Carpenter Technology Corporation · NYSE:CRS
Carpenter Technology — Q1 FY2014 Earnings Presentation
19 slides from Carpenter Technology's earnings presentation, Oct 29, 2013
Slide 1: Fiscal Year 2014 1st Quarter Earnings Call
Fiscal Year 2014 1st Quarter Earnings Call October 29, 2013
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: 1st Quarter FY14 Summary
1st Quarter FY14 Summary Bill Wulfsohn President and Chief Executive Officer 3
Slide 4: 1st Quarter FY14 Summary
Q1 earnings in-line with our expectations – effectively managing through: seasonal impacts generally soft market environment Solid operational execution Drove strong overhead cost control Achieved strong manufacturing performance Volume up 1%, revenue down 7% due to mix change Well positioned for fu
Slide 5: End-Market Sales and Trends
Aerospace & Defense 182.9 45% -6% -20% Airplane delivery rates** up 9% Aug YTD 2013 vs. 2012 Numerous customers have publicly announced temporary production reductions Solid YOY growth in titanium fastener demand Energy 59.1 14% -15% -27% Rig count down 1% vs. same quarter last year, but clear shift
Slide 6: 1st Quarter FY14 Financial Overview
Tony Thene Senior Vice President and Chief Financial Officer 6 1st Quarter FY14 Financial Overview
Slide 7: 1st Quarter FY14 Financial Overview
Q1 Net income of $34.6 million or $0.65 per share Sales, excluding surcharge, of $412.1 million Aerospace and Energy comprised 59% of sales Operating margins (ex pension EID) increased sequentially by 20 basis points due to focused cost control and manufacturing efficiencies Cash Flow from Operation
Slide 8: Income Statement Summary
Income Statement Summary Sequential change in earnings per share in-line with normal seasonality 8 * Detailed schedule included in Non-GAAP Schedules in Appendix $ Millions, except per-share amounts Q1-13 Q4-13 Q1-14 Sequential Change Net Sales 544.9 611.8 498.6 (113.2) Sales ex. Surcharge * 440.8 4
Slide 9: Free Cash Flow Summary
9 Free Cash Flow Summary $ Millions Q1-13 Q1-14 Change Net Income + Non-cash Items 82 76 (6) Inventory (79) (47) 32 Other working capital 8 37 29 Total Net Working Capital (71) (10) 61 Pension Plan Contributions - Required (48) (2) 46 Net Cash from Operating Activities (37) 64 101 Before Discretiona
Slide 10: SAO Business Update
SAO Business Update Andy Ziolkowski Senior Vice President Commercial, Specialty Alloys Operations 10
Slide 11: SAO Segment Summary
Q1 Operating Results Q1 Business Highlights Q2-14 Outlook Anticipated impacts from Seasonal volume decline from Q4FY13 Major planned maintenance on Reading forge Year-over-year volume increase in Transportation and Industrial & Consumer Weaker mix driven by continued aerospace destocking Focused cos
Slide 12: PEP Business Update
PEP Business Update Gary Heasley Senior Vice President Performance Engineered Products 12
Slide 13: PEP Segment Summary
Q1 Operating Results Q1 Business Highlights Q2-14 Outlook Improved operating income driven by: Reduced cost base in powder business Increased drill collar rentals Sales down 11% sequentially Seasonal volume decline Lower powder sales Solid Aerospace titanium fastener demand Slightly weaker mix at Dy
Slide 14: Growth Opportunities
Growth Opportunities Bill Wulfsohn President and Chief Executive Officer 14
Slide 15: Growth Enablers
15 Growth Enablers Athens Facility United Technologies Temper Tough TM Alloy Remains on-time and on-budget 519,000 square feet now under roof 2/3rds of capex spend completed Multiple high level customer visits Taking actions based on increased insourcing opportunities Multi-level agreement covering
Slide 16: 1st Quarter FY14 Summary
1st Quarter FY14 Summary 16 Q1 Highlights Strong execution in a difficult environment Seasonal impacts Generally soft market conditions Extensive Reading forge maintenance Met our earnings expectations Cash flow was negative due to significant capex spend – but better than expected with strong cash
Slide 17: Appendix of Non-GAAP Schedules
Appendix of Non-GAAP Schedules 17
Slide 18: Non-GAAP Schedules: Operating Margin Excluding Surcharge and Pension
18 Preliminary Non-GAAP Unaudited Schedules (in millions) OPERATING MARGIN EXCLUDING SURCHARGE AND PENSION EARNINGS, INTEREST AND DEFERRALS Q1-13 Q4-13 Q1-14 Net sales 544.9 $ 611.8 $ 498.6 $ Less: surcharge revenue 104.1 115.2 86.5 Consolidated net sales excluding surcharge 440.8 $ 496.6 $ 412.1 $
Slide 19: Non-GAAP Schedules: Free Cash Flow
19 Preliminary Non-GAAP Unaudited Schedules (in millions) FREE CASH FLOW Q1-13 Q1-14 Net cash provided from (used for) operating activities (36.7) $ 64.0 $ Purchases of property, equipment and software (56.4) (114.9) Dividends paid (9.6) (9.6) Free cash flow (102.7) $ (60.5) $ Management believes th
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