CRS - Earnings call transcript Q1 2018 | Carpenter Technology Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to the Carpenter Technology Corporation First Quarter Fiscal 2018 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please do note that today's event is being recorded. I would now like to turn the conference over to Brad Edwards of Investor Relations. Please go ahead, sir.

Brad Edwards

operator. you, Thank and the everyone, Carpenter's Conference Earnings Good Quarter welcome ended for First September Call morning, to XX, XXXX. also This with is being the over call Internet, presentation slides. broadcast along phone, those you delay for slide movement. experience note, Please in listening by a you of time may Damon the Officer. and Senior on Executive are call Thene, and today President Speakers Vice Chief President and Tony Officer; Audia, Financial Chief based this by presentation that are management statements during earnings on made expectations. Statements forward-looking current are those report from statements actual SEC year results XX-K and to found that attached XXXX, factors Carpenter's can for the XX, Risk could in to materially be filing. that cause filings, differ including on the forward-looking most recent exhibits June the ended company's Form when sales excludes Please that reference management revenue, also that otherwise discusses the note or surcharge. in following discussion, noted, unless that income, items. excludes reference and interest pensions, EID or and operating discussing When deferrals special earnings, is operating items. operating EID excluding to pension, margins, referring When on that and surcharge, sales income special excluding and based I Tony. will now turn to the call over

Tony Thene

good Thank Brad, to and you, morning everyone.

programs will them every as with that leadership across I Carpenter, in supervisor human review giving training been ongoing our quarter, in team performance members Slide incident begin a always, by investment significantly for principles has X.X. As supported valuable safety employees. This rate, all development the work to well skills touch their as total case performance, management to improvement X. our TCIR, of on improved In our or with

of our first as increase to fiscal must as further of The teams XXXX we continue company. quarter intensity we X across employee injury goal such communication the a the even drive encouraging, hand improvement but year addition, In and workplace. activities frequency of in to level is TCIR increase ergonomic ultimate engagement the and of safe, engagement the

and a first X, quarter Turning our of performance. summary Slide to

quarter XXXX. first solid year start fiscal represent to results a Our

and in values Our our vision strategy, evident were performance.

was much a decline trend. historical less first decline basis, a than typical sequential results the reflect While seasonal the quarter on our

our Carpenter remain this we continue new chain. marks in that full best and to in the not know commercial as committed results, and said Operating our improvements With potential position quarter have strengthening sustainable and an as supply we Model quarter our approach reached that years. first partner potential Our fulfilling our four in to irreplaceable produce fiscal the

largest Let a Aerospace and our me strong quarter we In Defense, delivered end-use mention highlights. first few quarter. another market,

down due I As historically versus our seasonality. quarter to quarter just stated, fourth first is our

said, market sequential down year-over-year four is And average revenue from XX%. been Over That current years, Defense has in the the our revenue decline quarter and our Aerospace this on last to XX%. was basis, a QX QX up X%. only

is and addition, XX% oil year-over-year. at increase, our levels of encouraging remain and our and Aerospace We X% sign sequentially increasing is sequentially, sequential XXX% a oil market activity X% up to Amega continues year-over-year. and In of up up activity business quarter Rental West was gas gas. growth, Defense consecutive North on an optimistic cautiously fifth backlog America – in believe and we

segments. business our at Looking

performance the first XX.X%. as year-over-year our meaningful performance improved operating to fourth PEP, each strong expansion. the impact SAO the and was improving Amega the a from year despite product businesses, from reach XXXX. consecutive had highest income operating hurricanes. a a In margin continues notable by fiscal negative and quarter, quarter SAO continued recent mark Dynamet drive since driven is the driving are and to for West margin We quarter Model Operating mix was Carpenter richer milestones. That for positive

any no of damage the during to and Fortunately, severe was storms none of our employees facilities. were our injured there

