Copell Financial LLC. October 31, PDF Free Download

Copell Financial LLC October 31, 2007

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. 2007 CRS Holding, Inc. All Rights Reserved. Slide 2

CARPENTER TECHNOLOGY OVERVIEW Leaders in Specialty Materials for Critical Applications 118 Years of Metallurgical and Manufacturing Expertise Highly Engineered Materials Specialty Alloys (46% of Sales) -High Temperature Alloys -High Strength Alloys -Magnetic, Controlled Expansion and Electronic Alloys Stainless Steels (36% of Sales) -Focus on High Value Stainless Steels Titanium (10% of Sales) -Leading Supplier of Titanium Fastener Wire to Aerospace Market 2007 CRS Holding, Inc. All Rights Reserved. Ceramics (5%) -Largest Independent Investment casting ceramic core supplier -Alumina and Zirconia structural ceramic components 2007 CRS Holding, Inc. All Rights Reserved. Slide 3

SPECIALTY ALLOYS OPERATIONS 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 4

SOPHISTICATED PRODUCTS FOR NICHE MARKETS TTM 9.30.2007 $2.02 BILLION 11% 7% 9% 3% 11% 36% 23% Aerospace Medical Automotive: Other Industrial Energy Automotive: Engine/Safety Consumer Management s estimate 2007 CRS Holding, Inc. All Rights Reserved. Slide 5

(in millions) $800 $700 $600 $500 CRS Aerospace Revenue ENGINEERED MATERIALS FOR AEROSPACE APPLICATIONS Diverse Variety of Performance Materials Specialty Alloys Stainless Steel Titanium Ceramics $400 $300 $200 $100 $0 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 TTM 9/07 Globally Recognized Certified Material Supplier for Mission-Critical Applications Compressors Fasteners Gears and Drive Shafts Landing Gear Turbine Blades 2007 CRS Holding, Inc. All Rights Reserved. Slide 6

ENGINEERED MATERIALS FOR AEROSPACE APPLICATIONS AVIONICS / APU Hiperco 50 FUSELAGE FASTENERS Ti Pyromet Alloy A-286 FLAP TRACK / SLOT TRACK COMPONENTS Custom 465 17-4 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-286 2007 CRS Holding, Inc. All Rights Reserved. Slide 7

BOEING/AIRBUS COMMERCIAL JET BUILD RATES CHANGE IN BUILD SCHEDULE Deliveries 1200 1000 800 600 400 200 0 2005 2006 2007 2008 2009 2010 Jul-05 Jul-06 Jul-07 2007 CRS Holding, Inc. All Rights Reserved. Slide 8

(in millions) $250 $200 CRS Energy Revenue ENGINEERED MATERIALS FOR ENERGY APPLICATIONS Highly Engineered Materials Stainless Steels Specialty Alloys Ceramics $150 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 9/07 Power Generation Turbine Blades Disks Shafts 2007 CRS Holding, Inc. All Rights Reserved. Slide 9

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 718 2007 CRS Holding, Inc. All Rights Reserved. Slide 10

(in millions) CRS Medical Revenue ENGINEERED MATERIALS FOR MEDICAL MARKET APPLICATIONS $140 $120 $100 Global Provider of Highly Specialized, High-Quality Materials Stainless Steels Specialty Alloys Titanium $80 $60 $40 $20 $0 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 TTM 9/07 Exacting Standards for Use in Critical Applications Dental Implants Fracture and Spinal Fixation Hip and Knee Replacements Surgical Needles and Staples Vascular Devices R&D Focused on Next Generation Materials 2007 CRS Holding, Inc. All Rights Reserved. Slide 11

ENGINEERED MATERIALS FOR 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 12

INTERNATIONAL SALES Management s estimate 13% 55% (in millions) $700 $600 8% $500 17% Asia Pacific Canada Mexico Europe Other 7% $400 $300 13% 12% 15% $200 $100 35% 7% 18% Aerospace Automotive Consumer Energy Industrial Medical 2007 CRS Holding, Inc. All Rights Reserved. Slide 13 $0 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 TTM 9/07

STRATEGIC GROWTH LEVERS FOUNDATION Cost reduction Complexity reduction Pricing for value ENHANCEMENTS Operational Excellence Lean manufacturing Waste reduction Market & Customer Focus Organizational structure Marketing expertise Geographic expansion New segments 2007 CRS Holding, Inc. All Rights Reserved. 2007 CRS Holding, Inc. All Rights Reserved. Slide 15

STRATEGIC GROWTH LEVERS FOUNDATION Cost reduction Complexity reduction Pricing for value ENHANCEMENTS Innovate New product development Process improvements Collaborate Manufacturing Technology 2007 CRS Holding, Inc. All Rights Reserved. 2007 CRS Holding, Inc. All Rights Reserved. Slide 16

STRATEGIC GROWTH OPPORTUNITIES Opportunities to Consolidate Fragmented niche segments Investments in Markets Defense ~ $100 million opportunity International Expansion China Eastern Europe India Latin America Middle East 2007 CRS Holding, Inc. All Rights Reserved. 2007 CRS Holding, Inc. All Rights Reserved. Slide 17

FIRST QUARTER FINANCIAL HIGHLIGHTS $ IN MILLIONS FY 2007 FY 2008 % CHANGE SALES Excl. surcharge 404.5 326.5 475.0 337.5 17% 3% OPERATING INCOME % OF SALES % of sales excl. surcharge 73.1 18.1% 22.4% 85.7 18.0% 25.4% 17% NET INCOME % OF SALES % of sales excl. surcharge 51.2 12.7% 15.7% 57.7 12.1% 17.1% 13% EBITDA % OF SALES % of sales excl. surcharge 85.0 21.0% 26.0% 98.1 20.7% 29.1% 15% DILUTED EPS $1.94 $2.24 15% 2007 CRS Holding, Inc. All Rights Reserved. Slide 19

IMPROVING OPERATING PERFORMANCE TTM EBITDA* as Percent of Sales excl. Surcharge Revenue 30 25 20 15 10 5 Beginning of U.S. manufacturing recession CRS announces major cost reduction initiatives 0 Q3 2001 Q4 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 *Operating income + depreciation/amortization and excluding non-cash pension effects and restructuring charges 2007 CRS Holding, Inc. All Rights Reserved. Slide 20

FREE CASH FLOW GENERATION (after capex, dividends and before purchase of marketable securities) CASH FLOW FROM OPERATIONS $300 $250 $238 $275 $300 $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 21

EARNING CRS COST OF K RONA (includes excess cash and interest income, and after restructuring charges) 18% 16% 16.3% 15.1% 14% 12% 12.5% 10% 8% 6% 4.8% 4% 2% 1.0% 1.2% 0.9% 0% FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 2007 CRS Holding, Inc. All Rights Reserved. Slide 22

ENHANCING SHAREHOLDER VALUE GROW IN CORE MARKETS Aerospace 54% of Energy revenues Medical $500 million Opportunity CASH DEPLOYMENT CAPITAL INVESTMENTS $115 million premium melt capacity expansions $16 million upgrade to hot rolling facility SHARE BUYBACK Complete $250 million authorization DIVIDEND Maintain competitive yield 2007 CRS Holding, Inc. All Rights Reserved. Slide 23

Summary Leading position in attractive end markets and product niches Metallurgical and processing expertise to meet demand for higher performing materials Stable and long-standing customer relationships Enhancing margins through product mix shift and operational excellence Strong financial position to fund growth initiatives Commitment to invest cash to deliver return to shareholders 2007 CRS Holding, Inc. All Rights Reserved. Slide 24

Copell Financial LLC. October 31, 2007