Carpenter Technology Corp. (NYSE:CRS) Q4 2019 Earnings Conference Call Transcript

Aug 01, 2019 • 10:00 am ET

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Carpenter Technology Corp. (NYSE:CRS) Q4 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Carpenter Technology Corporation Fourth Quarter Fiscal Year 2019 Financial Results Conference Call. [Operator Instructions]

Now, I'd like to turn the conference over to Mr. Brad Edwards, Investor Relations. Please go ahead, sir.

Executive
Brad Edwards

Thank you, operator. Good morning, everyone, and welcome to the Carpenter Technology earnings conference call for the fiscal fourth quarter and year ended June 30, 2019. This call is also being broadcast over the Internet along with presentation slides. Please note, for those of you listening by phone, you may experience a time delay in slide movement.

Speakers on the call today are Tony Thene, President and Chief Executive Officer; and Tim Lain, Vice President and Chief Financial Officer.

Statements made by management during this earnings presentation that are forward-looking statements are based on current expectations. Risk factors that could cause actual results to differ materially from those forward-looking statements can be found in Carpenter Technology's most recent SEC filings, including the Company's report on Form 10-K for the year ended June 30, 2018, Form 10-Q for the quarters ended September 30, 2018, December 31, 2018, and March 31, 2019, and the exhibits attached to those filings.

Please also note that in the following discussion unless otherwise noted, when management discusses sales or revenue that reference excludes surcharge; when referring to operating margins, that is based on operating income and sales, excluding surcharge.

I will now turn the call over to Tony.

Executive
Tony R. Thene

Thank you, Brad, and good morning to everyone on the call today. Let's begin on Slide 4 and a review of our safety performance. Our total case incident rate or TCIR was 1.3 overall in fiscal year 2019, up slightly from 1.2 last fiscal year. When we drill down to the details, the PEP segment achieved 0.9 TCIR for the fiscal year 2019, breaking through the 1.0 performance level, while the SAO segment performed below the 1.0 TCIR level during the second half of the fiscal year.

Our powder, CalRAM and distribution businesses achieved zero injuries for the fiscal year 2019, evidence that a zero injury workplace is possible. We continue to drive the deployment of our safety system in areas such as hand safety as hand injury currently represent 55% of our total recordable injuries. Given performance, we're over 80% of our employees have been trained in this program and the hazard elimination and action tracking team. This program has increased engagement and will continue in fiscal year 2020, focusing on implementing operators suggestions for improvement. Finally, the goal remains a zero injury workplace. And through employee engagement, system improvement and leadership commitment, we will be successful.

Now let's turn to Slide 5 and a review of our fiscal year 2019. Before we discuss the fourth quarter results, I will take a few minutes to cover our impressive fiscal year 2019 results. In terms of total Company year-over-year financial performance, sales excluding surcharge increased 8%, operating income increased 28%, the highest operating income in six years, adjusted operating margin improved