Carpenter Technology Corporation · NYSE:CRS
Carpenter Technology — Q2 FY2020 Earnings Presentation
19 slides from Carpenter Technology's earnings presentation, Jan 31, 2020
Slide 1: Q2 Fiscal Year 2020 Earnings Call
Exhibit 99.1 Carpenter Technology Corporation nd 2 Quarter Fiscal Year 2020 Earnings Call January 30, 2020Exhibit 99.1 Carpenter Technology Corporation nd 2 Quarter Fiscal Year 2020 Earnings Call January 30, 2020
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: Q2 Fiscal Year 2020 - Tony Thene, President and CEO
nd 2 Quarter Fiscal Year 2020 Tony Thene President and Chief Executive Officer 3nd 2 Quarter Fiscal Year 2020 Tony Thene President and Chief Executive Officer 3
Slide 4: Safety is Our Highest Value
Safety is Our Highest Value Total Case Incident Rate (TCIR) 3.9 3.7 3.5 3.3 2.2 2.1 2.0 1.3 1.3 1.2 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 YTD 4Safety is Our Highest Value Total Case Incident Rate (TCIR) 3.9 3.7 3.5 3.3 2.2 2.1 2.0 1.3 1.3 1.2 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
Slide 5: Q2 Summary
nd 2 Quarter Summary th • Delivered 12 consecutive quarter of year-over-year earnings growth with EPS of $0.79, Adjusted EPS of $0.83 Generating Consistent Year- • Continued strong product mix drove record second quarter operating income for Specialty Alloys Operations (SAO); adjusted operating marg
Slide 6: Q2 End-Use Market Highlights
nd 2 Quarter End-Use Market Highlights vs. vs. Q2-20 Net Sales ex. Comments Q2-19 Q1-20 Surcharge ($M)* nd +19% -3% • Year-over-year (YoY) increases across all sub-markets with record 2 quarter shipments driven by strong demand Aerospace and $278.8 59% • Short-term disruption anticipated related to
Slide 7: Navigating 737 MAX Disruption
Navigating 737 MAX Disruption % of Net Sales Sub-market / Application Mix* End-use Market ex. Surcharge* • Rings • Bearings Engines 40% • Discs • Shafts Aerospace and Defense 59% Fasteners • Airframe • Engine 20% • Landing Gear • Electrical Structural 30% Medical 9% • Actuation • Distribution Defens
Slide 8: Q2 Financial Overview and Business Update - Tim Lain, CFO
nd 2 Quarter Financial Overview and Business Update Tim Lain Vice President and Chief Financial Officer 8nd 2 Quarter Financial Overview and Business Update Tim Lain Vice President and Chief Financial Officer 8
Slide 9: Income Statement Summary
Income Statement Summary Year-Over- Sequential $ Millions, except pounds and per-share amounts Q2-19 Q1-20 Q2-20 Year Change Change Pounds ('000) 63,918 62,298 59,298 (4,620) (3,000) Net Sales 556.5 585.4 573.0 16.5 (12.4) Net Sales ex. Surcharge Revenue* 449.4 486.6 471.2 21.8 (15.4) Gross Profit 1
Slide 10: Free Cash Flow Summary
Free Cash Flow Summary $ Millions YTD FY19 Q1-20 Q2-20 YTD FY20 Net Income + Non-cash Items 146 83 81 164 Inventory (151) (51) (57) (1 08) Working Capital / Other 55 (29) (1) (29) Total Net Working Capital / Other 96 (80) (58) (137) Pension Plan Contributions (3) (2) (1) (4) Net Cash Provided From O
Slide 11: SAO Segment Summary
SAO Segment Summary Q2 Operating Results Q2-19 Q1-20 Q2-20 vs Q2-19 vs Q1-20 Pounds ('000) 61,668 60,004 56,564 (5,104) (3,440) Net Sales ($M) 461.6 491.1 483.0 21.4 (8.1) Sales ex. Surcharge ($M) 356.2 393.2 382.5 26.3 (10.7) Operating Income ($M) 69.0 81.0 76.3 7.3 (4.7) % of Net Sales 14.9% 16.5%
Slide 12: PEP Segment Summary
PEP Segment Summary Q2 Operating Results Q2-19 Q1-20 Q2-20 vs Q2-19 vs Q1-20 Pounds* ('000) 3,300 3,250 3,424 124 174 Net Sales ($M) 112.9 109.4 106.0 (6.9) (3.4) Sales ex. Surcharge ($M) 109.4 107.9 104.1 (5.3) (3.8) Operating Income (Loss) ($M) 4.4 (2.0) 0.4 (4.0) 2.4 % of Net Sales 3.9% -1.8% 0.4
Slide 13: Q2 Fiscal Year 2020 Closing Comments
nd 2 Quarter Fiscal Year 2020 Closing Comments Tony Thene President and Chief Executive Officer 13nd 2 Quarter Fiscal Year 2020 Closing Comments Tony Thene President and Chief Executive Officer 13
Slide 14: Investing in Our Future Growth
Investing in Our Future Growth Additive Manufacturing Soft Magnetics Titanium Capacity Expansion ▪ $100 million investment in hot strip mill on ▪ High-value titanium offerings driving sales ▪ Created end-to-end additive manufacturing platform via strategic Reading campus growth consistently ahead of
Slide 15: Closing Comments
Closing Comments th ▪ 12 consecutive quarter of year-over-year earnings growth Continue to Deliver Solid Financial th ▪ 12 consecutive quarter of year-over-year backlog growth Results and ▪ SAO delivered highest second quarter operating income on record Operating Performance; End-to- ▪ Strong year-o
Slide 16: Appendix of Non-GAAP Schedules
Appendix of Non-GAAP Schedules 16Appendix of Non-GAAP Schedules 16
Slide 17: Non-GAAP Schedules: Adjusted Diluted Earnings Per Share
Non-GAAP Schedules (Unaudited) Adjusted Diluted Earnings Per Share $ Millions except per share amounts Q2-19 Q1-20 Q2-20 Diluted Earnings per Share $ 0 .73 $ 0 .85 $ 0 .79 Net Income 3 5.5 41.2 3 8.8 Special Items: Acquisition-related costs 1.2 - - Restructuring charges - - 1.8 Special Items 1 .2 -
Slide 18: Non-GAAP Schedules: Adjusted Operating Margin Excluding Surcharge Revenue
Non-GAAP Schedules (Unaudited) Adjusted Operating Margin Excluding Surcharge Revenue and Special Items $ Millions Q2-19 Q1-20 Q2-20 Net sales 5 56.5 585.4 5 73.0 Less: surcharge revenue 1 07.1 9 8.8 101.8 Net Sales Excluding Surcharge Revenue 449.4 486.6 4 71.2 Operating Income 5 5.4 59.8 5 5.0 Spec
Slide 19: Non-GAAP Schedules: Free Cash Flow
Non-GAAP Schedules (Unaudited) Free Cash Flow $ Millions Q2-19 Q1-20 Q2-20 YTD FY19 YTD FY20 Net cash provided from operating activities 3 7.8 0 .7 2 1.8 4 7.2 22.6 Purchases of property, plant, equipment and software (4 0.1) (4 7.5) (4 6.7) (81.7) (94.3) Proceeds from disposals of property, plant a
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