To make sure that this event was most relevant for all of you. We actually conducted investor survey this summer, and one of the questions we asked was, what information is most important for us to cover today? And we reassess with this survey about 36 combined sell-side and buy-side analysts. And the topics that you see on the left side in blue are really the areas of interest that you wanted us to address.The bullet points to the right of those indicate that things that we are going to covered today. So, the most important here thing is that, we have listened to you and we will address those things that are most interest for you to hear today. This is our second Investor Day in the last year and a half. And our Investor Days are very unique events. It gives us the opportunity to talk about things in much greater detail than we can in other types of venues that we have. We can’t cover these kind of things on earnings calls, or one-on-one meetings, or Roche or things like that. But we have the opportunity here today to really talk a lot more in-depth in a much more detail that we typically can. And then within that, we are able to then talk a lot more about long-term strategy of the company. So another benefit is, you can access to the management team of Carpenter. Again, you used to see me and Bill and Doug, but now we really have the broader team here, which also gives you the opportunity to ask and have all your questions answered as well today. It's a common understanding that companies should not have an Investor Day unless they’ve got something really unique and exciting to talk about. And I think from today, you will not be disappointed in terms of what we are going to cover. So with that, it’s my pleasure to introduce to you our President and CEO, Bill Wulfsohn.
William A. WulfsohnOkay, thank you, Mike, and thank you, everyone, for taking the time to join us this morning. Our last Investor Day was 18 months ago. And since then we have been very busy, and I think our progress is an evident. We set our primary goal back 18 months ago coming off of if you will the great recession to get back to prior peak even at a level that we had enjoyed several years back. And I am pleased to say, we are ahead of schedule. And today, we will be announcing new earnings targets for both this year, the mid decade, as well the end of the decade. Today, we really will be talking about our future strategies and how we will get there? And as you may have noticed, we put out roughly five or six different announcements over the last week or so, really in preparation for today, things that we’ve been working on that we haven't previously disclosed, but wanted to be able to talk about openly. And then just one that I will highlight, we’ll talk about our China facility and we’ll talk about other aspects of what we are doing. But I assume most of you have heard or read this morning that we put our announcement to that. We are both happy and sad and both at the same time to note that, Doug Ralph will be retiring from Carpenter. He will retire after the first of the year. This is something that Doug initiated. He is one of the fortunate one that can make the decision to do other things with his wife, while he is still young and feeling good, and I think he wants to play a lot of golf. But I will say that as happy as we are for him as an individual and for his wife. Doug is a tremendous there and has brought much to our company, not just financial leadership, but also strategic and managerial expertise. And so we are going to miss him, but he is going to be here with us for through the year if you will, roughly until one year from now. And we will be making a transition. We will be completing the search. And you will hear about the transition and Doug will be with us from, but we're going to miss him.
So, thanks, DougK. Douglas Ralph From an agenda standpoint plans to cover the bulk of our focus on our strategy and our forward expectations and I assume most of you have a pretty good sense for who we are. We will talk that would be appropriate to just talk about who we are as a company and really more specifically what makes us unique. We are different than just a steel company and I would like to explain to you how and why? 123 years union free and our main right insight, I think it's a culture that many of you who visited our company understands, is based upon pride, dignity, respect, and most importantly innovation. So we’ve got a couple of old pictures here to depict our innovation as well as our commitments of our workforce. And here you have, we provide the material to the early Wright Brothers planes to the Spirit of St. Louis. We’ve been in the aerospace industry for a long time. And really that's how Carpenter as a company has thrived in an environments and the region of the world that a lot of companies have in fact have perished. What does make us different though in the market is, we strategically position ourselves and that's what we are going to talk about, for the majority of the discussion is, how we position ourselves? What actions we are taking to make sure that we are really a specialty materials company in the metals market, and not just the broad supplier to the commodity sector. We focus of our energies on supercritical markets with very demanding applications and we look at technology as our primary avenue for enabling customers to do and better things in the supercritical applications. And with that, I hope that you will understand and see that, while we are in the metal space, we really are a specialty materials company.