The to time in the West as impact returned for this This speaks it us business delivering at quarter businesses. facilities share. to also closer driving only but actions gaining reduced the win three reached operating which allowing model as to additional value further position to this profitability customers, across Model SAO The is our milestone reduce our our business waste Amega is Carpenter has well market is of cost to first not and productivity unlocking Operating incremental is traction Our tangible years. reductions, important as improved cost, and and PEP an delivering capacity. almost

are the commercial also on front. executing well We

as increase XX% perspective, our SAO new opportunities unique increased market X% maps solve utilization technology XX% and share From operational Athens, strategic shared solutions to our the and at finding levels all we their backlog real total quarter, and value across end-use initiatives at approximately to Our during an sequentially developing year-over-year in challenges. Customers road prioritizing are first unlock aerospace continue the utilize markets. that and the and currently, completions respect select year calendar shift With for we Athens, by products to other mills. drilling market. of our XXXX. of OEMs remain as us schedule we our continue qualification OEM to oil gas recently to VAP production we final to majority end from access on to And the the increase received approvals of submit giving

out no solid obligation strategic true growth is our our capabilities strategic with major Lastly, a allow and to capital advantage and near-term allocate position to areas. in us will competitive financial building several

the basis, were impact while some Slide Starting continue were to up seeing ramp engine submarket, XX% new demand Defense, solid our sequential where engine sales down we with a X, up engine given broad we participation, basis, platform. the X% platform remain related We end-use In expect down ex-surcharge sales seasonality. and year-over-year a were on to forward. to engine strong moving about update. sequentially, on the year-over-year move enthusiastic new Aerospace given were but basis, and the mute able a XX%. market seasonal to demand the the Let's and revenues reflecting On

but Our fastener to compared was year. was of down first also submarket last up quarter sequentially,

in stated challenging. in we've visibility the remains As fastener the past, submarket

the see moderate. portfolio nickel patterns near-term demand that spans for attractive Despite market our began remains of signs show entering stainless. to appear and first we increasing, was improvement the fastener conditions fastener submarket titanium, headwind, leadership overall product to given and demand market quarter and us the While

and Our submarkets driven to continue the demand. program-specific aerospace be of distribution by timing structural

We the in reasons positive OEMs at the this the of are signs excited year. backlog channel our we some to growth aircraft major to our related and see the market. benefit fiscal The long-term this continue are of about potential in solutions

submarket increased sequentially in year-over-year due program-specific Lastly, both to demand. revenues our defense and

oil America, sales market, energy in completion reflects directional rig includes sequential were XX% the our was offset and fourth lower late up the sales. North Energy up gas and the business replacement distribution year-over-year we drilling oil Sales and in decline power see count gas activity. XX% basis. generation On an in increases of to we that year quarter XXXX. energy by up declined activity continue rental our moving The XX% Now a fact sequential and sales submarkets. due North power horizontal and year-over-year, which fiscal to basis, on oil a and year-over-year. gas and American submarket generation to higher and XX% were in divested

our West, the in in further the are activity Permian coupled successful expand a during with rental efforts Amega downturn. share at As replacement we market our presence to our given and increases strong seeing Basin result,

of market Sales drilling industry. cycle for lower OEM. be Looking generation in down that impacting transportation from turbines capital for X% as by this and was elongated well at revenue as spending sales Order also activity basis, North through in the and largely share nonlinear. were a working impact annual expanding standpoint. the year-over-year. in the down the well market primarily America, both at the submarket industrial shutdown as in The flat market international the due outside offshore remain summer we as timing markets order and gas on as Transportation patterns generally market overseas. vehicle of others America can is power a the in to light sequential North sequentially depressed Year-over-year, activity offset is the levels were volatile us replacement our

in speaks solid our in heat, an corrosion that high vehicle North provide attractive Downside date, We as cyclical regions OEMs. the resistance market, given building heavy-duty Europe for also in believe our the and overseas attractive benefits made light by American and are our sales grew light share recovery continues. and pressure transportation truck responding market alloys We've Carpenter, remains the strength market progress including one market the to being China. which they I and to weighting we

truck the our we the our allowed value We titanium have high as continue and for Model, medical key a as to growth we customers remain of share. bring sales priority requirements. also successfully level. distributor products continue leveraging world reduced of We to to because market. grow and solutions It increasingly market, we grown Dynamet conditions facility the year-over-year improving in stringent us application market showed sequentially, market and will but well, portfolio were navigating can customers help of of which in the times better demand the share has our transportation down Operating strong a look the early Carpenter our at the In heavy-duty as levels serve our experiencing lead segment

space, submarkets direct X% which quarter driven year-over-year of building by consumer and industrial up from end-use were the The the across but industrial sequentially multiple medical an new the consumer seasonality, higher was sales as well some were in product relationships opportunities. market. as to first progress reflecting electronics In sales make down XX% OEM is demand increased to the compared fiscal continue market, increase creating also We and XXXX. customer

for turn it to the I'll Damon over financial Now review.

