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William A. WulfsohnThank you, Mike, and good morning everyone. Fiscal year 2012 was an excellent year for Carpenter. As a team, we executed well and we exceeded our earnings targets. The legacy Carpenter business saw a 68% increase in operating income, excluding pension EID, which was above our 50% growth target. This profit growth was driven primarily by focus pricing action, mix management initiatives designed to free up capacity for increased sales of high value products and excellent manufacturing performance, which reduced our cost per ton for the third straight year. Combined these actions drove a $0.44 per pound or 66% improvement in SAO profit per pound, and equally as important, these actions enabled the capacity gains to sell an additional 4,500 premium tons in the year. Fiscal year 2012 was also an outstanding year for the company in terms of positioning for future growth. I would like to highlight four key areas of particular strategic importance. First, and the highlight of the year, was our acquisition of Latrobe Specialty Metals. We have now owned Latrobe for four months and the results in the business are strong. As expected, on an operating basis, the acquisition has been immediately accretive to earnings. I am also pleased to report that the integration is going extremely well. Based upon what we have learned to date, we are even more excited about the strategic value and synergy potential from this transaction. Thus in summary, Latrobe is tracking ahead of our overall deal economics and we remain confident that we will achieve at least $25 million of synergy by year three. Second, we announced earlier this year the construction of a $500 million premium products facility in Alabama. This state-of-the-art facility will enable us to support existing and increasing customer demand for our aerospace and energy products, with 27,000 tons of new premium product capacity.
In addition, the plant will enable us to improve customer satisfaction by offering dramatically reduced lead time. We monitor the progress of the plant’s construction weekly, and I am pleased to report that the project is on schedule and on budget.Third, this year, we expanded our Dynamet facility in Clearwater, Florida. We believe this project which will eventually lead to the doubling of our Titanium wire capacity is essential, as we work to meet rapidly growing demand for our Titanium aerospace fastener wire products. And fourth, this year, we expanded Amega West footprint to better support international market for oil and glass exploration, with acquisitions in Canada, Singapore and Dubai. Looking forward, as we move into fiscal year ’13, our business remains strong and our backlog is high. We are coming off a record quarter in terms of volume in our premium forged bar and billet business. In addition, we have worked hard over the last several years to strengthen customer relationships. As a result of these efforts, we have seen increased and expanded long-term supply agreement. In addition, I would like to highlight three important and unique factors driving Carpenter’s strong customer demand and profitability in the context of various global pressures at this time. First, to limit the impact of raw material price changes on profits, we have implemented pricing mechanism and hedging policies. Second, we have focused our strategy on the design qualification and manufacturer of high-value differentiated in this product. Note, only a small percentage of our products are sold through distribution or service centers. And Carpenter doesn’t participate in the flat rolled stainless market. These areas, while attractive at specific points of an economic cycle, can experience higher levels of cyclicality and pricing pressure in the context of weak demand. Read the rest of this transcript for free on seekingalpha.com