Stainless & Its Alloys

Transcription

1 Stainless & Its Alloys What s Hot & Not in Aero, Power Gen & Energy? September 16, 2014 univstainless.com

2 Guilty as Charged 2

3 Reflections on The world ain't all sunshine and rainbows. You, me or nobody is gonna hit as hard as life (or an aero inventory cycle). But it ain t about how hard you can get hit. It s about how hard you can get hit and keep moving forward. That s how winning is done. 3

4 Bullwhip Effect Has Eased De-Stocking Largely Over 4

5 Pick Your Poison 5

6 Universal Stainless Today: Sales by End Market YTD 2014* * For six months ended 6/30/14 6

7 Universal Bookings Accelerating Subject to Seasonality YOY Bookings Improvement ( before Surcharge): Q1-24.2%; Q2-21.6%; Q3-32.4% 7

8 The Purchasing Manager s Index (PMI) Moving Up Improving Confidence (?) Strength in new orders and production -17 out of 18 mfg sectors reporting growth

9 Historical & Projected Jet Airplane Deliveries Two Major Downturns: ; One Minor Downturn: Source: Airline Monitor, Boeing & Frost & Sullivan 9

10 Jan-11 June Jan 12 June Jan-13 June Jan-14 June Nickel Prices Monthly LME Average Narrow Trading $9/ Lb. Breakout (?) $14.00 $12.00 Nickel up 40% YTD Moly up 38% YTD Chrome up 12% YTD Cobalt up 30% YTD $10.00 $8.00 $6.00 $4.00 $

11 Historical and Projected World Airline Traffic (ASM) (Billiions) Source: Airline Monitor, Boeing, Frost & Sullivan 11

12 Aerospace Historical and Project MRO Spending ($ Billions) $68 $ $36 $37 $38 $39 $41 $45 $46 $42 $51 $50 $

13 End Markets Aerospace Demand Drivers: Growth in revenue passenger miles (RPM s) Growth in Airline Seat Miles (ASM s) High fuel costs Environmental concerns Aging fleets Low interest rates Points to consider: World traffic growth continues to increase- 5.2% CAGR Load factors approaching 80.0 Record retirements per year; 17K by 2035 In-service fleet will double in next 20 years (22,928 53,393) Boeing & Airbus have an 8-year backlog 47,800 Total Deliveries between

14 End Markets Power Generation Demand Drivers: Rapid growth of middle classes Availability & cost of natural gas Renewable energy support Technological advancements Environmentally friendly Points to Consider: 25% of new global power will be gasnow exceeding coal in US GE s 6-week, $17B Alstom deal sends a message PG Service companies growing at double-digit rates ( GE-17%) Excess generating capacity limiting NA new turbine business Pent-up demand (?) 14

15 North American Natural Gas and Oil Rig counts 1,584 Oil Rigs 340 Gas Rigs 15

16 End Markets Oil & Gas Demand Drivers: Growing global demand for energy Growth in natural gas and renewables Implementation of advanced drilling technologies Increase in hostile drilling environments Declining US reliance on imported liquid fuels Fossil fuels still providing 78% of energy in 2035 Points to Consider Global E&P Spending growing 3.3% to record $644B in 2014 Gas inventories being replenished (1TCF now 463bcf) 2015 oil production projected highest since 1972 in US. 40% increase in global oil consumption by 2040 (EIA) Natural gas consumption (TWH) 3%+ increase in US Ukraine situation remains a wild card over short term. 16

17 20 YEARS SERVING CUSTOMERS MOVING TO ADVANCED ALLOYS NASDAQ: USAP univstainless.com

18 Integrated Operations: High Quality Products Semi-Finished Ingots Reroll or Forging Billet Plate Bridgeville Finished Special Shapes Bloom Bar Forged Bar Bar Rod and Wire Titusville Bridgeville North Jackson Dunkirk 18

19 Manufacturing Integration Path of North Jackson PRODUCTS Plate ESR Bar Mills Machined Bars Forging Billets AOD Melt VAR 2 Hi/4 Hi Mill Bar Finish Plate & Bloom Bar Finish Forged Rounds Ingot Reroll Billets Round Bar Flats & Squares Forged Squares VIM Melt More VAR Radial Forge Forge Finish Large Forged Sections Large Forged Bars Remelted Ingots North Jackson Integration Impact: B roader, more co mplete product line USAP co ntrols key h o t work processes Capacity to support growth 19

20 North Jackson Facility Ramp-up Hydraulic Radial Forge Vacuum-Induction Melting (VIM) Furnace Four New Vacuum-Arc Remelting (VAR) Furnaces Status Heat Treating Equipment Finishing Equipment Industry Certifications Customer Approvals In Process 20

21 Moving to Advanced Alloys Qualification Milestones / Major Customer Approvals AS 9100 Forge, VIM, VAR: North Jackson March/June 2012 ISO Material Testing: North Jackson April 2012 Dunkirk October 2013 NADCAP Material Testing: North Jackson August 2012 Bridgeville December 2012 Dunkirk October 2013 NADCAP Heat Treat: North Jackson February 2013 Bridgeville May 2013 Dunkirk June 2013 OH 18001:2007: North Jackson March 2014 NADCAP NDT ALL (Pending 2014) Rolls-Royce - SABRe: ALL April 2013 Pratt & Whitney LCS: ALL March 2014 GE Aviation S-400/S-1000: ALL July

22 Three-Year Status Report on North Jackson New Customer Approvals: 33 New Products Commercialized: 30 New Products Currently Under Development: 8 Employee Growth: +30% with Focus on Advanced Alloy Technology Premium Products as Percentage of Sales: 8% (from 0%) 22

23 Conclusions 2013 Destock; 2014 Transition; 2015 Solid year Positive momentum developing: o o o o Inventories coming in-line ( perhaps low) Raw material prices up Lead times extending moderately Major market drivers are positive Producers making investments to support customer needs (speed, on-time, quality & capacity) New capacity impacting shape and pace of recovery Washington DC continues to be a drag 23

24 We Can Do This Now, if you know what you re worth, then go out & get what you re worth. 24