpenter Technology's earnings presentation, Feb 2, 2018
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: 2nd Quarter Fiscal Year 2018 Summary
2nd Quarter Fiscal Year 2018 Summary Tony Thene President and Chief Executive Officer
Slide 3: Safety is Our Highest Priority
Safety is Our Highest Priority 3.7 3.3 © 2018 CRS Holdings, Inc. All rights reserved 4 Total Case Incident Rate (TCIR) 4.8 3.9 3.9 3.5 2.12.22.0 1.0 FY09FY10FY11FY12FY13FY14FY15FY16FY17FY18 YTD
Slide 4: 2nd Quarter Summary
2nd Quarter Summary sequential sales growth © 2018 CRS Holdings, Inc. All rights reserved 5 Results driven by solid market demand and solutions-focused commercial approach; reported EPS of $1.92, adjusted EPS of $0.55 – best second quarter since FY14 Aerospace and Defense growth supported by strong
Slide 5: Q2-18 End-Use Market Highlights
Q2-18 End-Use Market Highlights Q2-18 Net Sales ex. Surcharge ($M)* vs. Q2-17 vs. Q1-18 Comments Improvement year-over-year (YoY) in fastener sub-market; well-positioned 53% 7% 7% 9% strength in select application areas 17% *Excludes sales through Carpenter’s Distribution businesses © 2018 CRS Holdi
Slide 6: 2nd Quarter Financial Overview and Business Update
2nd Quarter Financial Overview and Business Update Damon Audia Senior Vice President and Chief Financial Officer
Slide 7: Income Statement Summary
Income Statement Summary Change *Detailed schedule included in Non-GAAP Schedules in Appendix © 2018 CRS Holdings, Inc. All rights reserved 8 Strong market conditions contributed to solid performance in Q2 $ Millions , except pounds and per-s hare am ounts Q2-17 Q1-18 Q2-18 Sequential Pounds ('000)
Slide 8: Free Cash Flow Summary
Free Cash Flow Summary The clerical accuracy of certain amounts may be impacted due to rounding. *Detailed schedule included in Non-GAAP Schedules in Appendix **Credit facility refinanced in Q3-17 at $400 million with 2022 maturity © 2018 CRS Holdings, Inc. All rights reserved 9 Traditional first ha
Slide 9: SAO Segment Summary
SAO Segment Summary © 2018 CRS Holdings, Inc. All rights reserved 10 Q3-18 Outlook Strong demand signals in most end-use markets Given growth opportunities and backlog levels, operating income expected to increase 10-15% sequentially Q2 Business Results Higher demand across all end-use markets drove
Slide 10: PEP Segment Summary
PEP Segment Summary * Pounds related to manufactured pounds for Dynamet and Carpenter Powder Products only © 2018 CRS Holdings, Inc. All rights reserved 11 Q3-18 Outlook Continued strong demand for titanium products Short-term headwinds related to fire at Dynamet PA facility --$4-5 million operating
Slide 11: US Tax Reform Opportunity
US Tax Reform Opportunity Legislation enacted in December 2017 represents most significant tax changes in US in more than 30 years Discrete income tax net benefit of $66 million recorded in Q2-18 US federal corporate income tax rate reduced to 21%, with phase-in for FY18, resulting in estimated effe
Slide 12: 2nd Quarter Fiscal Year 2018 Closing Comments
2nd Quarter Fiscal Year 2018 Closing Comments Tony Thene President and Chief Executive Officer
Slide 13: Strengthening Value Proposition in Core Growth Areas
Strengthening Value Proposition in Core Growth Areas Performance / response Lower total system costs © 2018 CRS Holdings, Inc. All rights reserved 14 Soft Magnetics Industry Leader in Key Soft Magnetic Markets Today Industry leading position in Aviation Avionics Growing significantly in Consumer Ele
Slide 14: Closing Comments
Closing Comments revenue expansion across multiple sub-markets grow our market share ongoing implementation of the Carpenter Operating Model © 2018 CRS Holdings, Inc. All rights reserved 15 Continued progress executing our strategic plan and positioning Carpenter for sustainable long-term growth Sol
Slide 15: Appendix of Non-GAAP Schedules
Appendix of Non-GAAP Schedules
Slide 16: Non-GAAP Schedules: Adjusted Diluted Earnings per Share
Non-GAAP Schedules (Unaudited) Adjusted Diluted Earnings per Share Management believes that earnings per share adjusted to exclude the impact of special items is helpful in analyzing the operating performance of the Company, as these items are not indicative of ongoing operating performance. Managem
Slide 17: Non-GAAP Schedules: Operating Margin Excluding Surcharge and Pension EID
Non-GAAP Schedules (Unaudited) Operating Margin Excluding Surcharge Revenue and Pension Earnings, Interest and Deferrals (“Pension EID”) Management believes that removing the impacts of raw material surcharge from operating margin provides a more consistent basis for comparing results of operations
Slide 18: 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. © 2018 CRS Holdings, Inc. All rights
Slide 19: Non-GAAP Schedules: Free Cash Flow
Non-GAAP Schedules (Unaudited) Free Cash Flow $ Millions Q2-17 Q1-18 Q2418 YTD FY17 YTD FY18 Net cash (used for) provided from operating activities (29.5) (7.4) 24.7] (25.4) 17.3, Purchases of property, equipment and software (18.5)} — (28.9))— (26.8)}(45.1))_—(55.7)| Dividends paid (8.5) (86) (8.6)
Carpenter Technology — Q2 FY2018 Earnings Presentation on 6ix