Carpenter Technology's CEO Discusses F3Q 2012 Results - Earnings Call Transcript

Note, we are also seeing good growth and movement for higher value product opportunities in other strategic areas such as transportation, plus in the act to get the demand for our premium product has enabled us to sustain a very strong backlog. In addition to our strong end-market demand, we are continuing to see positive impact from our pricing and mix management actions. These actions have resulted in higher average profit per pound, greater overall profitability and we’ve seen revenue growth in the quarter has once again outpaced volume growth.

In summary, we are progressing rapidly to meet our commitment to return to our prior peak level of EBITDA excluding any literal contribution. Switching gears, February 29 was a very exciting day in the history of Carpenter, as we closed on the Latrobe transaction. While the antitrust approval process was long, it gave us time to prepare for an aberration which enabled us to hit the ground running after close.

I am pleased to report that the integration process is going well. Latrobe’s operating results are already accretive to earnings excluding acquisition related costs and we are even more encouraged by the synergies potential of the combination. Finally, during the quarter we took significant action to expand our capacities to support both our near-term and long-term growth objectives.

As previously discussed, we have seen rapid demand growth for our premium products. This is good news but has also taxed our available supply. To address this opportunity in the near-term, we have taken actions to add remelt capacity and address constrains in our Reading operations. And immediately after closing on Latrobe, we move forward with an investment to add three additional VAR furnaces at that location.

Impacts of these investments should result in an incremental 4,000 tons of premium capacity over each of the next two years. We are also well under way to doubling our capacity to produce titanium wire used in aerospace fasteners and expand our powder metal production capacity. Every market indicator combined with our customer discussion solidifies our belief that we are in the early stages of a strong growth cycle in the aerospace and energy markets.

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