Davenport and Company. June 3, 2008

Transcription

1 Davenport and Company June 3, 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 Leaders in Specialty Materials for Critical Applications 119 Years of Metallurgical and Manufacturing Expertise Highly Engineered Materials Specialty Alloys (52% of Sales) -High Temperature Alloys -High Strength Alloys -Magnetic, Controlled Expansion and Electronic Alloys Stainless Steels (35% of Sales) -Focus on High Value Stainless Steels Titanium (9% of Sales) -Leading Supplier of Titanium Fastener Wire to Aerospace Market Tool and Other Steels (4% of Sales) -Leading producer of gas atomized powders Divested ceramics businesses 3/ CRS Holding, Inc. All Rights Reserved CRS Holding, Inc. All Rights Reserved. Slide 3

4 SOPHISTICATED PRODUCTS FOR NICHE MARKETS TTM $2.0 BILLION 12% 6% 12% 10% 38% 22% Aerospace Energy Medical Automotive Consumer Industrial Management s estimate 2007 CRS Holding, Inc. All Rights Reserved. Slide 4

5 PREMIUM ALLOY OPERATIONS (PAO) Mike Shor 2007 CRS Holding, Inc. All Rights Reserved. Slide 5

6 CARPENTER S POSITION IN U.S. STEEL INDUSTRY Operating in a Niche Segment U.S. STEEL CONSUMPTION 132,400,000 TONS CARBON STEEL 129,500,000 TONS SPECIALTY STEEL 2,900,000 TONS STAINLESS STEEL ELECTRICAL STEEL SUPERALLOYS TOOL STEEL 2,329,000 TONS 397,000 TONS 76,000 TONS 98,000 TONS FLAT ROLLED / OTHER 2,051,000 TONS LONG PRODUCTS 278,000 TONS LONG 19,000 TONS FLAT 28,000 TONS INGOT BILLET 29,000 TONS Source: AISI/SSINA and management s estimates 2007 CRS Holding, Inc. All Rights Reserved. Slide 6

7 MANUFACTURING PROCESSES Air Melting Electric Arc Furnace (EAF) Argon-Oxygen Decarburization Furnace (AOD) Continuous Caster Premium Melting Vacuum Induction Melting (VIM) Electroslag Remelting (ESR) Vacuum Arc Remelting (VAR) Hot Working Press Rotary Forge Rolling Mill Finishing 2007 CRS Holding, Inc. All Rights Reserved CRS Holding, Inc. All Rights Reserved. Slide 7

8 ENERGY INDUSTRIAL AUTOMOTIVE CONSUMER MEDICAL 2007 CRS Holding, Inc. All Rights Reserved. Slide 8

9 (in millions) $800 $700 $600 $500 $400 $300 $200 $100 $0 CRS Aerospace Revenue FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 TTM 3/31/08 ENGINEERED MATERIALS FOR AEROSPACE APPLICATIONS Diverse Variety of Performance Materials Specialty Alloys Stainless Steel Titanium Globally Recognized Certified Material Supplier for Mission-Critical Applications Compressors / Rings and Disks Fasteners Landing Gear Structural Turbine Blades Gears and Drive Shafts 2007 CRS Holding, Inc. All Rights Reserved. Slide 9

10 ENGINEERED MATERIALS FOR AEROSPACE APPLICATIONS AVIONICS / APU Hiperco 50 FUSELAGE FASTENERS Titanium Pyromet Alloy A-286 FLAP TRACK / SLOT TRACK COMPONENTS Custom PH ENGINE COMPONENTS Pyromet Alloy 718 Waspaloy AM-355 Pyromet Alloy 901 Controlled Expansion Alloys LANDING GEAR COMPONENTS AerMet 100 Custom 465 PYLON FASTENERS Pyromet Alloy 718 Pyromet Alloy A CRS Holding, Inc. All Rights Reserved. Slide 10

11 BOEING/AIRBUS COMMERCIAL JET BUILD RATES CHANGE IN BUILD SCHEDULE Deliveries Source: Airline Monitor Jul-07 Jan CRS Holding, Inc. All Rights Reserved. Slide 11

12 AEROSPACE INDUSTRIAL AUTOMOTIVE CONSUMER MEDICAL 2007 CRS Holding, Inc. All Rights Reserved. Slide 12

13 (in millions) $250 $200 $150 CRS Energy Revenue ENGINEERED MATERIALS FOR ENERGY APPLICATIONS Highly Engineered Materials Specialty Alloys Stainless Steels Powder Metals Performance Materials for Demanding Applications $100 $50 Oil & Gas Exploration Non-Magnetic Drill Collars Pressure Housings Pump Shafts Down Hole Safety Cable $0 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 TTM 3/31/08 Power Generation Turbine Blades Disks Shafts 2007 CRS Holding, Inc. All Rights Reserved. Slide 13