Damon Audia

you, Good morning, Thank Tony. everyone.

and Slide the income statement summary. to X, Turning

QX drove tend relative our quarter fourth our surcharge a in decreased effect our X% market XXXX. volume mentioned, manufacturing in on quarter. very excluding first basis regular a of of Net Consistent to by excluding to Tony the preceding start best generally seasonality first quarter surcharge. were business. conditions, fiscal quarter the our $XXX coupled sales As due years. and we performance, performance first the quarter improved strategies, lower a seasonal our Sales with X% execution in million to on sales $XXX which to million mark results or four strongest year commercial Historically, our see operating sequential is strong

$XX However, sales demonstrates I ex-surcharge, year-over-year markets. first during our noting conditions our QX quarters. recent volumes declines in a coupled at in the excluding across million $X of with including on positive we experienced surcharge growth less increased approach end-use the declined higher our in our our a market by Defense This think than increased XX% XX% markets, fiscal sales million of both medical and XX% net end-use solutions-focused effectively noticeably XX% strengthening previous On market. growth most $XX in worth and across line basis, were the and impact with it's on sequential end-use commercial million. expectations most or the have historically in volume. of were and expenses Aerospace that SG&A Sales basis

in the Going expense and forward, as X.X% basis driven having SG&A conditions This at a moment. in combined items. to million expect in impact per million quarter in and of first volumes operating the we fiscal the was quarter and year commercial to results ongoing of was the market by to will $XX that a in when team's volume, as continue as XXXX. cost the PEP improvement to $XX result EID product Again, sales up to Overall, higher special pension, Carpenter solution-focused approach, income to range improvements the I an down SOA of quarter Operating XX.X% a and of the year. sequential on be with a compared reflect both it's the execution last lower on XX.X% compared the Model mix. sequential further in improving percent in our quarter due of excluding Operating of of expected but result touch mix a significantly fourth improved implementation our

tax in rate XX.X% quarter quarter. quarter first and XX.X% fourth the the negative for to last effective year's Our compared was fiscal XX% in first

in million XX% or tax solid XXXX. be of to both net represents for first the of $X.XX reported sequentially rate continue to in expect very We fiscal range a our to year the income XX% which quarter per and share, year-over-year. execution We $XX.X effective

million Now fourth compared to $XX X. $XX negative cash positive flow the Slide Free in year million in XXXX. first turning the of to fiscal quarter quarter was

our demand markets in million levels our patterns for in More quarter are across know, build is With traditionally the current we we flow generation, as strongest by in increased quarter. free stronger said, free you with was fourth quarter current cash our during that line capital seeing in specifically, expectations. and first working we inventory decline we during $XX the the As the cash backlog. quarter generally the with aligned our flow quarter inventory the increasing

of to year inventory $XX to full the We a million $XX range continue to on XXXX. fiscal basis in reduce expect during year million

spent for our $XXX For first million spent quarter expenditures, we the 'XX. million fiscal of the expenditures and we in similar quarter, XXXX, capital on track year $XX fiscal million to guidance capital on in of approximately for remain $XX year

Our liquidity position strong. remains

$XXX cash under $XXX we our $XX and million As of of liquidity, million of September including availability of have credit XX, million facility. total

Tony mentioned, As the with remain well strength sheet. balance our positioned we of

Our major there fiscal are several pension years for meaningful debt fiscal in and contributions next obligations XXXX XXXX, mature no years. the and

surcharge year-over-year XX%. On which results. up down and to or our $XX segment SAO was net were on sales were sequential a X% excluding basis. excluding XX Now turning million sales or $XXX Slide Net million basis, million, $XX surcharge a

Operating earlier, in year-over-year seeing income which was As in sequentially, our strong of commercial I patterns most customers. end-use partially solution-focused on XX% of performance compared our muted since markets million product in that $X demand the in waste quarter, increase was levels increase Operating practices. constrained from continuously execution up sequential reflects stronger year was This the reflects quarter to bringing XX.X%. basis, facilities XXXX. redundancies, a to up facilities We solutions-focused our value year-over-year demand markets best non-standard seasonality is of our million mix with SAO continued the year $XX.X improvements sequentially, XX% higher our but are operating we richer quarter first was by across Again, our the a sales by mentioned across and steady mix. parts stronger to the normal sales but decrease On prior our volume coupled Operating first was approach down Carpenter for of and $XX cost the eliminating margin Model. our the down million across fiscal the first from ways output due to quarter. first the the income for look

one plan modules and through per on day of maximize and and by waste example, increasing inefficiencies. For minimizing we our a press scheduling uptime formulated to operations presses,

one X% increase of contributors a many quarter. press SAO strong in resulted efforts Our in was the performance to in the output, which the

