Slide 1: 1st Quarter 2015 Earnings Call
1st Quarter 2015 Earnings Call October 23, 2014 Carpenter Technology Corporation Unless otherwise noted, the logo and registered trademarks are property of CRS Holdings, Inc. a subsidiary of Carpenter Technology Corporation.
Slide 2: Cautionary Statement
Cautionary Statement 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 pr
Slide 3: 1st Quarter Fiscal Year 2015 Summary
Bill Wulfsohn President and Chief Executive Officer 1st Quarter Fiscal Year 2015 Summary
Slide 4: 1st Quarter Summary and Opening Comments
1st Quarter Summary and Opening Comments 4 Challenging First Quarter but Recovery in Month of September Q1 earnings significantly impacted by operational inefficiencies driven by Reading shutdown and Latrobe press outage. • Weaker mix exacerbated by operational inefficiencies. • Strong recovery in m
Slide 5: Sales by End-Use Market
5 Aerospace & Defense 180.7 41% -1% -15% Lower sales of premium products for defense and decline in certain engine materials created a weaker overall mix YOY Demand returning for aerospace distribution but at lower average selling price versus prior year Sales for aero engine materials up 5% and fas
Slide 6: 1st Quarter Fiscal Year 2015 Financial Overview
Tony Thene Senior Vice President and Chief Financial Officer 1st Quarter Fiscal Year 2015 Financial Overview
Slide 7: Income Statement Summary
Income Statement Summary 7 Q1 Net Income includes a favorable legal settlement of $4.4 million or $0.05/share *Detailed schedule included in Non-GAAP Schedules in Appendix $ Millions, except per-share amounts Q1-14 Q4-14 Q1-15 Sequential Change Pounds ('000) 64,892 80,538 71,746 (8,792) Net Sales 49
Slide 8: Free Cash Flow Summary
Free Cash Flow Summary 8 The clerical accuracy of certain amounts may be impacted due to rounding. $66 million of cash and $558 million of total liquidity at end of Q1 $ Millions Q1-14 Q1-15 vs LY Net Income 35 14 (21) Non-cash Items 44 47 3 Inventory (47) (31) 16 Working Capital / Other 10 (12) (22
Slide 9: Share Repurchase Authorization
Share Repurchase Authorization 9 Demonstrates ongoing commitment to deliver value to our shareholders p to $500 million share repurchase authorization over two years • Have the option to engage in share repurchases from time to time at the Company’s discretion based on: ‒ Capital needs of the busine
Slide 10: SAO Business Update
Andy Ziolkowski Senior Vice President Commercial, Specialty Alloys Operations SAO Business Update
Slide 11: SAO Segment Summary
SAO Segment Summary 11 Q1 Operating Results Q1 Business Results Q2 Outlook Revenues were up in all end-markets except Aerospace & Defense versus Q1 FY14 Overall weaker sales mix relative to Q1 FY14 Higher labor and maintenance/supply costs and reduced output levels caused by: unanticipated startup i
Slide 12: PEP Business Update
Gary Heasley Senior Vice President Performance Engineered Products PEP Business Update
Slide 13: PEP Segment Summary
PEP Segment Summary 13 PEP Segment Q1 Results and Q2 Outlook Q1-14 Q4-14 Q1-15 vs LY vs Q4 Pounds ('000) 2,666 3,790 3,034 368 (756) Sales ex. Surcharge ($M) 117.5 136.0 129.6 12.1 (6.4) Op Inc ex. EID ($M) 11.6 12.2 9.7 (1.9) (2.5) % of Sales ex. Surcharge 9.9% 9.0% 7.5% -2.4% -1.5% Sales up 10% vs
Slide 14: Growth Enablers and Forward Outlook
Bill Wulfsohn President and Chief Executive Officer Growth Enablers and Forward Outlook
Slide 15: Growth Enablers
Capacity Expansion Rolls Royce Contract Expanded Dynamet titanium wire capacity by 25% and bar capacity by 35% Nearing completion of the China facility that will provide improved customer service by localizing product finishing Expanded Amega West capacity and scope to support growing demand for dir
Slide 16: Outlook and Closing Comments
Outlook and Closing Comments 16 Forward Outlook Expectations Revenue backlog for premium tons is up 14% sequentially. • Continued progress on customer qualifications at Athens. • New contracts with key customers aimed at Athens’ capacity. • Must execute on the Reading press shutdown and return proce
Slide 17: Appendix of Non-GAAP Schedules
Appendix of Non-GAAP Schedules
Slide 18: Non-GAAP Schedules: Operating Margin Excluding Surcharge and Pension
Preliminary Non-GAAP Unaudited Schedules 18 Operating Margin Excluding Surcharge And Pension Earnings, Interest And Deferrals Q1-14 Q4-14 Q1-15 Net sales 498.6 604.6 549.8 Less: surcharge revenue 86.5 115.7 109.7 Consolidated Net Sales Excluding Surcharge 412.1 488.9 440.1 Operating income 55.8 59.2
Slide 19: Non-GAAP Schedules: Free Cash Flow
Preliminary Non-GAAP Unaudited Schedules 19 Free Cash Flow Q1-14 Q1-15 Net cash provided from operating activities 39.5 15.0 Purchases of property, equipment and software (90.4) (59.0) Proceeds from disposals of property and equipment - 0.1 Dividends paid (9.6) (9.6) Free Cash Flow (60.5) (53.5) $ M