Macquarie Aerospace & Defense Conference. Chairman & CEO

Transcription

1 Macquarie Aerospace & Defense Conference May 14, 2009 Mark Donegan Chairman & CEO

2 Forward-Looking Statements Information included within this presentation describing projected growth and future results and events constitutes forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of Actual results in future periods may differ materially from the forward-looking statements because of a number of risks and uncertainties, including but not limited to fluctuations in the aerospace, power generation, and general industrial cycles; the relative success of the Company s entry into new markets; competitive pricing; the financial viability of the Company s significant customers; the impact on the Company of customer labor disputes; demand, timing, and market acceptance of new commercial and military programs; the availability and cost of energy materials, supplies, and insurance; the cost of pension benefits and post-retirement medical benefits; equipment failures; relations with the Company s employees; the Company s ability to manage its operating costs and to integrate acquired businesses in an effective manner; governmental regulations and environmental matters; risks associated with international operations and world economies; the relative stability of certain foreign currencies; the impact of adverse weather or natural disasters; the availability and cost of financing; and implementation of new technologies and process improvement. Any forwardlooking statements should be considered in light of these factors. The Company undertakes no obligation to publicly release any forward-looking information to reflect anticipated or unanticipated events or circumstances after the date of this document.

3 Record Fiscal Year FY09 FY08 % Change Net Sales $ 6,827.9 M $ 6,749.8 M 1.2 % Consolidated Segment Operating Income $ 1,599.7 M $ 1,500.4 M 6.6 % Margin % 23.4 % 22.2 % Earnings Per Share from Continuing Operations (diluted) $ 7.38 $ 6.84 (Includes $0.06 and $0.03 of restructuring charges in FY09 and FY08, respectively) Record net sales Record consolidated segment operating income Record operating margin from continuing operations STRONG PERFORMANCE IN CHALLENGING TIMES

4 Sales By Market FY09 Seamless Pipe 31% IGT 49% Oil & Gas/ Other 20% POWER 25% GENERAL INDUSTRIAL & OTHER 22% 53% AEROSPACE Military 22% Regional and Business 10% Large Commercial 68%

5 Sales Upside Areas of Opportunity PCC $ Content Per Commercial Aircraft Platform / ER A /600 A A NG A320 *Data points represent average dollar content $ Millions $0 $1 $2 $3 $4 $5 $6 Solid position on base programs High dollar content on 787 aircraft

6 Sales Upside Areas of Opportunity PCC $ Content Per Military Aircraft Platform F-22 C-17 F-18 F-35 *Data points represent average dollar content $ Millions $0 $1 $2 $3 $4 $5 Strong position on production/development programs Continuing upside potential

7 Sales Upside Areas of Opportunity Base Programs Additional 787 airframe/engine share Castings Forgings Fasteners Development Programs A350 airframe/trent XWB engine KC-X tanker (airframe/engine) Geared turbofan engine F136 engine Longer-Term Programs CFM56 Growth V2500 Select UAVs GE/Honda HF120 engine MK29 missile launcher Hyfly hypersonic missile FUTURE SHARE GAINS ON ALL FRONTS

8 Sales Upside Areas of Opportunity PCC $ Content Per IGT Platform $ Millions $4 $3 50Hz Middle East China Russia Africa Europe Japan 60Hz Middle East South America North America Japan +275MW/50Hz $2 185MW/60Hz $1 $ MW/50-60Hz MW/50-60Hz 256MW/50Hz MW/50-60Hz *Data points represent average dollar content Well positioned on domestic and international platforms Growing dollar content on advanced programs

9 Sales Upside Areas of Opportunity Seamless Pipe Coal-fired Power Plants Dollar content linked to output 300MW $2.5M 600MW $7.0M 1,000MW $12.0M IGT Power Plants > $1.5M in typical installation Q4 FY09 sales growth of 37% year-over-year Steady backlog at ~ $1B

10 Sales Upside Areas of Opportunity Additional Power Markets Coal and IGT Special Metals Move toward higher efficiencies/lower cost Major transition to to nickel alloy Higher temperatures/pressures/corrosion $200-$250M Market Oil & Gas Special Metals Emerging demand for for larger diameter tubing Increased oil oil & gas well productivity Higher strength New alloys/new patents Increased corrosion resistance Better economy Hackney Ladish (HL) Expand into international markets now primarily domestic Wyman-Gordon branding Move HL HL product types to to new alloys power/refinery/chemical Enter combined cycle power generation market Pipe and fitting packages $500M Market >$450M Market

11 Steady Operating Margin Improvement 30% SMC 6.5% 25% SPS 5.6% 22.2% 23.4% 20% 18.3% 15% 12.6% 14.9% 15.7% 16.0% 14.7% 15.1% 16.0% 10% 5% 0% FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09

12 Operating Performance Areas of Attack Investment Cast Products Variable costs Labor Productivity Highly efficient, cross-trained work force Supply chain consolidation Utility conservation In-house vs. outside services Material Increased revert blend Higher revert availability Fixed costs Laser focus on engineering Emphasis on manufacturing efficiencies Scrap/rework Material utilization Other cost-reduction opportunities

13 Operating Performance Areas of Attack Forged Products Material utilization Increased revert Consolidation of heats Elemental efficiencies Additional internal (Wyman-Gordon) supply Buy-to-fly upside More near-net shape Total utilization of PCC assets Variable costs Maintenance optimization Energy conservation

14 Operating Performance Areas of Attack Fastener Products Variable costs Increased automation Improved man-to-machine ratios Material Purchasing synergies Increased internal buys (Special Metals) Southern California operations Efficient utilization of assets across operations Heat treat Testing Machining Consolidation of SG&A functions

15 FY10 Outlook Key Markets AEROSPACE SALES Q1/Q2 Inventory destocking across the segments Adjustment to previous growth expectations in supply chain Driven by engine/landing gear OEMs, followed by Boeing/Airbus subcontractors Q3/Q4 Stabilizing schedules on base aircraft platforms Increased 787 build rates One 787 = Five 737s Continued opportunity for fastener share gains

16 FY10 Outlook Key Markets POWER SALES Q1/Q2 Stable IGT market Increased penetration of new customers Aftermarket Seamless pipe Solid sales Steady backlog Q3/Q4 Ramping up Painesville IGT facility Continued penetration of IGT OEMs Stable large coal-fired power plant construction worldwide Extended market reach through Hackney Ladish Market expansion New metals New oil & gas applications Leverage combined Wyman-Gordon/Special Metals assets

17 FY10 Outlook Operating Performance Q1/Q2 EBIT Volume declines Lost leverage Lost fixed absorption Managing employment levels to support Q3/Q4 demand Similar to Boeing strike environment Annual Q2 Events Scheduled forge shutdowns Extended European holidays Q3/Q4 EBIT Tremendous potential for operational improvement Variable cost Material utilization Fixed asset leverage Solid productivity Effective leverage of sales growth RELENTLESS ATTACK ON COSTS TO PROTECT MARGINS Productivity Yields Leveraging entire PCC toolkit Revert utilization Scrap and rework

18 Questions