Turning to the for outlook SAO.

growth. strategy, end-use expect increase to continues demand as As trends reinforce we our across the up to look at on commercial We see to we years. execution most basis. currently QX, our delivered operating to in a four of X% our realigned we best positive continue team second markets of This income drive and to our backlog sequential outlook continues quarter

Slide the due higher basis, or rental the turning to million as sales our driven in XX% increases demand as On and a fourth well a titanium our of well business elimination mainly year sales, products fiscal strong Florida. hurricanes our we year-over-year affected due in PEP activity late West to the gas primarily million divested to Amega $XX quarter approximately On segment in increased sales XX, Now as for XXXX sequential of Texas oil of related impact further that sales in PEP and declined as by recent a to $XXX the million, basis, $X overview. that business. the and operations from

on the Tony its profitable first year operations of the of our Fortunately, lost quarter as facilities, our operating short-term impact our have business headwind, and reduction number the these impact schedules any West income on not our production long-term only are first natural expected we Despite the it disruptions since highlighted, to disasters days XXXX. delivered natural quarter to gas estimate and a in caused as at Based disasters the and almost results. a fiscal oil second quarter notable Amega XXXX. was of milestone achieved in the $X million of this

activity share on prior work at the close discussed for and cost, also been groundwork laying we've gains As managing staying market while the as hard we've to calls, improve. customer levels our

as helping Model, Model continues Our Operating our aimed to generate Florida unlocking been products, of to in result conducted the titanium medical the studies a our particularly capacity end-use on customers' capitalize to We've sales for opportunities demand on competitiveness. Carpenter largely benefits deliver Dynamet our our our our business impact Operating grow market. certain The strong of having operational operations, we at expectations. an incremental on and better also cost base. Carpenter is analysis increasing In able

time drove With the management cause, in root of we first daily problem-solving throughput significant the and hour implementation by hour boards, and quality. improvements

Carpenter we've the reductions of enhancements delivering cost market. whether our result, our the Model types a win As reduced productivity is quality these XX%. in benefits, are that in Operating by or helping team cost there they of commercial It's

at we execution Looking products, operating improvement. given segment additional and XX% our expect demand generate resulting strong results. in improvement PEP at QX, is in our sequential continued as titanium In further Amega of as to strong performance our growth manufacturing for and continued West to commercial strategies cost currently the financial summary, operating the XX% income well operating

approach manufacturing improvements We are while solutions a a and strategy operating pursuing metallurgical to with expertise. delivering also commercial our and extensive that best portfolio gains, is leverages disciplined cost capacity that our

Tony. the over turn call I'll to Now back

Tony Thene

believe I and general expanding including AM annual study spoke relationships over or an growth a the of the it design the the customers Thanks, continue The their published the or billion Damon. as well level $X.X points for additive on our Paris to AM rate AM, exciting projections products performance, strength long focus corrosion Young will & duty have by growth market, them with manufacturing XXXX that XX% collaborate compound On it's successes strategic ratios, XXXX. a last future end-use Air about earnings many at to Show. weight our a Ernst significant remains higher our their reach are term. flexibility. with helping our call, impact as future and with opportunity markets we address to opportunities of resistance growth whether as cycles, next longer There we

potential manufacturing to While vary expansion and the market. Aerospace decades Defense, growth medical adoption Transportation in from and in especially market increasing of projections additive to years point study, robust most study and and the ahead,

how are weighting number transform light efficiency. with fundamentally AM markets, solutions joint components are ones engines is including each focus fuel across There industry efficiency Carpenter aerospace, key for of end-use in cost several our AM trends, today, customers it fuel increasingly the of for AM Drilling especially used and nozzle potential operators in the new applications per AM of the rig fact, with are initiatives In aligned key realize and currently GE disruptive lowering could that In major powder. their barrel. industry. a of the focused and on including market being which the energy supplies their a

