Slide 1: 4th Quarter and Fiscal Year 2015 Earnings Call
4th Quarter and Fiscal Year 2015 Earnings Call July 30, 2015 Carpenter Technology Corporation Unless otherwise noted, the logo and registered trademarks are property of CRS Holdings, Inc. a subsidiary of Carpenter Technology Corporation.
Slide 2: Cautionary Statement
Cautionary Statement 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 pr
Slide 3: 4th Quarter and Fiscal Year 2015 Summary
Tony Thene President and Chief Executive Officer 4th Quarter and Fiscal Year 2015 Summary
Slide 4: Safety is our First Priority
Safety is our First Priority 4 4.8 3.9 3.5 3.9 3.7 3.3 2.1 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Total Case Incident Rate (TCIR)
Slide 5: Fiscal Year 2015 Summary
Fiscal Year 2015 Summary 5 Actions Taken to Improve Profitability and Strengthen Operations Generated free cash flow of $74 million for full year Original Athens project spend completed Inventory reduction of $67 million since the end of the first quarter Repurchased $125 million of shares under $50
Slide 6: 4th Quarter Summary
4th Quarter Summary 6 Generated Strong Free Cash Flow and Improved Profitability Positive free cash flow of $107 million driven by: Inventory reduction of $54 million Capital expenditures at $18 million Repurchased $64 million of shares during Q4 Operating margins improved sequentially as a result o
Slide 7: Sales by End-Use Market
Aerospace & Defense 216.5 47% +2% +1% Engine material sales flat year-over-year (YOY) Fastener activity continued to be strong; up YOY and sequentially Structural sales flat YOY and up sequentially with a stronger mix Defense material sales up YOY and sequentially due to growth of supported programs
Slide 8: 4th Quarter Fiscal Year 2015 Financial Overview
Tim Lain Acting Chief Financial Officer 4th Quarter Fiscal Year 2015 Financial Overview
Slide 9: Income Statement Summary
Income Statement Summary 9 Operating margin improved on operating cost performance and overhead cost reductions *Detailed schedule included in Non-GAAP Schedules in Appendix ^ Detailed schedule included on next slide $ Millions, except per-share amounts Q4-14 Q3-15 Q4-15 Sequential Change $ Millions
Slide 10: Restructuring Charges & Special Items
Restructuring Charges & Special Items 10 Q4 impacted by $6.3 million ($0.08 EPS) of restructuring charges & special items $ per-share Q3-15 Q4-15 Income Statement Classification Diluted (Loss) / Earnings per Share As Reported ($0.03) $0.44 Reduction in Force & Severance Costs $0.13 $0.03 Restructuri
Slide 11: Free Cash Flow Summary
Free Cash Flow Summary 11 The clerical accuracy of certain amounts may be impacted due to rounding. $563 million of total liquidity including $70 million of cash at end of Q4 ok ok ok ok ok ok ok ok ok Plan Plan Plan Plan ok ok $ Millions Q1-14 Q1-15 vs LY $ Millions FY14 Q1 Q2 Q3 Q4 FY15 $ Millions
Slide 12: Share Repurchase Program Update
Share Repurchase Program Update 12 Repurchased $154.5 million of shares to date Authorized share repurchase program in October 2014 Up to $500M of share repurchases authorized over a two year period Repurchased at Company’s discretion based on capital needs of the business, general market conditions
Slide 13: Guidance for FY16
Guidance for FY16 13 Key Metrics for FY16 $ Millions FY15 FY16 Depreciation and Amortization 122 121 (1) Interest Expense, net 28 32 4 Net Pension Expense 45 54 9 Effective Tax Rate 34.1% 32-33% #VALUE! Pension Contributions 7 0 (7) Capital Expenditures 171 120
Slide 14: SAO Segment Summary
SAO Segment Summary 15 Q4 Operating Results Q4 Business Results Q1 Outlook Volume down YOY driven by lower Industrial & Consumer sales and weakness in Oil & Gas Sales mix was stronger YOY fueled by higher Aerospace and Medical activity Lower YOY operating margins are a result of higher operating cos
Slide 15: PEP Segment Summary
PEP Segment Summary 16 Q4 Operating Results Q4 Business Results Q1 Outlook Sales and operating income performance significantly impacted by weak Oil & Gas demand due to limited drilling activity Partially offset by: Strong sequential and YOY performance in the Titanium and Powder businesses driven b
Slide 16: Athens Product Qualification Process On-Track
Athens Product Qualification Process On-Track 17 Current Achieved first VAP qualification for nickel superalloy used for aerospace engine rings Expanded the scope of qualified products requiring only site certifications (non-VAP): Aero fasteners Aero standard grade rings and structural Structural st
Slide 17: Outlook and Closing Comments
Outlook and Closing Comments 18 FY16 Outlook & Areas of Focus The significant decline in the Energy end use market remains a primary concern and we expect it will remain depressed throughout the fiscal year Weakness in Energy is expected to amplify the seasonal volume decline typically experienced i
Slide 18: Appendix of Non-GAAP Schedules
Appendix of Non-GAAP Schedules
Slide 19: Non-GAAP Schedules: Operating Margin Excluding Surcharge, Pension EID
Non-GAAP Schedules (Unaudited) 20 Operating Margin Excluding Surcharge, Pension Earnings, Interest and Deferrals "Pension EID", Restructuring Charges and Special Items Q4-14 Q3-15 Q4-15 FY14 FY15 Net sales 604.6 570.6 558.0 2,173.0 2,226.7 Less: surcharge revenue 115.7 107.7 95.0 390.2 414.9 Consoli
Slide 20: Non-GAAP Schedules: Free Cash Flow
Non-GAAP Schedules (Unaudited) 21 Free Cash Flow $ Millions Q4-14 Q4-15 FY14 FY15 Net cash provided from operating activities 95.5 134.1 239.6 282.6 Purchases of property, equipment and software (51.0) (18.3) (349.2) (170.5) Proceeds from disposals of property and equipment - - 0.3 0.2 Dividends pai