CRS - Earnings call transcript Q4 2022 | Carpenter Technology Corporation

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

Operator

Good day, and welcome to the Carpenter Technology Corporation Fourth Quarter Fiscal 2022 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to the management. ahead. go Please

Brad Edwards

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

Tony Thene

morning Thank to the today. and you, good everyone call Brad, on

of review Let's safety a performance. on Slide X and our begin

record. performance fiscal best XX% an above total X.X is X.X, year was safety A fiscal approximately was year rate. is our which XXXX, case lower fiscal performance our It our XXXX rate our on of rate X.X. incident year than of For all-industry

is it zero to goal. goal work and However, believe towards be our we workplace. We injury possible, a ultimate will continue that to is

Now a review quarter. and fourth Slide let's turn of to X the

demand notably, continue see our increase of the ramp in aerospace see we strong markets. end-use market to Most each and end-use in to levels. We defense to continue pre-COVID

traffic accelerating the to Although, see We backlogs across continue our many the and is yet are medical global end-use the increasing And environment. ramp passenger surgery industry the rapidly. is recovered, backlog our indicators COVID-XX. demand as by aerospace order not market likewise markets addresses end-use of delayed of fully conditions improve strong

Let me highlight two.

First, XX% of the XXX% our increased quarter backlog marks consecutive year-over-year. backlog growth. sixth This and sequentially

and continue contractual Second, gains to business. realize we on transactional price our both

fourth last we This to the the on business months. Specifically, our XX% was by price base in XX%. XX increase recently transactional increased prices such

We requesting accelerated volume working delivery customers, with dates. with are closely additional our as most are

Our focus is productivity operations this demand. aggressive our to increasing meet on across

remains SAO net the result healthy. by And importantly, our a and PEP growing driven of liquidity market exceeded our segment quarter, sales higher our expectations For the demand. as

year quarter, million million $XX finished and the total During in free we the with generated flow cash of liquidity. $XXX

a Now update. end-use sequentially Slide environment. market our markets move end-use recovering X were year-over-year, of the let's Most and to up reflecting and demand

is market aerospace of year-over-year. increasing X% Our build accelerate for each their XX% meet to the sequentially substantially aerospace Demand end-use and across up rates. as and submarkets were customers defense activity sales materials our

continues result, to extended and a rise. our across industry backlog times lead the have As

expected year. to focused customers The be year rise to XX% XX% demand. pre-pandemic continues meet reflect to calendar to sequentially end-use stock and compared half the of defense procedures outlook is and in up were XXXX. overall are last aerospace The year-over-year. second XXX% and XX% to our with end-use market levels market, sales in backlog sequentially In levels medical ongoing on medical increasing up surgeries results positive elective Specifically, the as recovery up

and were as are We up chain and namely are In replenishment our production. compared remains build challenges, year-over-year. continues end-use The XX% inventories, improvements medical strong up to at that sales XX% growth are Light-duty support this market, last consumers X% with investment. in year. end-use rates up With calendar to and end oil very in demand and is In sequentially end-use and sales growth a sequentially market seeing make the even backlog chip are of is expected historic XXX% driving submarket, the continuing market, the last as modest the the lows. supply down low transportation were energy year. to sequentially to buy, XX% industry through high inventories demand X% the imbalance impacting supply to chain and year. compared and expected down the gas shortages increase In the supply to

pandemic up. from recovers global kept been the supply disruptions. supply has world geopolitical not has The recent shortage challenged by further more energy, the requiring As

we consumer drilling addition, were in solutions market, premium environments. advanced end-use growing activity In harsh our sales In on a year-over-year. flat are up for basis alloy the for and sequential demand seeing XX% industrial and

expect to the We throughout see high continue our year. historically and remain semiconductor demand for to demand solutions strong

submarket XX% see with mill strip the growth on engagement of healthy in Reading. to increased year-over-year. continue commissioned in driven largely the demand submarket we in sales hot and by electronics electronics is our Growth backlog customer recently addition, In