advanced needs position product and expected will Given as for through, weight metals are as years of history design environment weighting lateral other clear our the is AM AM industrial the in solution solution accomplish reduce expertise. end-use we tailor in the as innovation And across application. help performance to challenging operators flexibility existing savings, and drilled that capabilities, high and markets, hole most also and die leadership down and as for corrosive implants Today, OEMs. medical devices significant XXX are build outcome. there significantly processing increases steady well to their are across market wear. for are AM more look potential at customization design a In of leveraging in to are our there moving In Transportation, AM to capabilities application strengthen enhanced and tools they and fast beginning medical machinability improve by feet component potential patient is to to drilling and opportunities markets. deliver light change improve AM examples to It's a

alloy as exist. opportunity the what as are AM best those determine our will working broader for feedstock development While be, will existing space, well ensure powder if and or new the results. in the improve Today, for many process to a understand challenges to properties AM significant flowability, presents control final customers, solve commercialization industry part our

We have powder unique mission-critical expertise are and manufacturing today, and grade applications, engineering wire in additive feedstock.

As feedstock a XD fuel parts to just We mentioned, including and critical few. printed already rocket implants, of AM name we nozzle, for chambers supplier are medical a believe thrust I've aerospace leading a we understanding how can the provide customers expertise the meaningful metal manufacturing and characteristics provider metallurgical a solutions extensive of with the value process. to material of additive change as during

capability our customers. our We proposition continue strengthen and to to value

For solutions with a example, XD company. partnership deliver believe can we we to printing customers design Together, we Burloak from a and Technologies, through leading application concept, leading formed design manufacturing.

formed design also to AM. manufacturing spearhead an plans We have begun center and continued business that team push experienced will an additive have build our into

group is closing let's performance. attractive, with in results our Now strategic and is comments. and driving share demonstrate XX, best off and first results, gaining momentum, this bookings, a turn four quality We're market the commercial our of to the operational Slide fiscal XXXX our and showing representing and having The on rate quarter on financial solid are to my start high opportunities. our in opening markets execution Conditions capitalizing year and new our plan our our impact of years. across customer improvement level end-use

chain and customers have traction. exciting. partner our And never collaboration of gaining critical supply goal been a provider is solutions with Our solutions-oriented more becoming initiatives

changing continues performance as stages. West is of remains of is its The from Model portfolio, recovery growth. work Operating improve our we submarkets at platform think, limited benefiting are Carpenter and the leadership rental our product in increasing. Defense But produce energy every facilities. positions levels activity to new and how early one The at our Amega We market, driving are in engine in across other including where the the Aerospace market and diversity ramp

unlock drive and We further to reduce incremental working cost, are productivity gains capacity.

well manufacturing market. Operating is Carpenter on have margin are transformational to additional we on as as and end-use opportunities a drive our Model do. Additive across our currently there believe the are have of benefit expected impact industry expansion, customers helping the much to more While work

and to as capabilities thoughtfully leadership existing We leverage expertise quickly metallurgical well in our market. powder wire and position our as to build are a this moving

look continue invest AM, long-term areas, our build to strategically to our and sustainable growth. customers solutions evolving a we including for continue as will We foundation as provider in for growth poor further

by for our transformation. this with close me the we Let results quarter progress made saying, reflect our have

to are date our far and noteworthy, the metal done are continuing for reputation we in intimate a your are potential accomplishments from and solutions customer to innovative our connections, to the preferred vision field growth, about Although be fulfilling path back excited provider your unquestionable specialty quality, unlocking for X you technology creative to the with injuries, attention. operator and turn questions. engaged Thank it talent. I'll And the to

Operator

go [Operator questioner Please Chris Longbow today will with Olin Instructions] be Research. first And the ahead.

Chris Olin

morning. good Hi,

Tony Thene

morning Good Chris.

