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 2016 Summary
2nd Quarter Fiscal Year 2016 Summary Tony Thene President and Chief Executive Officer
Slide 3: Safety is our First Priority
Safety is our First Priority 1Q16 TCIR = 2.3 2Q16 TCIR = 1.9 4.8 3.9 3.5 3.9 3.7 3.3 2.1 2.1 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 YTD Total Case Incident Rate (TCIR)
Slide 4: 2nd Quarter Summary
2nd Quarter Summary Focus on our High-End Premium Alloys and Operational Efficiency Continued to Support Stable Margins and Profitability Despite Some Challenging End-Use Markets Overall volume impacted by continued weakness in Energy and Industrial and Consumer end-use markets Aerospace and Defense
Slide 5: 2nd Quarter FY16 End-Use Market Highlights
2nd Quarter FY16 End-Use Market Highlights Aerospace and Defense 195.6 52% +3% +5% Engines up both year over year (YOY) and sequentially Fasteners down YOY primarily due to supply chain adjustments Structural up YOY on volume and improved product mix Defense up YOY with continued spending on support
Slide 6: 2nd Quarter Fiscal Year 2016 Financial Overview
2nd Quarter Fiscal Year 2016 Financial Overview Damon Audia Senior Vice President and Chief Financial Officer
Slide 7: Income Statement Summary
Income Statement Summary Relatively flat gross margin despite 3% sequential reduction in volume *Detailed schedule included in Non-GAAP Schedules in Appendix $ Millions, except pounds and per-share amounts Q2-15 Q1-16 Q2-16 Sequential Change $ Millions, except per-share amounts FY14 Actual FY15 Fore
Slide 8: Free Cash Flow Summary
Free Cash Flow Summary The clerical accuracy of certain amounts may be impacted due to rounding. Lower capital expenditures and less sequential inventory build delivering positive free cash flow while maintaining strong liquidity ok ok ok ok ok ok ok ok ok ok ok Plan Plan Plan Plan ok ok $ Millions
Slide 9: Share Repurchase Program Update
Share Repurchase Program Update Repurchased 5.7 million shares (11% of outstanding) since inception for $221 million Authorized share repurchase program beginning October 2014 Up to $500M of share repurchases authorized over two year period Repurchase at Company’s discretion based on capital needs o
Slide 10: Business Update and Growth Enablers
Business Update and Growth Enablers Tony Thene President and Chief Executive Officer
Slide 11: SAO Segment Summary
SAO Segment Summary Q2 Operating Results Q2 Business Results Q3 Outlook Steep declines in Energy and Industrial & Consumer end-use markets drove lower year-over-year sales volumes Sequentially, volumes were slightly lower primarily due to further weakness in Energy end-use market Improving operating
Slide 12: PEP Segment Summary
PEP Segment Summary Q2 Operating Results Q2 Business Results Q3 Outlook Sales and operating income performance year-over-year primarily driven by weak Oil and Gas demand due to reduced drilling activity Sequential sales lower than expected – down 7% driven by: Continued decline in Oil & Gas demand W
Slide 13: Growth Enablers
Growth Enablers Carpenter Today Focus on high-value specialty alloys with limited exposure to commodity stainless steel markets Products serve demanding applications in attractive end-use markets Commitment to innovation and being preferred solutions provider Opportunities include building on Aerosp
Slide 14: Investing in the Future
Investing in the Future VAP: Vendor Approved Process Athens Facility Powder Products Achievements to Date Facility is fully operational 89% of customer site non-VAP certifications complete 75% of Oil & Gas completions achieved Two VAP qualifications completed for nickel superalloy used for aerospace
Slide 15: Outlook and Closing Comments
Outlook and Closing Comments Well Positioned as Preferred Solutions Provider for High-end Premium Alloy Markets; Initiatives Aimed at Supporting Margin Growth as Volumes Return Actively managing business to maximize results with some challenging end-use markets Expect second half volume to be up mod
Slide 16: Appendix of Non-GAAP Schedules
Appendix of Non-GAAP Schedules
Slide 17: Restructuring Charges and Special Items
Restructuring Charges and Special Items * Income Tax Items Discrete income tax charge recorded in Q2-15 as a result of a tax law change. Discrete income tax charge recorded in Q1-16 as a result of decision to sell equity method investment in India. Discrete income tax benefit recorded in Q2-16 as a
Slide 18: Non-GAAP Schedules: Operating Margin Excluding Surcharge
Non-GAAP Schedules (Unaudited) Operating Margin Excluding Surcharge, Pension Earnings, Interest and Deferrals "Pension EID", Restructuring Charges and Special Items $ Millions Q2-15 Q1-16 Q2-16 Net sales 548.4 455.6 443.8 Less: surcharge revenue 102.7 70.5 64.4 Consolidated Net Sales Excluding Surch
Slide 19: Non-GAAP Schedules: Free Cash Flow
Non-GAAP Schedules (Unaudited) Free Cash Flow $ Millions Q2-15 Q2-16 FY15 YTD FY16 YTD Net cash provided from operating activities 12.5 30.1 27.5 71.6 Purchases of property, equipment and software (68.4) (19.6) (127.4) (49.5) Proceeds from disposals of property and equipment - 0.2 0.1 0.3 Other - -
Slide 20: Free Cash Flow
edu Free Cash Flow $ Millions -15 Net cash provided from operating activities 12.5 - a Purchases of property, equipment and software (68.4) (127.4) (49.5) Proceeds from disposals of property and equipment - 0.1 0.3 Other = = a 4.0 Dividends paid (9.6) (8.9) (19.3) (17.9) Free Cash Flow (65.5) 1.8| (