Carpenter Technology Corporation · NYSE:CRS

Carpenter Technology — Investor Day (May 2023)

62 slides from Carpenter Technology's investor day presentation, May 16, 2023

Slide 2: Cautionary Statement
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 3: Agenda
Agenda Company Overview & Strategy Tony Thene, Chief Executive Officer Growth: Markets & Technology Marshall Akins, Chief Commercial Officer Dr. Suniti Moudgil, Chief Technology Officer Specialty Alloys Operations Brian Malloy, Group President, Specialty Alloys Operations Performance Engineered Prod
Slide 5: At an inflection point — this is our time
At an inflection point — this is our time • Leverage core strength in • Strong underlying demand • Strengthening and expanding • To date, achieving external engineered materials and fundamentals driving record set of assets and capabilities targets communicated process capabilities to solve backlog
Slide 6: Our role as a preferred solutions provider to customers
Our role as a preferred solutions provider to customers Partner to OEMs & Tiers across end-use 134 years of specialty alloy product A global footprint with ~4,000 employees markets in solving critical needs and process innovation leadership 500+ Alloys Energy • Nickel-based • Stainless steels Distri
Slide 7: Our Vision and Core Values
Our Vision and Core Values Vision Core Values Carpenter Technology strives to be the preferred solutions provider in specialty materials with a reputation 1 ZERO INJURY WORKPLACE 2 TRANSPARENCY 3 ABOVE THE LINE 4 PERFORMANCE ACCOUNTABILITY for zero injuries, unquestionable quality, close customer co
Slide 8: Environmental, Social, and Governance program supports strategic vision
Environmental, Social, and Governance program supports strategic vision Our approach to sustainability is built upon our Vision and Core Values and aligns with our business strategy for growth Latest Sustainability Highlights: • Set target for 30% reduction of Scope 1 & 2 CO2 emissions per ton of ma
Slide 9: Distinctive product and process capabilities drive strategic vision
Distinctive product and process capabilities drive strategic vision Technology development Strategic marketing • Translate customer needs into • Demonstrate market knowledge solutions quickly and support growth • Develop proprietary and • Think, act, and execute in a breakthrough products future out
Slide 10: Strategic priorities drive shareholder returns
Strategic priorities drive shareholder returns • Focus on high-growth, high • Invest in expanded or • Drive to a Zero Injury • Improve profitability through value end-use markets and enhanced capabilities to Workplace pricing, mix optimization, and applications complement solutions increased volumes
Slide 11: Growth: Markets & Technology
GROWTH: MARKETS & TECHNOLOGY Marshall Akins, Chief Commercial Officer Dr. Suniti Moudgil, Chief Technology Officer © 2023 CRS Holdings, LLC. All rights reserved. 11
Slide 12: Growth: Markets & Technology key takeaways
Growth: Markets & Technology key takeaways 1. Support a diversified range of end-use markets with positive growth outlooks and increasing needs for our solutions 2. Produce high value, highly engineered products not readily found in the market 3. Commercially robust outlook © 2023 CRS Holdings, LLC.
Slide 13: Overview of end-use markets and trends
Overview of end-use markets and trends MARKET % REVENUE* DEMAND TRENDS APPLICATION TRENDS Global travel demand continues to improve, accelerating build Lightweight, more fuel-efficient planes rates and demand for material 48% Next-generation platforms with increasing performance Increasing spend on
Slide 14: Historic demand conditions and backlog of orders
Historic demand conditions and backlog of orders Backlog values increased 70% year-over-year, up 10% sequentially Quality of backlog increasing with pricing and mix actions Backlog ($M) 2,400 +70% +10% • Value increase outpacing volume 2,000 • Average sales price ~50% higher versus pre-COVID 1,600 •
Slide 15: Aerospace and Defense: Strategic supplier to industry's most important applications
Aerospace and Defense: Strategic supplier to industry’s most important applications Defense • High-performance material solutions, specified and 10% designed into application • Enable platforms to go further, Fasteners 20% Based on historical faster, and longer by revenue, pre- 40% Engines addressin
Slide 16: Commercial Aerospace: Broad range of critical solutions