Chris Olin

Wanted is in to to number, in income items margins? suggested on assume $X about what quarter-to-quarter, with revenue should talking type million what the the operating wondering the you're cost X% there you and on guidance top the so a that of could segment, in saw of increase that any there million we here. $X SAO outstanding start I'm we affect

Damon Audia

Yes.

noteworthy back you QX between the revenue I of the significant end I and continues think, can point it QX as model relatively – similar say, of improving sort the to you correct there. into back that that for numbers cost improvements and cost sort up of really SAO margins again, to your are the the margins look would – to. we're I and so there. would sort the you revenue issues operating – on you're gives Chris – that generate No generating slightly at

Chris Olin

got Athens in place? quarters, the qualifications Okay, about impact Is with we $XX quarter? start to consistent thanks. you've your the the think now of that previous And million over like guidance from energy how next per that these should

Damon Audia

Yes. rate Chris, think remarks, as Tony up on XX%. the utilization around his to scripted I mentioned gone has just

starting the here. are Tony of some on we're and see want that incoming from to to wins may seeing elaborate We Athens

our base been move a XX%, Carpenter, we So that to cost million $XX to to up you of that become here with is can add that or here. an reducing cost we've reducing incremental in value starting as annual part assume drag dealing that

Tony Thene

Hi, decreased Chris, with Several were by probably a $X is million Tony. to that $XX probably ago, possibly. million increasing. quarters month we million this $X.X That's at utilization

Chris Olin

I back thanks. queue. get Okay, will into

Operator

next with go today our Please will Cowen Company. questioner be Gautam & Khanna ahead. And

Gautam Khanna

can cycle Could in you give wondering Thanks. Good there being you And kind and gave to set talk inning lot was as made, forward? you far How getting along we comments if are we you couple you this around journey at to you years are color of out think in System do analogy, And evolution? how Any and on do. that the some was in? nine morning. a Tony, do that. I about improvements maybe the if a root that baseball see wondering work on SAO? when the was a move inning we that Operating ago, you talked had what in surpass expressed could you've see margins I of of this about Carpenter that you cause XX%

Tony Thene

the potential news because in Gautam. it I I us. would good tremendous is we which a Good journey, morning, Carpenter believe, have amount out of of of in Yes. early we're say this for shareholders that says front innings

see year, first We've could quite our always variable where cost we're range. down Last in can year, the X%. a in years was year-over-year. that I be that we think going increase forward committed to X% I going that bit. X% to were X% we

some constraints in markets, is the of to not we unlock just some great unlocking of capacity as in ability So capacity. implement about the know, medical of just aerospace, the and many plants, than the you the it's Because others, cost, the model it's when across reducing more there operating but that visit value. is markets and

Operator

our be will And questioner go Global. ahead. Please with Instructions] next Sullivan Seaport Josh [Operator

Josh Sullivan

morning. good Hi,

Tony Thene

Josh. morning Good

Josh Sullivan

set on any maybe With there new is energy basis? market a opportunity to the new total quantify qualification, way addressable the

Damon Audia

the repeat question? you could Josh, Sorry,

Josh Sullivan

Did like? in about – market some mentioned the that opportunity quantify that or to looks qualifications Sorry, Is that. what is new you market. you set energy any what way there

Tony Thene

sorry Josh, that. about

qualification through at additional allows background a don't qualifications Athens not our a take It material whole is of they unless adjust lot to us, and them distributors little that noise material spectrum have really sold they business here. to that customers. across We bit a want that of all because [derogate], on getting cetera. et have that opens of up of that have to By

up was us. last that significant picking So for issue a qualification

market are can lead anywhere decide be that how flow we quickly that the the significant I of you our else, get significantly oil Athens, that that have there times customer at facility, lower can than gas we going efficient perceive will But Now primarily we a at and that plant. because the because forward, comes. have to can tell

Josh Sullivan

great. that that to looks lead the any a Okay, comp, way seasonality I – be quarter? is there I versus just previous might might understand this it And that how guess, maybe not quarter but time, on perfect quantify how...?

Tony Thene

than pretty maybe Well, to and could about The I And general, times provide. range, think be which on total, that you I look from in you of if lead on about just Athens industry, gas could X-week is Athens standard in an standards out I'll – that just oil in significant. be Xx say standpoint, current what aerospace could think would can current Athens Xx X more different. the be

Josh Sullivan

on Okay, you more guys Or about perspective? causing the getting you then guess, from there just time market? of be some that's it great. something ahead I market a there. I is excited spent happening you are little And to a customer the that's mean, AM

Tony Thene

energy market? the energy the – On

Josh Sullivan

the manufacturing on market. additive So

Tony Thene

one it's there us our think to always in in just each calls for talk see important what future. I we the of out about

to be can traditional of be it's I the company to zones. the we think be, got growth Carpenter for outside best

of a quite just being with customers had them, know a folks a in of around rock forward. position a I power think two think, help We've a doing few discussions have value very can there. and going as what we're I producer, producer us together, so long so how supply important we puts let well to all to those AM history our unique as it's We

