Slide 1: Carpenter Technology Corporation 2nd Quarter Fiscal Year 2023 Earnings Call
January 26, 2023 CARPENTER TECHNOLOGY CORPORATION nd 2 Quarter Fiscal Year 2023 Earnings Call 1
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: 2nd Quarter Fiscal Year 2023
nd 2 QUARTER FISCAL YEAR 2023 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) 4 3.7 3.5 3.3 3 2.5 2.2 2.1 2.0 2 1.5 1.5 1.3 1.2 1.1 1.0 1 0.6 0.5 0 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 YTD © 2023 CRS Holdings, LLC. All rights reserved. 4
Slide 5: Second Quarter Summary
Second Quarter Summary • Demand conditions across end-use markets remain solid; backlog growth of 9% sequentially and 107% year-over-year • Capturing share and price gains through contract negotiations; increased prices on transactional business Return to Profitability With • SAO segment gaining mom
Slide 6: Second Quarter End-Use Market Highlights
Second Quarter End-Use Market Highlights Q2-23 NET SALES MARKET EX. SURCHARGE % VS. Q2-22 VS. Q1-23 COMMENTS ($M)* • Ongoing improvements to global travel demand and industry need for new planes • Supply chains struggling to keep up with demand, with more material wanted sooner $200.4 48% • Growing
Slide 7: Financial Overview and Business Update
nd 2 QUARTER FISCAL YEAR 2023 FINANCIAL OVERVIEW AND BUSINESS UPDATE Tim Lain | Senior Vice President and Chief Financial Officer 7
Slide 8: Income Statement Summary
Income Statement Summary YEAR-OVER- SEQUENTIAL $ millions, except pounds and per-share amounts Q2-23 Q2-22 Q1-23 YEAR CHANGE CHANGE Pounds (‘000) 50,500 43,082 44,890 7,418 5,610 Net Sales 579.1 396.0 522.9 183.1 56.2 Net Sales ex. Surcharge Revenue* 420.8 314.9 375.7 105.9 45.1 Gross Profit 70.0 13
Slide 9: SAO Segment Summary
SAO Segment Summary Q2-23 OPERATING RESULTS YEAR-OVER- SEQUENTIAL Q2-23 Q2-22 Q1-23 YEAR CHANGE CHANGE Pounds ('000) 49,442 43,248 44,562 6,194 4,880 Net Sales ($M) 495.8 330.8 447.3 165.0 48.5 Net Sales ex. Surcharge ($M) * 346.2 251.6 305.7 94.6 40.5 Operating Income (Loss) ($M) 30.3 (20.3) 19.9 5
Slide 10: PEP Segment Summary
PEP Segment Summary Q2-23 OPERATING RESULTS YEAR-OVER- SEQUENTIAL Q2-23 Q2-22 Q1-23 YEAR CHANGE CHANGE Pounds ('000) * 2,978 2,776 2,326 202 652 Net Sales ($M) 106.7 85.7 93.2 21.0 13.5 Net Sales ex. Surcharge ($M) ** 98.0 83.8 87.7 14.2 10.3 Operating Income ($M) 9.3 3.0 6.3 6.3 3.0 Adjusted Operat
Slide 11: Free Cash Flow Summary
Free Cash Flow Summary $ millions Q1-23 Q2-23 6 MOS FY23 6 MOS FY22 Net Income + Non-Cash Items 32 49 81 6 Inventory (121) (106) (227) (110) Working Capital / Other 11 (29) (18) (32) Total Net Working Capital / Other (110) (135) (245) (142) Net Cash Used for Operating Activities (78) (86) (164) (136
Slide 12: Closing Comments
nd 2 QUARTER FISCAL YEAR 2023 CLOSING COMMENTS Tony Thene | President and Chief Executive Officer 12
Slide 13: Second Quarter Recap
Second Quarter Recap • Strong demand environment across end-use markets, especially in Aerospace and Defense and Medical • Ramping manufacturing operations and increasing productivity across facilities to capture demand • Improving margins with higher volumes, improved product mix and increased pric
Slide 14: On-Track to Return to FY19 Operating Income Run-Rate and to Grow Beyond
On-Track to Return to FY19 Operating Income Run-Rate and to Grow Beyond Strong demand outlook across end-use markets supports long- Focused on ramping operations to capture demand and realize term growth FY23 outlook MARKET OUTLOOK Projected Operating Income ($M) Will exceed pre-COVID-19 levels, wit
Slide 15: Appendix of Non-GAAP Schedules
APPENDIX OF NON-GAAP SCHEDULES 15
Slide 16: Non-GAAP Schedules
Non-GAAP Schedules Adjusted diluted earnings (loss) per share $ millions, except per-share amounts Q2-23 Q2-22 Q1-23 Diluted Earnings (Loss) per Share $0.13 ($0.61) ($0.14) Net Income (Loss) 6.2 (29.4) (6.9) Special Item, net of tax: COVID-19 costs — 1.4 — Special Item, net of tax: — 1.4 — Net Incom
Slide 17: Non-GAAP Schedules
Non-GAAP Schedules Adjusted operating margin, excluding surcharge revenue and special item $ millions Q2-23 Q2-22 Q1-23 Net sales 579.1 396.0 522.9 Less: surcharge revenue 158.3 81.1 147.2 Net sales excluding surcharge revenue 420.8 314.9 375.7 Operating income (loss) 22.6 (31.5) 8.3 Special item: C
Slide 18: Non-GAAP Schedules
Non-GAAP Schedules Adjusted segment operating margin, excluding surcharge revenue and special item SAO SAO SAO PEP PEP PEP $ millions Q2-23 Q2-22 Q1-23 Q2-23 Q2-22 Q1-23 Net sales 495.8 330.8 447.3 106.7 85.7 93.2 Less: surcharge revenue 149.6 79.2 141.6 8.7 1.9 5.5 Net sales excluding surcharge rev
Slide 19: Non-GAAP Schedules
Non-GAAP Schedules Free cash flow $ millions Q1-23 Q2-23 6 MOS FY23 6 MOS FY22 Net cash used for operating activities (78.0) (86.4) (164.5) (136.3) Purchases of property, plant, equipment and software (13.5) (17.5) (31.0) (33.4) Proceeds from disposals of property, plant and equipment and assets hel
Slide 20: Your trusted partner in innovation.
Your trusted partner in innovation. Carpenter Technology Corporation (NYSE: CRS) is a global leader in high-performance specialty alloy-based materials and process solutions for critical applications in the aerospace, defense, medical, transportation, energy, industrial and consumer electronics mark