Commercial Aerospace: Broad range of critical solutions Engines Fasteners Structural & Avionics Parts Benefits Parts Benefits Parts Benefits • Rings • Enable high • Airframe • Broadest portfolio • Landing gear • Wide range of • Discs performance • Engine of alloys, forms, and • Slat and flap applica
Slide 18: Aerospace: Global market recovering with extremely strong forward outlook
Aerospace: Global market recovering with extremely strong forward outlook Airplane build rates expected to rebound and exceed pre-COVID levels Annual production rates by body style 2,000 1,600 • Global air traffic continues to recover from COVID downturn 1,200 • OEMs increasing production, with high
Slide 19: History of innovation in Aerospace and Defense
History of innovation in Aerospace and Defense 134 years of experience in advancing what’s possible 2021 1927 1991 Perseverance Mars Rover Spirit of St. Louis R&D 100 award: AerMet® 100 used in Navy jet 1903 1969 2019 2022 First in flight Apollo 11 Commercial Commercial rocket electric airplane © 20
Slide 20: Lightweighting Solutions
CASE STUDY Lightweighting Solutions Industry standard for ultra-high strength and corrosion-resistant structural solutions Ultra-high strength Portfolio of solutions Applications • Alloys with ultra-high strength and • AerMet® 100 / 310 / 340 • Jet engine shafts toughness • HP 9-4-30 • Landing gear
Slide 21: High-temperature wear solutions
CASE STUDY High-temperature wear solutions Industry standard for advanced gear and bearing solutions for jet engines High-temperature advanced wear solutions Portfolio of solutions Applications • Highly wear-resistant alloys capable of • Pyrowear® 53 Gearing and bearing operating in high temperature
Slide 22: Defense: Supporting next-generation platforms across environments
Defense: Supporting next-generation platforms across environments Air Land Sea Missiles and Munitions Rotary aircraft (e.g. V280 Valor, Armored Multi Purpose Vehicle Hypersonic solutions, EXAMPLE Columbia class submarines, Apache Long Bow, Blackhawk), fixed- Tanks (e.g. M1A2 SEP V3 Abrams, air to ai
Slide 23: Medical: Material solutions for improving patient outcomes
Medical: Material solutions for improving patient outcomes Dental • Implants • Screws Cardiology Advancing options for patient outcomes: • Stents • Stronger, smaller, and longer-lasting implants • Leads and catheter wires • Expanded range of treatment options Orthopedics • Strength and precision for
Slide 24: Medical: Growth 2-3x above medical device market
Medical: Growth 2-3x above medical device market Track record of growing faster than expanding market Carpenter Technology • Share gain with key market players • Focus on wide portfolio and supply stability • Investments in capacity to support growth • Ongoing expansions to product portfolio Medical
Slide 25: BioDur® alloys
CASE STUDY BioDur® alloys Exceptionally high strength with biocompatible corrosion resistance Regulatory landscape for Cobalt Portfolio of solutions • European Union Medical Device Regulation BioDur® 316LS BioDur® 734 BioDur® 108 requires devices containing 0.10% or greater cobalt content to indicat
Slide 26: Transportation and Energy end markets
Transportation: Leading supplier Energy: enabling increases to high-value applications to global energy supply Light-duty, heavy-duty, marine, performance car Onshore and offshore oil and gas, industrial turbine, nuclear, wind • Valves, gaskets, fasteners, turbochargers and springs • Drilling equipm
Slide 27: Industrial & Consumer: Innovative solutions for a technological world
Industrial & Consumer: Innovative solutions for a technological world Semiconductor fabrication, chemical manufacturing, energy infrastructure, and consumer electronics Industrial solutions • Harsh and high-pressure environments • Enable fluid delivery, measurement systems, etc. • Highest purity and
Slide 28: Carpenter Electrification: Material solutions for an electrified world
Carpenter Electrification: Material solutions for an electrified world High-power electric motors Sensors and shielding for consumer Other emerging opportunities electronics • Auxiliary power units in commercial • Medical: surgical tools requiring high- aircraft • Smartphones and wearables frequency
Slide 29: Best-in-class soft magnetic materials and stack manufacturing capabilities
