Carpenter Technology Corporation · NYSE:CRS
Carpenter Technology — Q3 FY2017 Earnings Presentation
20 slides from Carpenter Technology's earnings presentation, Apr 28, 2017
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: 3rd Quarter Fiscal Year 2017 Summary
3rd Quarter Fiscal Year 2017 Summary Tony Thene President and Chief Executive Officer
Slide 3: Safety is Our Highest Priority
Safety is Our Highest Priority Total Case Incident Rate (TCIR) 4.8 3.9 3.5 3.9 3.7 3.3 Q1-17 TCIR = 1.8 Q2-17 TCIR = 2.2 Q3-17 TCIR = 1.9 2.12.22.0 FY09FY10FY11FY12FY13FY14FY15FY16FY17 YTD
Slide 4: 3rd Quarter Summary
3rd Quarter Summa Results Driven by Diversified Revenue Growth, Strong Commercial Execution, and Continued Roll Out of Carpenter Operating Model •Continued strong operating results; EPS of $0.44 •Sequential revenue growth across all end-use markets •Aerospace and Defense end-use market grew 8% sequ
Slide 5: Q3-17 End-Use Market Highlights
Q3-17 End-Use Market Highlights Aerospace and Defense 214.0 Energy 36.6 Transportation 31.3 Medical 31.6 Industrial and Consumer 66.7 vs. Q3-16 +3% +8% Continued solid engine demand Sequential improvement in fasteners, although not at prior year levels as supply chain works through inventory Structu
Slide 6: 3rd Quarter Financial Overview & Business Update
3rd Quarter Financial Overview & Business Update Damon Audia Senior Vice President and Chief Financial Officer
Slide 7: Income Statement Summary
Income Statement Summary $ Millions , except pounds and per-s hare am ounts Q3-16 Q2-17 Q3-17 Sequential Change Pounds ('000)61,33853,28663,2709,984 Net Sales456.3427.4473.646.2 Sales ex. Surcharge *402.4366.7412.946.2 Gross Profit47.562.583.120.6 Selling, General and Administrative Expenses41.747.1
Slide 8: Cash Flow Summary
Cash Flow Summary The clerical accuracy of certain amounts may be impacted due to rounding. Positive Free Cash Flow in quarter including $35 million acquisition *Detailed schedule included in Non-GAAP Schedules in Appendix
Slide 9: Capital Structure Enhances Strong Liquidity Position
Capital Structure Enhances Strong Liquidity Position ($ in millions) $700 $600 $500 $400 $300 $200 $100 $0 Revolver $400 $14 Drawn FY17 FY18 FY19 FY20 FY21 FY22 FY23 Solid liquidity of $397 million ($17 million of cash and $380 million of available borrowings under revolving credit facility) Credit
Slide 10: SAO Segment Summary
SAO Segment Summary Q3 Operating Results Q3-16Q2-17Q3-17vs PYvs Q2-17 Pounds ('000)59,08251,31461,0061,9249,692 Net Sales ($M)370.5348.6383.312.834.7 Sales ex. Surcharge ($M)316.5288.1322.45.934.3 Operating Income ($M)45.635.651.96.316.3 % of Net Sales12.3%10.2%13.5%+1.2 pts+3.3 pts % of Sales ex. S
Slide 11: PEP Segment Summary
PEP Segment Summary Q3 Operating Results Q3-16 Q2-17 Q3-17 vs PY vs Q2-17 Pounds* ('000)2,7742,3502,84066490 Net Sales ($M)91.483.298.77.315.5 Sales ex. Surcharge ($M)91.283.098.57.315.5 Operating Income (Loss) ($M)(0.9)0.84.75.63.9 % of Net Sales-1.0%1.0%4.8%+5.8 pts+3.8 pts % of Sales ex. Surcharg
Slide 12: 3rd Quarter Closing Comments
3rd Quarter Closing Comments Tony Thene President and Chief Executive Officer
Slide 13: Expanding our Foundation and Accelerating Growth
Expanding our Foundation and Accelerating Growth Aerospace Globalization and demand for travel spurring technological improvements Energy Complex drilling requirements pushing market to advanced solutions Transportation New emissions standards require higher performance materials Medical Increased f
Slide 14: Closing Comments
Closing Comments Focused on Strengthening Long-Term Growth Profile; Diverse Participation Across Attractive End Use Markets •Strong Q3 results driven by improving market conditions along with commercial and manufacturing execution •Solutions focused commercial team and strategy driving backlog grow
Slide 15: Appendix of Non-GAAP Schedules and Supplemental Schedule
Appendix of Non-GAAP Schedules and Supplemental Schedule
Slide 16: Non-GAAP Schedules: Adjusted Earnings Per Share
Non-GAAP Schedules (Unaudited) Adjusted 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 costs are not indicative of ongoing operating performance. Management uses
Slide 17: Non-GAAP Schedules: Operating Margin Excluding Surcharge
Non-GAAP Schedules (Unaudited) Operating Margin Excluding Surcharge Revenue, Pension Earnings, Interest and Deferrals (“Pension EID”) and Special Items $ Millions Q3-16 Q2-17 Q3-17 Net sales 456.3 427.4 473.6 Less: surcharge revenue 53.9 60.7 60.7 Consolidated Net Sales Excluding Surcharge 402.4 366
Slide 18: Non-GAAP Schedules: Free Cash Flow
Non-GAAP Schedules (Unaudited) Free Cash Flow $ Millions Q3-16Q1-17Q2-17Q3-17YTD FY16 YTD FY17 Net cash provided from (used for) operating activities65.53.9(29.7)61.3137.235.5 Purchases of property, equipment and software(16.6)(26.6)(18.5)(18.0)(66.1)(63.1) Proceeds from disposals of property and eq
Slide 19: 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 20: Net Sales By End-Use Market
Net Sales By End-Use Market $ Millions edule (Unaudited) ‘Aerospace and Defense Energy Transportation Medical Industrial and Consumer Distribution Net sales excluding surcharges Surcharge revenue Net sales Q3-16__Q3-17_ YTD FY16 YTD FY17/ 208.4 214.0 603.8 586.3 33.3 36.6 917 89.5 34.7 31.3) 103.7 9
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