to turn it summary. the over for Now I will financial Tim

Timothy Lain

the up fourth period sales million totaled SG&A improvement were same X% sequentially driven is in sales profit volume. and the excluding in higher product surcharge on each $XX.X year Sequentially, volume. period morning, offset items million Good on ago and are the improving up income the excluding include employee year quarter. of increases. million reserve retention the to items certain million SG&A million about that When for year-over-year, quarter line adjusting we SG&A quarter's certain sequentially. from which in X, on compared to a in summary. increasing primarily in were in It's expenses X% quarter, I'll higher special with by benefit were ago surcharge reported as the was quarter out Tony. were sales that current the $XXX.X recent expenses Thanks, cost line and the The called that legal of to related XX% the called year million mix the in when everyone. and pricing item same profit XXXX. higher corporate in both million in the last Sales $XX increased $XX.X Slide expenses were to gross quarter to and million. $X last sales note million $X our in results included the Net quarter, down quarter a largely credits special the the start $XXX.X up fourth profit, each inflationary and and X% adjustments. roughly same statement and from of fourth year considering the Note $X million corporate of year fourth $XX.X relatively sequentially sequentially due Gross and includes special negative costs, million recorded The $XX.X quarter gross out $XX.X timing third period. flat fiscal quarter. important costs a a totaled this that

third $XX.X As to When million $XX costs special $XX in and was between year look run million million per items, million on would to period operating quarter. in compared Operating in adjusted average quarter to the million was prior recent the $XX.X impact $XX.X we ahead corporate loss of an the income loss current current $X.X operating fiscal to an quarter. of income excluding we the of million expect adjusted our operating in ‘XX, adjusted quarter.

rate earnings impact in per certain given and effective on our to the special share for adjusted quarter was which about of items, the pre-tax Our breakeven. rate XX%. was quarter items earnings due The higher to effective excluding $X.XX statutory year the permanent rate, impact When tax the quarter rate outsized full non-taxable share. Earnings per rate for the share our is fourth largely the quarter. than per current XX.X%, earnings the brings that fourth were have

Now Compared million quarter or the net our XX% to period year, increased last and for Net million fourth sales surcharge. same $XXX.X surcharge $XXX.X results. X the turning excluding SAO Slide to sales increased excluding segment sales of on increased on driven X% volumes. markets, materials key volumes. X% X% higher slide. Sequentially, sales as market The by across on end-use sales was the higher our reviewed net improvement in were Tony

operating fourth operating income adjusted and results. to quarter. The $XX in income reported income and selling third basis adjusted ago, a due on performance fiscal shipments, an $X.X adjusted by million, about year, and million. recent operating $X.X coupled sequentially. SAO income our of quarter year-over-year increased mix SAO's this The higher prices. same in $XX of $XX was reported quarter year-over-year million in year Adjusted higher and improvement of a improving sequential Moving the was million million to largely with operating operating both operating SAO

backlog our continue our of end-use across remains increase. markets again ahead, this order strong grew rates all quarter and as Looking sequentially to

see increased have the across rates aerospace we anticipated chain meet to activity OEMs. increases build As highlighted, we the by supply in

the production SAO customers million for in sequential ensuring Based operating on on $XX range income foreseeable upcoming that will levels activity the expectations, similar of we accelerate remain of teams $XX generate flow quarter. meet Our in million anticipate the and we current focused our needs to future. adjusted to the

million basis and income titanium, adjusted $X operating Adjusted and to of operating $X.X ago medical ago applications. a of about same in conditions. turning quarter, significant result in across income operating the operating sales is of business, increased fiscal improved both a same were Slide driven demand The growth million $X all period in In or quarter. up XXXX additive year across reflects sales current increase quarter in recent last sales our by our year-over-year year and $X.X business medical year adjusted This the PEP sales segment in was surcharge fourth primarily by quarter our to improving the results. a businesses. and ago. million year demand net year end-use net surcharge. from and growth distribution excluding the X% The increased net shipments Now the same improvement from XX% year-over-year were sequentially. our year-over-year of Net In aerospace XX both sales We've sales sales PEP also Titanium Net the sequential sales million, seen income the markets led improvement about adjusted reported increased in compares The on the million $X.X units. the by of from increased in and business market a in a million and Dynamet by of and of same defense for third double-digits million. ongoing net income sequentially. primarily $XX.X quarter in quarter the units, each $XX.X excluding and operating income sequential