Josh Sullivan

just it up the on too fasteners? fastener any see on the cycle, early demand And Boeing one one rate? XXX production the the then last Is weakness? to demand just recent taking for titanium thoughts

Tony Thene

is the gains, technology is in the of Well, maps, variability cost the volatile. share think control in market really not material market better is know, Carpenter. that like to to quarter-to-quarter continue serve, across improvements in markets Carpenter we is used all our as rather be ones for get What you fasteners road we to I important it fastener terms

They So is overall bit. going not be Carpenter to down be can forward. that It's sustain going fasteners going can to quarter-over-quarter able a the up be impact improvement to a bit.

Josh Sullivan

queue. I back thanks. Great, will get in

Operator

Gibbs with our ahead. today will And Capital. Please Phil next KeyBanc be go questioner

Phil Gibbs

Hi, good morning.

Tony Thene

Good morning Phil.

Tony Thene

you? are How

Tony Thene

Great.

Phil Gibbs

Had a revs supply question looked the your aerospace were It chain. like there on up.

engine I were about non-engine if think base revs up break year-on-year, curious sales? just between that and out you could XX%

Tony Thene

that, Phil? you Would repeat

Phil Gibbs

year. if I XX% about just thought be up versus you sales to your base break I versus last aero and was that out look curious could engine non-engine?

Tony Thene

was think, I up I XX% said as well. engine Yes,

the by coincidence, total up XX%. were Just engine aerospace and both

Phil Gibbs

Okay.

what then consistent is growth So indicating? the board you're then across pretty

Tony Thene

market. aerospace total our of XX% to XX% about are engines Well,

you fasteners down. If look, were

up I think sequentially. XX% to fasteners XX% were

disruption a so was XX%. gives quite bit, Our market total the you that about of up

Phil Gibbs

year, Is just relative I is Tony? about talking last what we're – to here? that the Oh, was XX%

Tony Thene

Yes, sorry, Correct. sorry, it's year-over-year.

Phil Gibbs

but the And if aerospace specs the on set question year the it, I this some into table final a qualifications sort getting 'XX. final Okay. missed then in apologize I to for customers also approval VAP of side, you're on

the of this more And kind of a will qualification be 'XX? in so process ending

Tony Thene

supply plays because expand chain aerospace point and let Yes, of in. kind bit me how whole an on with I a it's think Athens important question, that the

If this this the and capacity, to step to over products based been and that say And supply supply chain deliver of involved, to you the up it's quarters, just and the been critical ramp-up would there where be I to complicated Carpenter across this significant provides that on our our you suppliers engine we've disruption. now our are of has capabilities pinch reason And think points going take to times the chain. a customers. we've stand able and multiple been asked – important that couple last at there's a look numerous magnitude

also cases, in products quite you see on earlier, these said extending, times we a As lead some bit.

that you supply, very really take tight are made demand, at Carpenter earnings aerospace ago. current So said, time this you the the scenario, remember to if a I decision reasons two quite a primary those some last increased Athens the of call if look on build

receive capabilities times as see to to due lead particular we we've as begun I've such momentum orders that standard. the have talked we directly win this environment, that Athens So approvals. industry the attractive in in we more to – to continue the about I compared as And expect

to calendar schedule of the do the by specific this we your on those packages to end remain to question, submit OEMs qualification year. Now

role OEMs very to more currently expedite important supply the the other this will with in play stressed aware it's process closely of qualification think forward working becoming critical to that say and in cases, OEM that chain. Athens going some I that we're are much

Phil Gibbs

just qualifications the get over months. that not course I whether will Tony, of trying it, next, take a call or place a of XX should the was of the gauge to think we lot

a they'll in about And think so take way but I step Is it? should the Athens utilizations that taken will 'XX. up have here, another the step

Tony Thene

just make the Yes, the you of I I comment want Phil, previously? hear made did part last to sure,

Phil Gibbs

Yes.

