Carpenter Technology Corporation. November 14, 2008

Transcription

1 Carpenter Technology Corporation November 14, 2008

2 FORWARD-LOOKING STATEMENTS Some of Carpenter s statements will be forward-looking statements, which are based on current expectations. Risk factors that could cause actual results to differ materially from these forward-looking statements can be found in Carpenter s recent SEC filings CRS Holding, Inc. All Rights Reserved. Slide 2

3 CARPENTER TECHNOLOGY OVERVIEW Leader in Specialty Materials for Critical Applications 119 Years of Metallurgical and Manufacturing Expertise Strong Customer Relationships Well Positioned for Current Economic Conditions Healthy Cash Flow Generation Excellent Balance Sheet Managing for Profit in Uncertain Economy Strong Long Term Growth Prospects Attractive End-Use Markets International Experience and Capabilities Broad Product Offerings -Expanding Capacity for High Margin Products 2007 CRS Holding, Inc. All Rights Reserved CRS Holding, Inc. All Rights Reserved. Slide 3

4 STRONG FINANCIAL CONDITION Favorable Debt Position $300 million with little payable before CY 2011 Minimal financial covenants Healthy Cash Reserves Exceeds debt Invested conservatively Good Cash Generation Solid free cash flow expected 2008 CRS Holding, Inc. All Rights Reserved. Slide 4

5 MANAGING IN UNCERTAIN ECONOMY Maintain growth strategy Complete capacity expansion Position for growth upon recovery Restructure upper management 20% of senior management positions effected Streamline communications Focuses accountability Reduce fixed costs Working Capital Management Maintain DSO and closely track customer payments Optimize inventory levels 2008 CRS Holding, Inc. All Rights Reserved. Slide 5

6 SOPHISTICATED PRODUCTS FOR NICHE MARKETS TTM REVENUES - $1.92 BILLION Revenue by End-Use Market 12% 7% 10% 9% Revenue By Alloy Type 9% 38% 24% 52% Aerospace Energy Medical 34% Automotive Consumer Industrial 5% Specialty Alloys Stainless Steels Titanium Tool and Other Steels 2008 CRS Holding, Inc. All Rights Reserved. Slide 6

7 (in millions) $800 $700 $600 $500 $400 $300 CRS Aerospace Revenue ENGINEERED MATERIALS FOR AEROSPACE APPLICATIONS Diverse Variety of High Performance Materials Specialty Alloys Stainless Steel Titanium Globally Recognized Certified Material Supplier for Mission-Critical Applications $200 $100 $0 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 TTM Ex-Surcharge Surcharge Jet Engine Components (Ni-based alloys) Compressors / Rings and Disks Turbine Blades Gears and Drive Shafts Fasteners (Ni-based and Ti alloys) Structural Parts (Ni-based and stainless alloys) Landing Gear Flap Tracks 2008 CRS Holding, Inc. All Rights Reserved. Slide 7

8 (in millions) $250 $200 CRS Energy Revenue ENGINEERED MATERIALS FOR ENERGY APPLICATIONS Highly Engineered Materials Specialty Alloys Stainless Steels Powder Metals $150 Performance Materials for Demanding Applications $100 $50 $0 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 TTM Ex-Surcharge Surcharge Oil & Gas Exploration Non-Magnetic Drill Collars Pressure Housings Pump Shafts Down Hole Safety Cable Power Generation (Industrial Gas Turbines) Turbine Blades Disks Shafts 2008 CRS Holding, Inc. All Rights Reserved. Slide 8

9 AEROSPACE AND ENERGY MARKET CONDITIONS Robust Long-Term Dynamics Aerospace Strong Build Schedule Thru 2015 Full Boeing/Airbus Order Books Need for Fuel Efficient Planes Expanding Customer Relationships Increased Revenue Per Plane From Larger Composite Planes Energy Strong Directional Drilling Activity Continuing Demand for IGT in US and Mideast Short-Term Disruptions Boeing Strike Repercussions Removal of Planes From Domestic Service Pushouts of 787 and A380 Potential Decline in Build Rates Full Inventories in Engine Supply Chain Oil and Gas supply chain inventories full Growth slowing for higher value IGT 2008 CRS Holding, Inc. All Rights Reserved. Slide 9