improve PEP ahead, believe range currently first As We quarters. coming to quarter. will that for of demand deliver in will continue we million segment adjusted upcoming look to operating in the $X million that we income $X anticipate the the the conditions

XX $XX quarter, turning working in by we the current driven In we of and capital quarter current free operating was Now strong of provided flow. cash $XXX cash of from to Slide a generated combined the benefits inventory solid by operations cash activities. with quarter, reduced the The current million the earnings management. million. In review from

orders. ramping facilities customers' inventory manage satisfy to closely and ensure we can production to continue across levels we'll our our continue We

chain continue steady foreseeable the to we We to also supply critical potential to ensure supply operating our raw supplies a regular will for our maintain have key materials of other actively future. and We suppliers minimize with manage contact disruptions.

receivable accounts a the spent in totaling identified tax million. In fiscal in we sales expenditures do increase $XX With the filings. Offsetting geopolitical expenditures. year finished we with potential million have of million of current the quarter, refunds was sourcing related prior expect any $XX year quarter an year XXXX, result the issues. the not strong this million fourth latest of nor as to $XX we capital In events $XX capital we We unfolding, tax of received quarter. fourth on

is times of As our good employees we the ensure materials. this over for prioritize said, perform year, their did we to equipment certain safely. of projects availability the that delays talked contractors course projects we our lead and due as with can outside some in extended working condition work But well about to in experience as

invest have in where We capacity targeted areas to also areas. expansion selected opportunities near-term see we or growth in

million details of shareholders, cash in quarter. Moving down we $XX consider mind, part to the continue those chart, fourth a to constant generated free the we fund dividend of which our With we in flow. our cash as free flow

total $XXX the Our with of of liquidity of million remains healthy million, borrowings credit available and and we our $XXX $XXX facility. quarter under cash million including liquidity ended current

XX Let's providing fiscal to in this for XXXX XXXX. We're with amortization Slide modeling fiscal $XXX about line expected move year roughly million to year talk XXXX. guidance. is $XXX in our which selected million Depreciation be XXXX, information fiscal is to year year and selected fiscal help in to

spend this flow spend XXXX. fiscal to the At well capacity paths. growth for to $XXX expand as expenditures in but constrained we type CapEx as in year expect certain about allows We for will in million areas required investments opportunities level, amounts maintenance also make targeted capital in

pension contributions. for pension expect our required contributions plans U.S. minimum to Moving don't fiscal minimum any have XXXX. required qualified in We year to

million $X to pension $XX pension expense. by million from expense pension net $XX expect moving we expense, pension net million, to increase of about of income non-cash For

clarity, will year year. approximately be next in income of expense in fiscal $XX XXXX. or reported the For million operating year be will about throughout to The other $XX for balance, million, pension next fiscal income included expense similar the

Next, the our higher XXXX. in interest $XX million to The $XX increase year XXXX. rates on was of fiscal to by in increase year XXXX driven refinanced is interest estimated was a fiscal million fiscal expense year in portion debt that from

income was full for fiscal about tax XXXX, Lastly, effective our rate with to reported rate tax year XX%. respect the year effective

we fiscal effective range to to tax For of the XX% be year expect the XXXX, XX%. rate in

the effective a year basis that, to quarter's permanent will the each fluctuate items in of the on rate quarterly call year, Tony. will back over impact the during pre-tax I this and saw due relation to non-taxable income. we As With turn tax to

Tony Thene

Thanks, Tim.