Best-in-class soft magnetic materials and stack manufacturing capabilities Soft magnetic alloys for improved Linking strip, stack, and end motor output performance, miniaturization, and greater to optimize performance design flexibility • Broad portfolio, including alloy with highest • Ability to ba
Slide 30: Growth: Markets & Technology summary
Growth: Markets & Technology summary Strong end-use market demand Positive application trends High-value products • Aerospace ramp • Lightweighting • Technically challenging to produce • Next generation defense • Longer lasting • Critical to customers’ applications • Aging population • Improved effi
Slide 32: Specialty Alloys Operations (SAO) key takeaways
Specialty Alloys Operations (SAO) key takeaways 1. Broad portfolio of highly specified and qualified products requires complex manufacturing processes 2. Unique system of assets and the technical knowledge that is difficult to replicate 3. Carpenter Operating Model drives continuous productivity imp
Slide 34: Integrated system of facilities with streamlined flow paths
Integrated system of facilities with streamlined flow paths • Primary Melt • Remelt • Hot Rolling and Press/Forge • Primary Melt • Finishing • Remelt • Inspection/Testing • Hot Rolling and Press/Forge • Finishing • Inspection/Testing • Remelt • Hot Rolling • Hot Rolling and Press/Forge • Finishing •
Slide 35: High purity melting for alloys used in critical applications
High purity melting for alloys used in critical applications • Large qualified capacity to produce high purity alloys across multiple sites • Specialized furnaces and processes meet tightest quality specifications • Higher purity means better performance and longer product life • Advanced melt capab
Slide 36: World-class collection of hot working and finishing capabilities
World-class collection of hot working and finishing capabilities • Manufacturing experience to achieve properties to customers' performance needs • Differentiated set of qualified assets and capabilities across facilities Radial Forge Press | Athens, AL • Athens radial press only significant aerospa
Slide 37: Recently commissioned Hot Strip Mill in Reading, Pennsylvania
Recently commissioned Hot Strip Mill in Reading, Pennsylvania State-of-the-art, fully integrated mill improves quality and throughput • Investment to upgrade legacy mill processing high value alloy solutions • Well positioned to support electrification and consumer electronics growth • Advanced, thi
Slide 38: Quality management includes rigorous testing, certifications and qualifications
Quality management includes rigorous testing, certifications and qualifications Rigorous testing throughout All facilities industry certified with Qualification of equipment and manufacturing process quality focus processes by customers • Demonstrate the ability to meet stringent standards, repeated
Slide 40: Driving performance through the Carpenter Operating Model
Driving performance through the Carpenter Operating Model • Improve productivity through lean manufacturing • Focus on quality and reliability • Double-down on training and skills advancement • Manage inventory levels and increase supply chain efficiency • Engaged workforce improving performance and
Slide 41: Specialty Alloys Operations summary
Specialty Alloys Operations summary Complex portfolio of products Unique assets and capabilities Trusted partner for quality • Broad portfolio of alloy solutions • Large capacity of high-purity melting • Rigorous, advanced testing • Available in range of forms and sizes • World-class hot working and
Slide 43: Performance Engineered Products (PEP) key takeaways
Performance Engineered Products (PEP) key takeaways 1. Offer portfolio of unique solutions to critical applications in high-growth end-use markets 2. Differentiated businesses that leverage and advance our metallurgical knowledge and capabilities 3. Provide opportunity for high value growth in near
Slide 44: Differentiated businesses managed to promote agility and growth
Differentiated businesses managed to promote agility and growth Distribution Solutions Solution provider for additive Leading North American distributor Global solutions provider of titanium manufacturing (AM) customers to providing solutions across a range of alloy products for high growth, high su
Slide 45: Carpenter Titanium: Exacting standards for critical applications