14 ENGINEERED MATERIALS FOR ENERGY APPLICATIONS WELLHEAD EQUIPMENT Carpenter Alloy 925 OIL AND GAS EXPLORATION AND COMPLETION MEASUREMENT WHILE DRILLING HOUSINGS Custom Age 625 PLUS Stainless NON-MAGNETIC DRILL COLLARS 15-15HS Max Stainless 15-15LC Mod PUMP & MOTOR ASSEMBLIES Custom 465 Stainless Pyromet Alloy 718 ROTARY STEERABLE TOOLS Pyromet Alloy 718 Pyromet Alloy 625 PRESSURE VESSELS Carpenter MP35N ARMOR CABLE 20Mo-6 HS Stainless POWER GENERATION SHAFTS AND DISKS Pyromet Alloy 706 GAS TURBINE ENGINE DUCTING Pyromet Alloy 625 BOLTING Pyromet Alloy CRS Holding, Inc. All Rights Reserved. Slide 14

15 ADVANCED METALS OPERATIONS (AMO) Mark Kamon 2007 CRS Holding, Inc. All Rights Reserved. Slide 15

16 AEROSPACE ENERGY 2007 CRS Holding, Inc. All Rights Reserved. Slide 16

17 450 CRS Industrial Revenue ENGINEERED MATERIALS FOR INDUSTRIAL APPLICATIONS Diverse Product Offering Specialty Alloys Stainless Steels Powder Metals Industrial market sales driven by demand for capital equipment FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 TTM 3/31/08 Capital equipment Electronics Chemical Petro-chemical Other 2007 CRS Holding, Inc. All Rights Reserved. Slide 17

18 CARPENTER S CAPABILITIES MATCH ATTRIBUTES OF NICHE BUSINESS High End Niche business 1. High quality and consistency 2. Flexibility to make variety of products, including shapes (hexagons etc), in small volumes 3. Cost 4. On time delivery Volume business Low End 1. Good enough quality 2. Cost 3. On time delivery Ferritic Austenitic Martensitic Precipitation Hardened 4. Narrow range of large volume products 2007 CRS Holding, Inc. All Rights Reserved. Slide 18

19 250 CRS Automotive Revenue ENGINEERED MATERIALS FOR AUTOMOTIVE APPLICATIONS Engineered Materials and Components Stainless Steels Specialty Alloys Powder Metals FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 TTM 3/31/08 Focus on Higher Value Materials Fuel Injectors Engine Valves Sensors Safety Applications Materials for Changing Technologies Demand for Higher Performing Alloys Global Participation 2007 CRS Holding, Inc. All Rights Reserved. Slide 19

20 210 CRS Consumer Revenue ENGINEERED MATERIALS FOR CONSUMER APPLICATIONS Engineered Materials and Components Specialty Alloys Stainless Steels Titanium FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 TTM 3/31/08 Broad Diversification Housing Electronics Fasteners Sports Other Focus on Higher Value Materials 2007 CRS Holding, Inc. All Rights Reserved. Slide 20

21 140 CRS Medical Revenue ENGINEERED MATERIALS FOR MEDICAL MARKET APPLICATIONS FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 TTM 3/31/08 Global Provider of Highly Specialized, High-Quality Materials Stainless Steels Specialty Alloys Titanium Powder Metals Exacting Standards for Use in Critical Applications Fracture and Spinal Fixation Hip and Knee Replacements Surgical Needles and Staples Vascular Devices 2007 CRS Holding, Inc. All Rights Reserved. Slide 21

22 MEDICAL MARKET APPLICATIONS FRACTURE FIXATION Carpenter Stainless Type 316/316L Ti 6AI-4V ELI BioDur 108 Alloy HIP AND KNEE REPLACEMENTS BioDur Carpenter CCM Alloy BioDur CCM Plus Alloy VASCULAR DEVICES (stents) Carpenter MP35N Alloy Carpenter L-605 Alloy ARTIFICIAL DISCS AND SPINAL FIXATION Micro-Melt BioDur Carpenter CCM Alloy BioDur CCM Plus Alloy SURGICAL NEEDLES AND STAPLES Custom 475 Stainless Carpenter Stainless Type 420 Ti 6AI-4V ELI DENTAL INSTRUMENTS AND IMPLANTS Carpenter Stainless Type 440A Custom 465 Stainless Ti 6AI-4V ELI Arterial Stent 2007 CRS Holding, Inc. All Rights Reserved. Slide 22