fourth fiscal quarter recap to XXXX. and our year Now

the well backdrop each a continue of recovery. in positioned Notably, of demand markets medical to are their aerospace end-use We markets. our environment and positive a strong outlook a accelerate with and

and our future. foreseeable to result, continues it remain to backlog a As expect grow the for we strong

deploying our model ramp to throughput to maximize continue operations, paths. and up key We productivity in our Carpenter operating flow

chain pressures to have taken challenges and current facing steps necessary the supply economy. We address the the broader inflationary

past percentage with of our our transactional we able contractual materials business, of a inflationary supply Through the increase mitigate the have we quarters, and our geopolitical to mechanism given of a closely Over material raw pressures. raw our ensure operations reliable worked for are and recent to vendors prices ongoing ability couple to surcharge our challenges. on large the

the to work and recovery needs. with closely partnering chain continue customers, their and supply to challenges navigating We key critical solve

maintain As a result healthy of these efforts, we believe we liquidity will continue a to position.

our near-term take let's at Now look and long-term a outlook.

up as strength an solutions are trends Near pandemic combination the for of demand positive advantageous by the have backlogs the a and sequentially are are XX% have our A backlog. materials we the growth a our trends. of our near-term end-use and sequentially acceleration strong of from materials and strong our XXX% We growth. markets. macro and each year-over-year. end-use markets XXX% On and order long-term for term, is serve were the in the position, we by confirmed intake long-term supported Bookings of outlook macro recovery the both basis, up across XX% our year-over-year, of positioned and

are Let examples. expected year XXXX. rates, pre-pandemic you from will end-use is global well In and aerospace a to me to Supporting Athens give incremental additional levels build to of demand. facility. our with at are continuing travel which demand market, growth the in couple narrow-body growth capacity this Technology air positioned the we our calendar capture return in defense Carpenter benefit

in on R&D programs. reasons, for these development the the contracts the product partnering well to negotiate our and is the more lift gains long-term continue even To and given environment, programs. of materials demand, programs The funded investment agreements like hypersonic, wing with share we that vertical solutions. solutions, we trials the platforms require we into customers is our solutions pricing In platforms expected on new And that customers during are are new have to and industry locked engaging and support with better defense, for next-generation future. able supply aerospace pandemic. fixed For been geopolitical materials and that demanding

the strategic our portfolio demand, implantable the to for capabilities capacity just in with pandemic biocompatible For support our invested keep growing of the hit. long-last Titanium market, initiatives. facilities, customers' up broad in end-use medical us order In materials we and positions to which online came devices as

positioned this as on Now, the demand. pandemic, well from significant we to emerge market and in are this anticipate capitalize we growth

improved on aging growth future. the well medical in device the demand drive solutions. industry requiring expected patient continues With materials the the into and focus to procedures outcomes, innovate, population And should high-value

our addition accelerate manufacturing in of areas to our as that are legacy will power such In investing electrification additive the trajectory. growth and businesses, we earnings further

Specifically in solutions. well electrification, are in with electric our dense power motors we positioned

a the for already are units, auxiliary or aerospace magnetic in We leader materials power in soft APUs, industry.

motors for our down finding needs our We experimenting us dense with also the that materials increasing materials properties are the for are and solutions in provide industries. Companies for power performance looking chain. other electric value pulling

manufacturing In core producing now customers. are soft stacks, addition the component the magnetic electric motor, in for we material, to our

is, working While the value lower submarkets. are range are defense vehicles our customers. support Carpenter that that processes, in as hybrid proprietary various engineered, power into Rightly the that to rate further to we how a year, we to summary, this The aircraft aerospace electric dense earnings? are equal vertical need. projection required our the currently entering motors in spoke In performance. customers does that could applications we a new and industry, for landing achieve high-end and automotive about rate And technically frontiers on highly electric industry stacks advanced sometime the chain, Technology our volumes, power question moving electric only industry, supercars We aircraft are attention. scale customers in motors. I dense so, working need we the and of Earlier flight. in demand. run capacity In with lot are provide translate actual working producing and power are obvious we regional through produce ‘XX, with with In FY we to require they in ‘XX take-off grow high-growth publicly we the that materials across and these at FY garnered looking applications participates

again. it address me let So

that total full FY year run of operating project operating points income level. at fourth In fourth terms annualized is we In FY the make. FY full FY income I income, ‘XX operating in quarter year actual would like the equal company will ‘XX ‘XX to rate we words, a important other ‘XX. be of expected Three to be at to quarter