So that's probably a lot of people say. They want to be a specialty material company. How are we actually achieving it? Well, to start off with out of 1.5 billion metric tons of steel that’s produced, we participate in only 1% of that market segment. And you can see that this was actually an assessment that was owned by steel and metals marketing research that depicts that within the specialty steel market, there is a further subsegments, there is alloy steels, there is stainless flat.And really when you get to the higher value and the lowest volume is, when you get into the areas in green and that’s the area that we have 100% of our sales mix in. That's where we sell our products. And when you think of other companies of course, you know a lot of carbon steel companies. You know some other people who do participate in the upper green portion and have a heavy concentration also in the stainless flat market. And others were trying to move up into that portion of the overall mix. So when you look at our revenues and our markets that we focus on back to the supercritical type of applications, it’s not surprising to see that we have roughly two-thirds of our business and what you would consider to be those very demanding environments of aerospace, defense, energy and medical. And actually we are going to end up talking about all five of these markets, including transportation and industrial, because our focus is even within those subsegments to focus on the very differentiated niches where a lot of value can be added. The other thing is when you look at our capabilities, they are really unique to the industry and with that, we have seen our business internally grow dramatically. And as Mark came and we will talk to later on, we are expanding our international footprint, because as our customers become more global, we have to make sure, we effectively support them as well.
And last, but not least, I think this is an important point to recognize, which is that, we are a company which is not driven if you will by raw material commodity prices. We are in essence a converter of materials. And with that we don't have a high correlation of our profitability to the underlying raw materials.So there are others that are vertically integrated and when titanium, they are very price, they will be very profitable and when titanium is low, they will suffer, or nickel, but that's not our case. We have very effective surcharge mechanisms. We have very differentiated products with long-term agreements. So our profitability is not fundamentally correlated with nickel prices, or titanium prices. So in summary, this is a quick baseline. You’ve got a 123 years of experience. We are very much in the 1% and in fact, I am proud to say that, we are the 1%. And we feel good about saying that. We are in the 1%, but we are talking about the 1% of the metals market, that's truly specialty. We think it's a very unique competitive position that’s not dependent upon raw material prices. And so much of our business is focused on aerospace and energy. Okay, we are here to talk about the future, but it's only appropriate to talk about what we said we are going to do and how do we execute against our agenda that we put forward to you just 18 months ago. And I think when you see the results, I think you will see that at least from our perspective, we’ve executed well versus what we said we can do. And to that end on page 13, this is actually the same page if you were to pull out the Investor Day presentation from 18 months ago. This is what we said, we are going to do as a company. We are going to optimize core, regain our profitability. We are going to accelerate with acquisitions, develop new technology, while strengthening our foundation to make sure that, we were becoming the most profitable, most global, and most respected company in the specialty metals market.
And we targeted to get a return to our prior EBITDA levels by fiscal year 2014. And I am very pleased to say that, we're well on path to make sure that, that happens in fiscal year 2013. And as you will see on the next page 14, that’s really as we account for without the impact of Latrobe, okay. Latrobe does add to that, but you can see that we expect we will be above the prior peak on the Legacy business.When you factor in Latrobe, we will be roughly 20% higher. We expect in fiscal year 2013 than the previous peak, so a lot of progress in that area. Mark Kamon, Sanjay Guglani, also Dave Strobel will be talking about how we've been able to achieve that through the market gains. But I will tell you as we focused heavily on enhancing our mix and selling value and going with our limited capacity into areas that ultimately value the kind of technology and quality standards that we can meet. At the same time, back in the area of optimizing the core, we’ve taken actions, which will flush out as we move to the discussions to double the capacity in our premium metal space. And this is very important, because what we are going to talk about as we go on is that this is an industry that even at this point in time when things are a little bit uncertain, the economy is a little bit unsettled, we are finding that our demand is greater than our ability to supply. And we think with the demand patterns coming up, but this is actually going to be a challenge for the industry. And so we’ve been very proactive about making the types of investments that will allow us to leverage the demand growth and really bring some value to our shareholders.