Carpenter Titanium: Exacting standards for critical applications Serving high growth, high value end- Differentiated set of qualified hot Solving our customers’ use markets with critical applications working and finishing capabilities Titanium challenges Transportation • Offer broad portfolio of Tit
Slide 46: Titanium ULTRABAR®
CASE STUDY Titanium ULTRABAR® Meets high tolerance needs for medical and aerospace applications Product • Titanium ULTRABAR® provides exceptional dimensional accuracy for high-precision products ® • ULTRABAR® improves accuracy and efficiency for critical applications. Typical applications • Precisio
Slide 47: Performance Engineered Products summary
Performance Engineered Products summary Carpenter Additive Carpenter Titanium by Dynamet • Aligned with growth opportunities • Serving high value end-use markets in the aerospace, defense and in medical, aerospace and defense medical markets • Leveraging unique, qualified assets Differentiated busin
Slide 49: Carpenter Technology Growth
Carpenter Technology Growth Adjusted Operating Income History ($M)* FY23 Operating Income ($M) 243 189 FY19 Adjusted Operating Income Run Rate 167 60 54-60 39 23 -34 8 -106 FY18 FY19 FY20 FY21 FY22 Q1-23 Q2-23 Q3-23 Q4-23 (Proj.) Growth trajectory was underway pre-pandemic Resetting growth trajector
Slide 50: Financial outlook
Financial outlook Opportunity to double operating income (OI) • Goal to double FY19 operating income run-rate during FY26 and 2X full year FY19 operating income by FY27 • FY27 operating income goal represents 40% CAGR from FY23 projected operating income • Expect significant step forward towards lon
Slide 51: SAO: Improving profitability via higher and more profitable volumes
SAO: Improving profitability via higher and more profitable volumes Net Sales Ex Surcharge ($B)* Adjusted Operating Margin (%)* FY27 Sales Projected 11-13% CAGR vs FY23 20+ 18.4 2.2-2.4 1.5 FY19 FY27 FY19 FY27 Proj Proj FY19 to FY27 expected increase in net sales driven by: Pricing gains, product mi
Slide 52: PEP: Growth primarily driven by Dynamet Titanium business
PEP: Growth primarily driven by Dynamet Titanium business Net Sales Ex Surcharge ($M)* Adjusted Operating Margin (%)* 570-610 13-15 467 6.4 FY19 FY27 FY19 FY27 Proj Proj Titanium business continues to grow • Titanium business driven by Aerospace and Defense and Medical end-use market sales with oper
Slide 53: Increased profitability to drive cash flow generation
Increased profitability to drive cash flow generation • Track record of delivering cash flow generation FY24 - FY27 ($ in millions) Estimated • Disciplined approach to working capital management Cash from operations 1,070 – 1,270 • No significant pension contributions until FY25 Capital expenditures
Slide 54: Balanced capital allocation strategy
Balanced capital allocation strategy • Targeting $125 million of • Build vs. buy • Expect to return to • Funded consistent annual spend for the next opportunities to expand historical leverage ratios dividend to stockholders several years capabilities or enhance via improving EBITDA throughout pande
Slide 56: Doubling OI to meaningfully increase earnings per share and cash flow generation
Doubling OI to meaningfully increase earnings per share and cash flow generation Goal of doubling operating income by FY27 vs. FY19 Adjusted Operating Income ($M) ~2x • Goal to double FY19 operating income run-rate 460-500 during FY26 and 2X full year FY19 operating income by FY27 • FY27 operating i
Slide 57: Bringing it all together – An industry leader with a compelling outlook
Bringing it all together – An industry leader with a compelling outlook Robust market outlook for solutions portfolio FY24 - FY27 • Broader macro trends driving record backlog and ($ in millions) Estimated positive outlook across end-use markets Cash from operations 1,070 – 1,270 • Broad portfolio o
Slide 61: Non-GAAP Schedules
Non-GAAP Schedules Adjusted operating margin, excluding surcharge revenue and special items $ millions FY18 FY19 FY20 FY21 FY22 Net Sales 2,158 2,380 2,181 1,476 1,836 Less: Surcharge Revenue 365 438 352 223 436 Net Sales Excluding Surcharge Revenue 1,793 1,942 1,829 1,253 1,400 Operating Income (Lo
Slide 62: Non-GAAP Schedules
Non-GAAP Schedules Adjusted segment operating margin, excluding surcharge revenue SAO PEP $ millions FY19 FY19 Net Sales 1,967 480 Less: Surcharge Revenue 430 13 Net Sales Excluding Surcharge Revenue 1,537 467 Operating Income 282 30 Operating Margin 14.3% 6.3% Adj. Operating Margin Excluding Surcha