First, growth income be the coming relatively linear. will quarters we operating anticipate that the over

are our if we hard of updated basis. see opportunity and to into and an supply will we we that third, quickly the current ‘XX. labor are projection. availability of on quarter working Second, have Obviously, change quarterly keep FY can to view environment And into the built constraints chain you inflation, a third pull this

get I earnings still double over you to relationships to bottom we In and ‘XX time. ‘XX the increase And FY take in, Thank to we projection. stated operator that over longer opportunities. back believe your once to FY and Carpenter we that questions. growth solutions, addition, I it We ‘XX. FY due our will strong that we poised for your can operating turn Technology strong customer the innovative significantly line term in is now markets the to our participate is believe income by The that level,

Operator

you. Thank

from question begin Our Sullivan Benchmark [Operator We first go Please with Company. question-and-answer ahead. Instructions] will now The the session. comes Josh

Joshua Sullivan

Hey. morning. Good

Tony Thene

Gosh. morning, Good

Joshua Sullivan

look your while Is now just the of on discussion? industry? lead that it some throughout This capacity it's how Can are discussion limits aerospace times stocks and about fits the or limiting right your week, just customers and quarter? put there's your like that you taking lot growth been the around previous versus And what in to market materials build then talk Boeing deliveries. castings do just Airbus Carpenter aerospace a into builds

Tony Thene

your for Thanks question. Josh. Yes,

out just that and aware impact targets how a level, our output deliveries. of high high that's tell high we there I demand, So issues around from extremely see certainly you per chain the still month. supply rate at can commentary may standpoint,

I any this, produce Now now. on coming is drag mean, just there's see we market being tight what don't the to some around discussion but too over going we're this the right quarters.

and for lead In right now that times. terms of in engine total, would us, to engines I industry in for think were an high lead XXs from low billet times, XX-week the nickel standpoint,

Joshua Sullivan

Got received or the then Raytheon like to you this it. but And at from through, supply chains titanium you even medical committed then be titanium look supply base firm have their Russian are Have contracts allowing Europeans the to in markets. U.S. altering point? coming supply firms resulting reassuring any

Tony Thene

people Josh, away Russian are supply? you saying moving from

Joshua Sullivan

Is Yes. given the change any the in incremental activity titanium front dynamic? on Russian there the supply

Tony Thene

Yeah.

one, share, pieces. two provide large on that some would to it's may aerospace I see you the They those side. think I that services participate we conversion and pick origins. be up could titanium would entities customers case, and mean, some the U.S. in

side, opportunity Dynamet some be medical of what want suppliers, to customers the going they with accessing us via and at for well. are do could On forward, as looking an that those compete we as

be that depending Dynamet together, for put you out, that meaningful plays business. could how our on it a all If opportunity

Joshua Sullivan

stacks, Or the Could strategy there? space? could point? one move product you integrated of then And at vertically brands, explain your just motor a last vertical into see in Carpenter get we integration electric could one, the some some just Carpenter how name

Tony Thene

we a piece now. Well, stack speak possible a as as that right time. building right but it we'll analysis. of producing now at Could stack we next right take from mean, I focused It's piece. on the lower lot a But at getting our one right do rate take of we now, out levels, we're the step we're step? interest customers and now,

Joshua Sullivan

Got it. Thank you for the time.

Tony Thene

you. Thank

Operator

Michael from Capital Leshock Please go with [Operator question ahead. Instructions] next comes KeyBanc The Markets.

