Slide 1: Fiscal Year 2014 2nd Quarter Earnings Call
Fiscal Year 2014 2nd Quarter Earnings Call January 30, 2014
Slide 2: Forward-Looking Statements
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 projected, anticipated
Slide 3: 2nd Quarter FY14 Summary
2nd Quarter FY14 Summary Bill Wulfsohn President and Chief Executive Officer 3
Slide 4: 2nd Quarter FY14 Summary
Q2 earnings in-line with our expectations Significant gains in Transportation and Consumer & Industrial Strong overhead cost control Continued reduction in production cost per ton Weak Aerospace cycle continues to dilute overall margins Momentum beginning to build Q2 Specialty Alloys Operations (SAO
Slide 5: End-market results: Aerospace, Energy, Medical, Transportation
Aerospace & Defense 177.7 43% -9% -3% Boeing delivered 648 planes CY13, up +9% Y/Y; Airbus delivered 626 planes CY13, a 6% Y/Y increase Engine demand stabilizing with future growth expected Structural and fasteners down due to destocking in supply chain but order patterns indicate growth in 2H Energ
Slide 6: 2nd Quarter FY14 Financial Overview
Tony Thene Senior Vice President and Chief Financial Officer 6 2nd Quarter FY14 Financial Overview
Slide 7: 2nd Quarter FY14 Financial Overview
Q2 Net income of $29.5 million or $0.55 per share Sales, excluding surcharge, of $414.6 million Aerospace and Energy comprised 59% of sales Operating margins (ex pension EID) decreased sequentially by 260 basis points due to weaker mix Cash Flow from Operations of $7.0 million and Free Cash Flow of
Slide 8: Income Statement Summary
Income Statement Summary Volume up but EPS down due to weaker mix 8 * Detailed schedule included in Non-GAAP Schedules in Appendix $ Millions, except pounds and per-share amounts Q2-13 Q1-14 Q2-14 Sequential Change Pounds ('000) 62,582 64,892 67,378 2,486 Net Sales 533.5 498.6 503.5 4.9 Sales ex. Su
Slide 9: Free Cash Flow Summary
9 Free Cash Flow Summary Prior periods may be impacted due to rounding. At cash flow generation inflection point – moving to positive FCF by Q4 $ Millions Q1-13 Q2-13 Q2-13 YTD Q1-14 Q2-14 Q2-14 YTD Net Income + Non-cash Items 82 76 158 76 69 145 Inventory (79) (10) (89) (47) (12) (59) Other working
Slide 10: SAO Business Update
SAO Business Update Andy Ziolkowski Senior Vice President Commercial, Specialty Alloys Operations 10
Slide 11: SAO Segment Summary
Q2 Operating Results Q2 Business Highlights Q3-14 Outlook Year-over-year volume increase driven mainly by Transportation and Industrial & Consumer Lower weighted average volume for Aerospace Lower operating cost per ton and SG&A costs compared to a year ago Order intake up significantly year-over-ye
Slide 12: PEP Business Update
PEP Business Update Gary Heasley Senior Vice President Performance Engineered Products 12
Slide 13: PEP Segment Summary
Q2 Operating Results Q2 Business Highlights Q3 -14 Outlook Sales impacted by soft market conditions Continued demand weakness for titanium products Lower demand for powder products Improved demand for down-hole drilling tools Seasonal impact on Distribution business Operating income down sequentiall
Slide 14: Athens Update
Dave Strobel Senior Vice President, Global Operations 14 Athens Update
Slide 15: Athens Facility Update
15 Athens Facility Update Construction/Start-up Certification/Qualification Integrated Manufacturing 90% of construction completed Spend 80% complete Latest technology applied throughout facility Start-up now underway in key front-end operations Working through vendor acceptance of key equipment Met
Slide 16: Summary and Forward Outlook
Summary and Forward Outlook Bill Wulfsohn President and Chief Executive Officer 16
Slide 17: 2nd Quarter FY14 Summary and Forward Outlook
2nd Quarter FY14 Summary 17 Q2 Highlights Met our earnings expectations Significant gains in Transportation, Consumer & Industrial Strong overhead cost control Continued reduction in production cost per ton Weak Aerospace cycle continues to dilute overall margins Momentum beginning to build Q2 SAO o
Slide 18: Appendix of Non-GAAP Schedules
Appendix of Non-GAAP Schedules 18
Slide 19: Non-GAAP Schedules: Operating Margin Excluding Surcharge and Pension EID
19 Preliminary Non-GAAP Unaudited Schedules (in millions) OPERATING MARGIN EXCLUDING SURCHARGE AND Three Months Ended Six Months Ended PENSION EARNINGS, INTEREST AND DEFERRALS September 30, December 31, 2013 2012 2013 2013 2012 Net sales 503.5 $ 533.5 $ 498.6 $ 1,002.1 $ 1,078.5 $ Less: surcharge re
Slide 20: Non-GAAP Schedules: Free Cash Flow
20 Preliminary Non-GAAP Unaudited Schedules (in millions) Three Months Ended Six Months Ended December 31, FREE CASH FLOW 2013 2012 2013 2012 Net cash provided from operating activities 7.0 $ 38.9 $ 71.0 $ 2.2 $ Purchases of property, equipment and software (97.6) (80.5) (212.4) (136.9) Proceeds fro