Carpenter Technology — Investor Day (May 2023) on 6ix

Carpenter Technology — Investor Day (May 2023)

Slide 1: Investor Day 2023

Slide 2: Cautionary Statement

Slide 3: Agenda

Slide 4: Company Overview & Strategy

Slide 5: At an inflection point — this is our time

Slide 6: Our role as a preferred solutions provider to customers

Slide 7: Our Vision and Core Values

Slide 8: Environmental, Social, and Governance program supports strategic vision

Slide 9: Distinctive product and process capabilities drive strategic vision

Slide 10: Strategic priorities drive shareholder returns

Slide 11: Growth: Markets & Technology

Slide 12: Growth: Markets & Technology key takeaways

Slide 13: Overview of end-use markets and trends

Slide 14: Historic demand conditions and backlog of orders

Slide 15: Aerospace and Defense: Strategic supplier to industry's most important applications

Slide 16: Commercial Aerospace: Broad range of critical solutions

Slide 17: Aerospace: Solutions in use on virtually every plane made

Slide 18: Aerospace: Global market recovering with extremely strong forward outlook

Slide 19: History of innovation in Aerospace and Defense

Slide 20: Lightweighting Solutions

Slide 21: High-temperature wear solutions

Slide 22: Defense: Supporting next-generation platforms across environments

Slide 23: Medical: Material solutions for improving patient outcomes

Slide 24: Medical: Growth 2-3x above medical device market

Slide 25: BioDur® alloys

Slide 26: Transportation and Energy end markets

Slide 27: Industrial & Consumer: Innovative solutions for a technological world

Slide 28: Carpenter Electrification: Material solutions for an electrified world

Slide 29: Best-in-class soft magnetic materials and stack manufacturing capabilities

Slide 30: Growth: Markets & Technology summary

Slide 31: Specialty Alloys Operations

Slide 32: Specialty Alloys Operations (SAO) key takeaways

Slide 33: SAO's unique capabilities provide a competitive advantage

Slide 34: Integrated system of facilities with streamlined flow paths

Slide 35: High purity melting for alloys used in critical applications

Slide 36: World-class collection of hot working and finishing capabilities

Slide 37: Recently commissioned Hot Strip Mill in Reading, Pennsylvania

Slide 38: Quality management includes rigorous testing, certifications and qualifications

Slide 39: © 2023 CRS Holdings, LLC. All rights reserved.

Slide 40: Driving performance through the Carpenter Operating Model

Slide 41: Specialty Alloys Operations summary

Slide 42: Performance Engineered Products

Slide 43: Performance Engineered Products (PEP) key takeaways

Slide 44: Differentiated businesses managed to promote agility and growth

Slide 45: Carpenter Titanium: Exacting standards for critical applications

Slide 46: Titanium ULTRABAR®

Slide 47: Performance Engineered Products summary

Slide 48: Financials

Slide 49: Carpenter Technology Growth

Slide 50: Financial outlook

Slide 51: SAO: Improving profitability via higher and more profitable volumes

Slide 52: PEP: Growth primarily driven by Dynamet Titanium business

Slide 53: Increased profitability to drive cash flow generation

Slide 54: Balanced capital allocation strategy

Slide 55: Closing

Slide 56: Doubling OI to meaningfully increase earnings per share and cash flow generation

Slide 57: Bringing it all together – An industry leader with a compelling outlook

Slide 58: Q & A Session

Slide 59: Q&A

Slide 60: Appendix

Slide 61: Non-GAAP Schedules

Slide 62: Non-GAAP Schedules