Michael Leshock

to wanted commentary. castings Hey. up on the Good I morning. follow

see the it at and as that do go market were isn't words, In capacity? when off-line? you road of rates? that we as is pre-pandemic, that the capacity castings that place much today, rates Is still down did in tight other those is where or some higher where look permanently the we As supported

Tony Thene

don't the of market since Yeah, to Mike. side participate castings I there. the can't speak we

Michael Leshock

out Okay. XX% XX%. price And percentage Is does then called is transactional is it piece the of to your sales? the increases, where had to the your What that And on given? a transactional of business, as where you've you business percentage compare transactional? something historically

Tony Thene

give exact Yeah. percentage, this guidance. We don't that but I can give you

All of larger under are the customers contracts. long-term

So you last idea of pretty the what good that relatively stayed the the over It's years. split will a give same is. several

Michael Leshock

And you engine the Okay. revenues jet then did quarter? give in your

Tony Thene

you sequentially. up can -- was that are that engines I Well, usually the you the at question revenue ask. folks That's key tell X%

Michael Leshock

you it. Well, Appreciate guys. All right. thank

Tony Thene

you. Thank Yeah.

Operator

Our Khanna next ahead. Gautam question Cowen. go from comes Please with

Gautam Khanna

constraints, hearing Sorry, wasn't X? I on identify about was call production chain. it engine supply maybe taking supply if for Airbus Boeing up from. complaints seems on or late AXXX perspective asked. like isolated if to the get of engine obviously, they it -- we're I'd XXX because effect earnings it they their I rate. just to on that's they made if your us joined faster yesterday help the customers chain on pushing where Tony, wanted know ramp your that would about how you the they this broad-based And comments Are be Or among the MAX your so some love perspective, are coming don't to But or one could and I get to might

see on it get I X? points Or to So the your wanted perspective just on could isolated that? to where anything pinch And you do among your is say you customers.

Tony Thene

Yeah. Good morning, Gautam.

aerospace probably ago that right? a You're so talking, I will at. where were back. a to points believes supply of be where at what, If both come And get quickly period -- we're across entire remember, we we'll we predicted where or that's kind And guess chain. the coming who where we back that be, never pinch would it is and everybody and the there'll is knows you year this point

there's in the that's So any behind. chain I think area don't specific one supply

the fast I think running in are ramped chain that areas up. it's really multiple get supply to

workflows know, that there's the of many into As go an engine. you manufacturing

customers So a board, one more they'd shorter like think are just the area lead too of time. inventories at I in all don't in engine and the our to low have believe that area. Across their material there's side that

So to up production. now we ramp working as we're on our that's -- what continue ramp

As well you very these are equipment. sophisticated know,

So you don't just turn They faucet. like high-quality turn a it very water are you on products. on

see going So a that's to doing we continue quarters of what to next do we're in have couple bring very structured more the as the over way, that we quarter, and you us second quarter the as into on first capacity. and

Gautam Khanna

point? from I if residual we impact the was at this back December any press curious And in Okay. outage there's are or that totally beyond

Tony Thene

had was press March of end with time at really, up, came so. the being quarter right, Gautam, this roughly or Well, full because we the back the first quarter, Yeah. back frame it fourth

I'm then the that and we'll outage, work into continue anticipate saying is out as quarter, So we'll times, that the we'll quarter from to same the quarter, at I would at lower not us. ahead because increasing. first be second behind on we'll And be the much over time this press next have we we're that. demand pulling get and lead recovering

quarters So several over the be as industry the here, think, next up. the case I entire that's going to ramps

the end between or somewhere you -- on months four three our lead for five lead on our are time the production months longer times short side. times, products As and or I shouldn't usually know, our say

take does it quite So a while through. to cycle of that kind

Gautam Khanna

suggested run that XXXX. ‘XX approaches could you quarter there that point, And the fiscal it. had be guys established Got one at in in a rate

Tony Thene

Yeah.

