Carpenter Technology Corporation (CRS)

CRS 
$43.95
*  
1.20
2.66%
Get CRS Alerts
*Delayed - data as of Oct. 1, 2014  -  Find a broker to begin trading CRS now
Exchange: NYSE
Industry: Basic Industries
Community Rating:
 
 
Symbol List Views
FlashQuotes InfoQuotes
Stock Details
Summary Quote Real-Time Quote After Hours Quote Pre-market Quote Historical Quote Option Chain
CHARTS
Basic Chart Interactive Chart
COMPANY NEWS
Company Headlines Press Releases Market Stream
STOCK ANALYSIS
Analyst Research Guru Analysis Stock Report Competitors Stock Consultant Stock Comparison
FUNDAMENTALS
Call Transcripts Annual Report Income Statement Revenue/EPS SEC Filings Short Interest Dividend History
HOLDINGS
Ownership Summary Institutional Holdings Insiders
(SEC Form 4)
 Save stocks for next time

Carpenter Technology Corporation (CRS)

F1Q2011 Earnings Call Transcript

October 26, 2010 10:00 am ET

Executives

Mike Hajost – VP and Treasurer

Bill Wulfsohn – President and CEO

Doug Ralph – SVP and CFO

Dave Strobel – SVP, Global Operations

Analysts

Edward Marshall – Sidoti & Company

Sanil Daptardar – Sentinel Investments

Steve Levenson – Stifel

Brian Yu – Citi

Gautam Khanna – Cowen

John Tumazos – John Tumazos Very Independent Research

Dan Whalen – Capstone Investments

Tim Hayes – Davenport & Co.

Phil Gibbs – KeyBanc

Presentation

Operator

Good morning, and welcome to Carpenter Technology’s first quarter earnings conference call. My name is Angela, and I will be your coordinator for today. At this time, all participants will be in a listen-only mode. After the speakers’ remarks, you will be invited to participate in a question-and-answer session towards the end of this conference call.

I would now like to turn the call over to your host for today’s call, Mr. Mike Hajost, Vice President and Treasurer. Please proceed.

Mike Hajost

Thank you, Angela. Good morning, everyone, and welcome to Carpenter’s earnings conference call for the first quarter ended September 30, 2010. This call is also being broadcast over the internet.

With us today are Bill Wulfsohn, President and Chief Executive Officer; Doug Ralph, Senior Vice President and Chief Financial Officer; as well as other members of the management team.

Statements made by management during this conference call that are forward-looking statements are based on current expectations. Risk factors that could cause actual results to differ materially from these forward-looking statements can be found in Carpenter’s most recent SEC filings, including the company’s June 30, 2010 10-K and the exhibits attached to that filing.

I will now turn the call over to Bill.

Bill Wulfsohn

Good morning, everyone, and thank you for joining us on our fiscal 2011 Q1 earnings call. What a difference a year makes? One year ago our sales volume was at a cyclical low. Today, we are pleased to see dramatic year-over-year growth in volume, revenue, and profitability. Overall, the year is shaping up to be in line with our expectations.

While Doug will walk you through the numbers shortly, I want to take a few moments to briefly describe some of my initial thoughts on the business, and what I believe should be several of our core focus areas.

As most of you know, I started in the role of President and CEO on July 1 of this year, while I was engaged as a Board Member for over a year prior to July. As you’d expect, I have spent the last couple of months digging deep to increase my understanding of how the business is operating and how we are positioned for future growth.

From these efforts, I have identified three core areas for my initial forward focus. One, enhancing our already strong operational excellence; two, improving our product mix; and three, accelerating growth in the business. While these are not new areas for Carpenter, I believe they are important emphasis areas that will drive shareholder value.

Our first priority focus begins with the customer. For several years now Carpenter has prioritized operational excellence and there is much to show from these efforts, particularly with respect to safety results, quality programs, and cost savings.

Now, in response to rapidly growing demand, I believe we need to increase the focus of our operational excellence efforts to sustain high levels of customer satisfaction, specifically to distinguish ourselves from the competition we will seek to enhance our responsiveness and reduce our lead times.

Our second core priority focus is to improve our product mix. During the downturn, we did a great job of filling excess capacity by taking on some lower value but profitable business. We recognized that the business cycle has now changed and demand is returning for higher value product lines.

Thus, it is important for us to carefully steer our capacity towards a richer product mix. This will help ensure we can build the same level of momentum on the bottom line as we’re seeing on the top line.

Finally, I have focused on ways to accelerate Carpenter’s growth. I would categorize our growth opportunities into the following four specific buckets

One, building upon our key customer relationships to remain well-positioned in attractive end markets; two, investing in new capacity and technology to support growth; three, leveraging industry trends that are driving rapid growth and the use of the advanced performance materials we sell; and fourth, augmenting organic growth with acquisitions and joint ventures.

First, with respect to our position in attractive end markets; we view our diversity of sales across six end markets as one of our core strengths. Within these end markets, we are particularly pleased with how rapidly demand is growing in our Aerospace and Energy segments.

The protected growth in aircraft builds and the shift to models that require more of our materials continues to make aerospace a very attractive growth market for Carpenter. Our engine business is stronger than ever and we continue to expect a pickup in fastener demand in the second half of our fiscal year.

We are also evaluating opportunities for increased participation in aerospace structural applications, an area where our share is low. Energy also remains a significant source of growth for us.

We are pleased with the return of directional drill rig activity and the related increase in demand for our non-magnetic drill collars. Augmenting this growth is our early success expanding our oil and gas business into completion applications.

Finally, while we have a good position in isolation collars, there are even larger opportunities in the markets for housings and stabilizers.

With respect to power generation, we have seen an improved demand for material used in large industrial gas turbines, as global electricity consumption increases. All of these developments further support our view that the energy market has the potential to create the most new growth to Carpenter, particularly in international markets.

Second, with respect to our production capacity, increased order activity for our high value products is increasingly consuming our premium melt capacity, which is good. At the same time, we are becoming tighter in some of our downstream processes including our hot working operations.

Read the rest of this transcript for free on seekingalpha.com