J.P. Morgan Aviation, Transportation & Defense Conference. Mark Donegan Chairman & CEO March 9, 2010

Transcription

1 J.P. Morgan Aviation, Transportation & Defense Conference Mark Donegan Chairman & CEO March 9, 2010

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 forward-looking 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 Building Strength In Power Markets Baseline Wyman-Gordon interconnect pipe

4 Coal-Fired Plant Schematic Boiler Island Hot Reheat Steam Pipes Turbine Island Feed Water Pipes BOILER Main Steam Pipes STEAM TURBINE Feed Water Pumps Interconnecting Pipe Schematic

5 Building Strength In Power Markets Baseline Wyman-Gordon interconnect pipe Dominant market position worldwide Advantages of inner diameter controlled pipe Better predictability of pressure drops/flow in system Reduced weight and pipe hanger loads Reduced welding costs Advanced alloys P91/P92 high chrome carbon steel Higher temperatures greater efficiencies Niche market One of the three manufacturers for 600MW plants ~ $5M interconnect pipe per plant One of two manufacturers for 1,000MW plants ~ $9M interconnect pipe per plant

6 Building Strength In Power Markets Baseline Wyman-Gordon interconnect pipe Cont d Recognized leader in Ultra Supercritical power plants Higher efficiencies Lower CO 2 emissions Additional market opportunities Nuclear projects Qualified with Westinghouse and Areva Large refineries Petrochemical projects Solid Market Position BUT Walking Away From $1 Billion Boiler Pipe Market

7 Building Strength In Power Markets Strategic Options Green field operation Massive capital investment Extensive construction time Rigorous, long-term qualifications Partnership with existing manufacturer Strong market position Solid production capabilities Well-developed skill set

8 Building Strength In Power Markets Chengde Boiler Pipe One of the largest boiler pipe manufacturers in China Significant share of Chinese boiler market ~ $2.5M boiler pipe per 600MW plant ~ $6.0M boiler pipe per 1,000MW plant Focus on smaller diameters/shorter lengths/lower alloys Specific cut lengths required for boiler applications Expertise in carbon steel and low chromes (P11/P22) Capacity to manufacture larger diameters Modern, well-run facility Proprietary manufacturing processes Significant cost advantages Extensive product portfolio Good customer relationships Additional benefits Cold drawing bench Final process required for 9 ⅝ downhole pipe Special Metals access to $200M oil & gas market over next two years Further upside in out years Cost-effective source for Hackney Ladish input stock

9 Building Strength in Power Markets Chengde Boiler Pipe PCC Contributions Wyman-Gordon worldwide name recognition Access to export markets Quality control Shared best practices Productivity Process control Inventory Scrap and rework Complete package of interconnect pipe, boiler pipe, and fittings to marketplace $3-3.5 Billion Market Opportunity Over Next Five Years 7-10% Annual Market Growth

10 Aerospace Current End Market Activity Using Q3 FY10 as a Baseline Slow OEM recovery Q4 FY10 through Q2 FY11 Large structural castings Cannon-Muskegon aerospace alloy Wyman-Gordon aerospace forgings (non-aftermarket) Aerospace airfoils (non-aftermarket) Fastener OEM direct ~ 50% of aerospace sales Continued mismatch with aircraft build rates Alignment by Q3 FY11 Flat aftermarket orders Zero growth through Q2 FY11 Airfoils Wyman-Gordon Accelerated order rate expected in second half of FY11

11 Current End Market Activity, cont d Using Q3 FY10 as a Baseline Aerospace Flat fastener distribution sales No growth through Q2 FY11 ~ 50% of aerospace sales Anticipated schedule recovery in second half of FY activity Inventory already in place for initial production aircraft Estimate of aircraft/engine shipsets Production ramp-up by Q3 FY11 Schedules currently being loaded in to support higher rates Continued progress at Carlton Forge

12 Carlton Forge Progress Report Aerospace market share opportunities clearly identified Currently only 25-30% of $1B aerospace market Penetration of low pressure turbine disc market Plan of attack to further penetrate power market Continued integration of new operational tools/methods Daily focus on cost reductions Rich revert stream On track for: Target synergies months $15-20M months $35-40M 10%+ CAGR

13 Current End Market Activity, cont d Using Q3 FY10 as a Baseline Aerospace Flat fastener distribution sales No growth through Q2 FY11 ~ 50% of aerospace sales Significant schedule recovery anticipated in second half of FY activity Inventory already in place for initial production aircraft Estimate of aircraft/engine shipsets Production ramp-up by Q3 FY11 Schedules currently being loaded in to support higher rates Continued progress at Carlton Forge Growing position on the right aircraft programs

14 Continued Major Presence in Aerospace Markets PCC $ Content Per Aircraft Platform A A A A320 $ Millions $0 $1 $2 $3 $4 $5 $6 $7 $8 Data points represent average dollar content

15 Continued Major Presence in Aerospace Markets PCC $ Content Per Military Aircraft Platform C-17 F-35 F-18 $ Millions $0 $1 $2 $3 $4 $5 Data points represent average dollar content

16 Sales Upside Areas of Opportunity Active development programs A350 Airframe Trent XWB Next generation engines CFM56 LEAP Geared turbofan V2500 select F136 engine KC-X tanker (airframe/engine) Future Share Gains On All Fronts

17 Current End Market Activity Using Q3 FY10 as a Baseline Power IGT Destocking at European customers holding steady Aftermarket still a wild card Growing presence on high-tech platforms

18 Average Sales Per Turbine ($ Millions) Continued Major Presence in IGT Markets PCC Casting $ Content Per IGT Class $4 $3 50Hz Middle East China Russia Africa Europe Japan 60Hz Middle East South America North America Japan MW 50/60Hz 4 Production Engines ~ $350K ~ $5M+ $2 $1 $ MW 50/60Hz 9 Production Engines ~ $16K ~ $1.4M MW 50/60Hz 14 Production Engines ~ $160K ~ $3.5M Older Generation Current Generation Next Generation IGT Technology Data points represent average dollar content

19 Current End Market Activity Using Q3 FY10 as a Baseline Power IGT Destocking at European customers holding steady Aftermarket still a wild card Growing presence on high-tech platforms Seamless Pipe China Current realignment to new power plant strategy Movement away from smaller coal plants 300MW plant ~ $2M interconnect pipe opportunity Burning through inventory on hand Three+ quarters of slower order rates at Wyman-Gordon Strategic transition to Super Critical power plants by Q3 FY11 Greater interconnect pipe opportunity 600MW plant ~ $5M 1,000MW plant ~ $9M

20 Current End Market Activity, cont d Using Q3 FY10 as a Baseline Power Seamless Pipe India Significant quoting activity 20 projects in 600MW range Orders anticipated in second half FY11 Oil & Gas Order books filling up going forward 1-2% sequential growth Substantial pickup in order activity Projects scheduled for second half FY11 General Industrial Continued upward trend 1-2% sequentially Steckel mill back in production mid-february

21 Summary Slow recovery through Q2 FY11 Major catalysts for second half FY11 growth Realignment with current aircraft build rates 787 production ramp-up Accelerated aerospace aftermarket and fastener distribution schedules Stabilized IGT order rates Seamless pipe upside in China and India Increased oil & gas project activity Positioning the Company for Strong Second Half FY11 Sales Growth and Continued Upside in Operational Performance

22 Questions Mark Donegan Chairman & CEO