Gautam Khanna

curious, earning. in as fiscal year, this possible any a was that of XXXX? a the do Or see dollar one I of you quarters of like still dollar

Tony Thene

Yeah.

joined a you're comments as little I in lot rate by of run got to forward, believe so my now, So in the right said, income. easier operating know -- you companies different we little that I at we and covering. that earlier, late. my said out probably moved there look you've prepared I tried a you As comments, a in I But that did of that about make talk and cover a it bit fourth couple just quarter, right? we'll to let's be mention

not we're about the below line. noise So talking the

Technology quarter, comments operating annualized A believe look quarter is be the that So that, I gave that fourth said that than run is can one ‘XX I thing really performance And history, only we pre-pandemic, quarters on at I we relatively year, right? compelling Number at I that in I period more couple maybe where that be that a we that's say little by they I of quarter, away, Technology at do can make going we'd But which I before. earlier. even to you I into think of Gautam, quarter that's the maybe year, hard what The this real around you the about if of the the of highest story was industry of story, rate this by see if many working that that story to right? And be had good for maybe and what's talk up It's now end couple of point even ramp others bit Carpenter third even the to short you the that if is, time. be fourth income, quarter, like our a that. really your publicly would the right only a think I to. think you that we know years think really that that's the is, next can growth a be as third now. a would a couple pull of the can in was Carpenter to between really I and we're rate made relatively And two, point clarity can quarter? that financial the us, So think for Hey, FY linear. around in quarters away.

Gautam Khanna

you bar? know question, you sense. Because as the those industry away I and any makes VSMPO seen wire the coil, in if I the fastener, at aerospace And was customers curious, have don't was of markets. in move know all bit No, or helped in that it benefit business medical folks a VSMPO, guys just the from player industry, in last yet. in I some

Tony Thene

a and are customers. player, we They Yes. had with have significant discussions

supplier, stay may might to decide to some that leave. Some decide with

those sourcing do we meaningful they're opportunity for there's decisions go through as as facility It an for We believe forward. speak. we us. So looking could be Dynamet

probably bit the little a more that provide So gets more coming in could clarity as quarters. firm we

Gautam Khanna

it. Tony. a lot Thanks Appreciate

Tony Thene

good day. Yeah. you. a Thank Have

Operator

Glick JPMorgan. ahead. The Please next comes question from Michael go with

Michael Glick

guys. Hey,

on had of comments. your Just a couple XQ follow-ups

progression that margin pretty as should at about the flow as Just as we cash linear be And then well? linear growing in SAO, kind is well? free rate think of that

Tony Thene

to that up, we The right? I production operating the will SAO. we'll in and see it's tell Yes, flow, good capital, up, to will income, move as improve you operating those make X just income the working margins would we're question or fourth a you'll three times you're it the saying what total to income process. other to higher. we when quarter know that. increases, Free as we'll you and said ramp work so these follow our times more cash offset we'll some early look But fourth investments quarter it in you're just on, have with I if I'd So of types months, are see this Because that to question. you should in ‘XX, margins -- inventory continue going increase primarily then operating ramp SAO say, yes, at operating FY be Carpenter -- have you right? of and to So six in WIP, say, than your do income.

So it's significant.

short keep build lead do in improved WIP inventory sales mind, we some to free to those cash that. certainly in But will increased the flow. will term So support

Michael Glick

Thank it. Got quarter. you good and

Tony Thene

Yeah. you. Thank

Operator

This Brad back closing concludes for to conference any the our session. question-and-answer like remarks. would Edwards to turn I over

Brad Edwards

connecting for call. questions, with Thank you, appreciate great forward to of soon. Have us joining day. your our quarter conference interest and and a fourth thanks today rest for to everybody your and We everyone earnings look your

Operator

The for today’s conference attending Thank is concluded. not presentation. you

disconnect. now many You

Carpenter Technology (CRS) 29 Jul 222022 Q4 Earnings call transcript