23 STRATEGIC PRIORITIES Anne Stevens 2007 CRS Holding, Inc. All Rights Reserved. Slide 23

24 INTERNATIONAL SALES (TTM 3/31/08) Management s estimate (in millions) 55% $700 12% $600 8% $500 17% 8% $400 27% CAGR Asia Pacific Canada Mexico Europe Other $300 12% 10% $200 21% $100 36% 16% 5% Aerospace Automotive Consumer $0 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 TTM 3/31/08 Energy Industrial Medical 2007 CRS Holding, Inc. All Rights Reserved. Slide 24

25 STRATEGIC PRIORITIES GROWTH Market & Customer Focus Growth in Core Markets Aerospace 50% of Energy revenues Expected to grow 10%+ per year International Expansion China Middle East India Eastern Europe Latin America Acquisitions Close to Core Development of New Markets Defense ~ $100 million opportunity 2007 CRS Holding, Inc. All Rights Reserved CRS Holding, Inc. All Rights Reserved. Slide 25

26 STRATEGIC PRIORITIES OPERATIONAL EXCELLENCE Lean Manufacturing Safety, Quality, Delivery, Cost TECHNOLOGY LEADERSHIP Innovate Product Development Process Improvement Collaborate Manufacturing Technology 2007 CRS Holding, Inc. All Rights Reserved CRS Holding, Inc. All Rights Reserved. Slide 26

27 FINANCIAL HIGHLIGHTS Doug Ralph 2007 CRS Holding, Inc. All Rights Reserved. Slide 27

28 FY 2008 FINANCIAL HIGHLIGHTS $ millions FY 08 Q1 FY 08 Q2 FY 08 Q3 FY 08 YTD VOLUME (lbs., 000) % change from ,216-9% 49,996-9% 59,218-7% 158,430-8% SALES Excl. surcharge % change from % -1% 0% 1% OPERATING INCOME % of sales excl. surcharge Adjusted % of sales excl. surcharge* % 23.6% % 22.8% % 23.1% % 23.1% DILUTED EPS from continuing operations $1.08 $1.17 $1.05 $3.32 % change from % 36% -14% 11% *adjusted for lag effect on surcharge and year-to-year difference in LIFO inventory impacts 2007 CRS Holding, Inc. All Rights Reserved. Slide 28

29 IMPROVING OPERATING PERFORMANCE TTM EBITDA* as Percent of Sales excl. Surcharge Revenue Beginning of U.S. manufacturing recession CRS announces major cost reduction initiatives 0 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q *Operating income + depreciation/amortization and excluding non-cash pension effects and restructuring charges 2007 CRS Holding, Inc. All Rights Reserved. Slide 29

30 CASH FLOW FROM OPERATIONS FREE CASH FLOW GENERATION (after capex, dividends and before purchase of marketable securities) $300 $250 $238 $275 $250 $200 $143 $150 $100 $50 $134 $92 $104 $80 $80 $88 $134 $238 $203 $202 $100 $0 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 $ Millions 2007 CRS Holding, Inc. All Rights Reserved. Slide 30

31 CAPITAL EXPENDITURE REQUIREMENTS (millions) $160 $153 $140 $125 $120 $100 $94 $100 $105 $80 $60 $49 $51 $47 $40 $20 $27 $9 $8 $14 $19 $0 FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 est 2007 CRS Holding, Inc. All Rights Reserved. Slide 31

32 ENHANCING SHAREHOLDER VALUE CASH DEPLOYMENT CAPITAL INVESTMENTS $115 million premium melt capacity expansion $16 million upgrade to hot rolling facility ACQUISITION OPPORTUNITIES Active and disciplined approach SHARE BUYBACK Completed $250 million authorization Initiated follow-on $250 million program DIVIDEND Consistent payout Competitive yield 2007 CRS Holding, Inc. All Rights Reserved. Slide 32

33 Summary Leading position in attractive end markets and product niches Core metallurgical and processing expertise, and commitment to future R&D, to meet demand for higher performing materials Strong cash generation and balance sheet, with flexibility to fund growth initiatives Commitment to invest cash to deliver return to shareholders 2007 CRS Holding, Inc. All Rights Reserved. Slide 33