Now, moving on to acquisitions, I remember that when I first started talking about acquisitions at a meeting like this, I referred to strategic acquisitions and somebody kind of came up afterwards and said, I don’t like that part of your strategy. And I said, why not? And they said, well, because strategic means that you’re going to buy it and you’re going to say that is strategic, and you are going to say that, it brings on your earnings, but it’s going to pay off in the long run.And so we quickly changed our language too, we want strategic, but we really want accretive acquisitions. And that’s what we’ve done. We’ve done five acquisitions, our largest is Latrobe. We’re very proud of bringing that team, that business. We have representative from the business here with us today. And what you find in the business is that, you have roughly 76% of their business, is in the aerospace and energy, what a great match? And that in fact, it was an acquisition that was immediately accretive, during its first four months, and we expect that it will add over 10% to our EPS in fiscal year 2013. And there is roughly $25 million with the synergies, which you’re going to hear, there is opportunity for upside on, which is forthcoming if you will over the years to come. The integration has gone very well. We are tracking ahead of the expectations and we put a couple of codes on here. We have our couple of new board members that came with a deal, and we are very pleased bringing very interesting and great perspectives to the board. And they as some of you may know, when they said that, they were willing to bring the companies together, they had no interest in getting cash for their position in Latrobe.
They believed in Latrobe, they believed in the cycle, and they believed in Carpenter and the synergies. So they swapped their equity for our equity. And what that did was that, not only kept very valuable players in the game with us, but it also meant that we were able to keep our balance sheet pretty clean, when you consider all the investments that we are making. And we’ll reference that and that gives us not only stability, but flexibility as we move forward.We also completed four acquisitions in the oil and gas industry. And we are very pleased about. As you can see the relative growth that Amega West our largest single acquisition in the areas had relative to the rig count growth. And the reasons for that are simple. There is a great team there in the right environment. They have very strong talents and connections in the marketplace, but with the backing of Carpenter, they’ve been able to get access to materials, technology, and other resources that have helped them to grow their business. But it’s also help the Legacy Carpenter business to get closer to the OEMs. So some of the materials that we know can add value to down hole completions and applications like that. We now have a way of giving that voice to be end customer, and we are seeing it, it really take hold. We have since done several other acquisitions, really focused on expanding our capabilities, as well as our ability to cover other parts of the globe. And I think the logic behind that will be very self-evident in short order here as we continue. Finally, here, I would like to note that we have taken a strong effort in commercializing technology. And I am going to touch on it briefly. But you are going to hear it in every market discussion we have. Dr. Tim Armstrong will speak to some of these as we move forward in the presentation.
But we’ve actually moved these differential, proprietary technologies into the marketplace, and we’ve continued to invest toward achieving the peak EBITDA plus levels that we’ve talked about, while increasing our investments in CapEx and staffing, and in our labs and our capabilities, and not only have we focused on commercializing the products that are in the top portion of the screen. But what you will here today is, our number of additional new materials, which we are going to be talking about, which really enables further applications and development in the marketplace.So we feel very good about our robust portfolio products and our ability to keep working towards the top end of that specialty market. And again I think it will be very clear to you, why we focus so much energy in this area as we move on. Now, moving to our foundation, we’ve made some enhancements to how we run the business. We’ve moved into an SAO and a PEP orientation, you will hear from the leaders of both those businesses. The SAO is our mill operations. And really with the addition of Latrobe and also Athens, our vision is, we are going to run this as a cohesive system that we are going to move materials from one facility to another, based upon the capabilities that exit in the capacity that’s available. Read the rest of this transcript for free on seekingalpha.com