Tony Thene

think key you go. that's how the next I Yes, step when quickly big a will say

accelerate that OEMs to it point supply closely other that's trying that with chains timing is think process Athens, right make I think tighter, I the criticality becomes the see that and normal and the working go qualification OEMs where going as would you point we're to going to of the possibly I now to see this are process. could qualification see. expedite that, tighter some that to you're And was

Phil Gibbs

is curious I you last you. back could are half? track here, targets. reduction also move one into of it My I you then Thank cadence just and inventory quarter squeeze see what with was you in said as on if terms very the into in the just, Okay, the good. second you the

Damon Audia

first Phil, Yes, up us, quarter. were in we I for the XX say, think,

modest decline – you'll that have then see would out our quarter see second I here. flat those And as is as in you'll and in strongly to think the build stronger a sort of QX seasons. two what sell coming are back we QX into

Phil Gibbs

Thanks everyone.

Operator

Gautam our Company. Khanna & [Operator from go with question a Please be Cowen next Instructions] And follow-up ahead. will

Gautam Khanna

up. really. turbine of the was I One, frame for questions the Yes, maybe sales company fiscal as two follow of gas percentage us the thanks Well, off wondering industrial can for the level base? a total you of 'XX revenue

Tony Thene

X% I about total can answer it's you, sales. for of that our net

Gautam Khanna

it's small. Okay, so

Damon Audia

Yes.

Gautam Khanna

like still I about – do is You're good Or couple way a unlike to not integration? next you over any the OEMs? don't you is position? lack forging in in disadvantaged as Does there as downstream the contract Carpenter any that ask you as wanted talk Castparts, we the ATI, the of anyway, Arconic. and ramp renewals with disadvantage in engine of of guys years, feel are by parts renewals – the control operations, unlike the way, you to talk you about additives, you you Precision sell about forgers, think contracts

Tony Thene

you, a I can not I that, that customers, we remember once. tell the visit of you that had. if that think talked disadvantage And they Not it. have time I say many commercial we've wins can heard one I quarter have as that it's don't some last the I about

Gautam Khanna

related demand, lastly, quarter was – aerospace some you can way And Tony, the in in side? spot the emergent supply much how as the chain of size some to subcontractors some Any mentioned able the to demand fill were us for you the year-over-year of are growth you on delivering. that Okay. maybe XX%

Tony Thene

the I Yes, new with meet the growth it's to when we're those in to engines. the up that just because step are to But to the customers significant able those of growth continue inherent opportunities is demand. relationship for mean, us majority that our strengthen and minority.

Gautam Khanna

overestimate I – in sure sort down? Or Was a step expect – be forward. is we going just I it what I'm result guess, it going we as forward? I sales could move to want to don't indecipherable of make

Tony Thene

I in don't that is for be for individuals needed think it's driver – quarter-over-quarter between – going think going major customers the to to I us stepping volatility. when

Gautam Khanna

I lot guys. it. a Thanks Okay. appreciate

Operator

And be Deutsche Please our ahead. next go with Kliewer will Bank. Jeremy questioner

Jeremy Kliewer

morning. Good

Tony Thene

Good morning.

Jeremy Kliewer

million first incremental the EBIT, is much the I $X segment on of was during how quarter? just PEP recovery of roughly that $X wondering kind million the the lost back bounce of

Damon Audia

or production capacity Jeremy, what the the constraints the where to so that That would lost just in really had was from Yes, tell effectively hurricane is facilities there. I not we recoverable. related $X our you is million impacts lost

a are an base artificially is So given a we're it's of it's to of coming million. because the that opportunities XX% just large $X here recovery upside off XX%, lower that the growth the hurricane, we're really seeing, percents that that The organic seeing. not sort but of

Jeremy Kliewer

your on are end that you those kind flatten expect rates, when also markets? your do And there in of increases out of or significant when demand, then kind dissipate is growth most market of year-over-year to end because

Tony Thene

I to be years. aerospace the on the five Well, three this to think side, next going is over

think I significant you're going growth. to see

the at engine published. look that's Just ramp-up being

going have On at applications, that capacity the do markets, aggressively Athens now new us allows online and we're we coming that. after to other

anticipate as forward. we we go So growing

Jeremy Kliewer

Thank you.

Operator

the Brad his session. to closing conference over conclude question-and-answer Edwards would will And this I for to the remarks. back now like turn

Brad Edwards

today great a We for Have on second thanks, to our with look forward you our day. conference all call. joining connecting for quarter and William, first call. us Thanks. everyone, Thanks, quarter again

Operator

for Thank you now conference concluded. the And has today's attending presentation.

disconnect. now may You

Carpenter Technology (CRS) 28 Oct 172018 Q1 Earnings call transcript