10 OTHER END MARKETS (millions) Industrial Automotive Consumer Medical Revenue TTM $458 $192 $166 $129 Valves and fittings Welding Fuel injectors Engine valves Safety applications Electronics Housing Sports Bone fracture fixation Hip and knee replacements Vascular devices Surgical instruments 2008 CRS Holding, Inc. All Rights Reserved. Slide 10

11 INTERNATIONAL SALES (FY 2008) 34% of TTM Revenues (in millions) 13% 58% 8% $700 $600 26% CAGR 17% 4% $500 Asia Pacific Canada Mexico Europe Other 20% 7% 10% $400 $300 $200 38% 7% $100 18% Aerospace Energy Medical Automotive Consumer Industrial For 3 months ended $0 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 TTM CRS Holding, Inc. All Rights Reserved. Slide 11

12 MANUFACTURING PROCESSES Expansions / Upgrades Premium Melting Vacuum Induction Melting (VIM) -Improved efficiency -40% capacity expansion -Commercial production 2Q CY 2009 Electroslag Remelting (ESR) -2 New furnaces by CY end Vacuum Arc Remelting (VAR) -4 New furnaces completed and operating Hot Working Rotary Forge -Major electrical and mechanical rebuild Q1 FY09 Rolling Mill -Control upgrades Q1 FY09 -Working through start up issues 2007 CRS Holding, Inc. All Rights Reserved CRS Holding, Inc. All Rights Reserved. Slide 12

13 STRATEGIC PRIORITIES GROWTH Expansion in Key Global Markets Market and Customer Focus Acquisitions OPERATIONAL EXCELLENCE Improving Basic Systems and Processes Driving Out Waste Focus on Customer Satisfaction (Quality and Delivery) TECHNOLOGY LEADERSHIP Develop New Products for Increasingly Demanding Applications Increase R&D Investment Improve Quality and Lower Costs Through Process Development and State-of-the-Art Equipment 2007 CRS Holding, Inc. All Rights Reserved CRS Holding, Inc. All Rights Reserved. Slide 13

14 FINANCIAL HIGHLIGHTS (CONTINUING OPERATIONS) $ IN MILLIONS FY 2007 FY 2008 (ex. special legal reserve)* FY Q SALES SALES excl. surcharge % change from prior year $ $ % $ $ % $413.7 $301.9 (2.9%) OPERATING INCOME ex. pension EID % of sales excl. surcharge $ % $ % $ % DILUTED EPS % change from prior year $ % $ % $0.58** (45.7%) EBITDA % of sales excl. surcharge $ % $ % $ % * Special environmental litigation reserve in Q was $21 million or $.26/share ** Includes increase in pension EID cost of $20.1 million or $0.28/share for full year ($0.06 in Q1) 2008 CRS Holding, Inc. All Rights Reserved. Slide 14

15 CASH DEPLOYMENT PRIORITIES CAPITAL INVESTMENTS Completion of $115 million premium melt capacity expansion Prioritizing other capex investment needs ACQUISITION OPPORTUNITIES Active and disciplined approach Close to core and in strategic markets/geographies SHARE BUYBACK Retired 7.6 million shares (17%) in 2 prior authorizations Evaluating in light of general economy and other cash applications DIVIDEND Consistent payout 2008 CRS Holding, Inc. All Rights Reserved. Slide 15

16 Summary Leading position in attractive end markets and product niches Strong cash generation and balance sheet, with flexibility to fund growth initiatives through challenging economic conditions Industry leader in metallurgical and processing expertise, with commitment to future R&D, to meet demand for higher performing materials Driving significant improvements to core operating processes Commitment to deliver attractive return to shareholders 2008 CRS Holding, Inc. All Rights Reserved. Slide 16