Carpenter Technology Corp (CRS) 2024 Q2 法說會逐字稿

Good morning, and welcome to the Carpenter Technology Corporation Second Quarter 2024 Fiscal Conference Call.

早安，歡迎參加 Carpenter Technology Corporation 2024 年第二季財務電話會議。

(Operator Instructions)

（操作員說明）

Please note this event is being recorded.

請注意此事件正在被記錄。

I would now like to turn the conference over to John Huyette, Vice President of Investor Relations. Please go ahead.

現在我想將會議交給投資者關係副總裁 John Huyette。請繼續。

Thank you, operator. Good morning, everyone, and welcome to the Carpenter Technology Earnings Conference Call for the fiscal 2024 Second Quarter ended December 31, 2023. This call is also being broadcast over the Internet, along with presentation slides.

謝謝你，接線生。大家早安，歡迎參加截至 2023 年 12 月 31 日的 Carpenter Technology 2024 財年第二季財報電話會議。此電話會議以及簡報投影片也透過網路廣播。

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, Senior Vice President and Chief Financial Officer.

請注意，對於那些透過電話收聽的人，您可能會遇到幻燈片移動的時間延遲。今天電話會議的發言人是總裁兼執行長 Tony Thene；提姆‧萊恩 (Tim Lain)，資深副總裁兼財務長。

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 these 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, 2023, Form 10-Q for the quarter ended September 30, 2023, and the exhibits attached to those filings.

管理階層在本收益報告中發表的前瞻性聲明是基於目前的預期。可能導致實際結果與這些前瞻性陳述有重大差異的風險因素可以在Carpenter Technology 最近向SEC 提交的文件中找到，包括該公司截至2023 年6 月30 日的10-K 表格報告、截至2023 年6 月30 日的10-Q 表格報告。截至 2023 年 9 月 30 日的季度以及這些文件所附的證據。

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

另請注意，在下面的討論中，除非另有說明，否則當管理層討論銷售額或收入時，該參考內容不包括附加費。當提及營業利潤時，這是基於調整後的營業收入，不包括特殊項目和銷售額，不包括附加費。

I will now turn the call over to Tony.

我現在將把電話轉給托尼。

Thank you, John, and good morning to everyone on the call today. I will begin on Slide 4 with a review of our safety performance. For the first half of fiscal year 2024, our total case incident rate was 1.9. This marks an improvement over the last quarter as we continue to integrate less experienced employees into our operations. We are targeting specific areas with employee engagement programs to identify and eliminate potential issues. Our target remains a 0 injury workplace, and we will continue to work tirelessly to achieve that target.

謝謝約翰，今天參加電話會議的每個人都早安。我將從投影片 4 開始回顧我們的安全績效。 2024 財年上半年，我們的總個案發生率為 1.9。這標誌著上季度的進步，因為我們繼續將經驗不足的員工整合到我們的營運中。我們針對特定領域制定了員工敬業度計劃，以識別和消除潛在問題。我們的目標仍然是零傷害工作場所，我們將繼續不懈地努力實現這一目標。

Now let's turn to Slide 5 and a review of the second quarter. For the second quarter of fiscal year 2024, Carpenter Technology continues to deliver on its targets, with reported operating income of $69.8 million. In this most recent quarter, we continued to build momentum, resulting in another strong quarter and the second most profitable first half of the fiscal year in the company's history. Most notably, the SAO segment exceeded expectations for the quarter, delivering $83.3 million in operating income, above the outlook we provided of $78 million to $82 million. Further, SAO realized an adjusted operating margin of 20%, up from 19.4% in the previous quarter, impressive performance, but we have line of sight to further improvement. We expect additional margin expansion with an ongoing focus on product mix optimization and targeted continuous improvement in operational productivity in the second half of fiscal year 2024.

現在讓我們轉向幻燈片 5 並回顧第二季度。 2024 財年第二季度，Carpenter Technology 繼續實現其目標，報告營業收入為 6,980 萬美元。在最近一個季度，我們繼續增強勢頭，實現了另一個強勁的季度，並成為公司歷史上第二大盈利的上半財年。最值得注意的是，SAO 部門本季的營業收入超出了預期，達到 8,330 萬美元，高於我們提供的 7,800 萬至 8,200 萬美元的預期。此外，SAO 的調整後營業利潤率達到 20%，高於上一季的 19.4%，表現令人印象深刻，但我們有進一步改善的目光。我們預計，在 2024 財年下半年，我們將持續專注於產品組合優化，並有針對性地持續提高營運生產力，從而實現額外的利潤率擴張。

Beyond profitability, we generated $14.6 million of cash from operations during the quarter, maintaining a healthy liquidity of $350.1 million. In addition, during the quarter, we completed multiple accretive long-term agreements with key customers across our aerospace and medical end-use markets. Our customers continue to affirm our extreme importance to their supply chains, and we remain focused on strategic engagement and alignment with them. And most importantly, we continue to operate in a strong demand environment across end-use markets where our material solutions are valued by our customers.

除了獲利能力之外，我們本季還從營運中產生了 1,460 萬美元的現金，保持了 3.501 億美元的健康流動性。此外，在本季度，我們與航空航太和醫療最終用途市場的主要客戶簽署了多項增值長期協議。我們的客戶繼續肯定我們對其供應鏈的極端重要性，我們仍然專注於與他們的策略合作和協調。最重要的是，我們繼續在終端使用市場的強勁需求環境中運營，我們的材料解決方案受到客戶的重視。

Now let's take a closer look at our second quarter sales on Slide 6. In the second quarter of fiscal year 2024, sales decreased slightly sequentially and increased significantly year-over-year. As anticipated, sales and volumes remained relatively flat sequentially, largely due to fewer operating days and targeted mix management.

現在讓我們仔細看看幻燈片 6 上的第二季度銷售額。2024 財年第二季度，銷售額環比略有下降，同比大幅增長。正如預期的那樣，銷售額和銷售量環比保持相對持平，這主要是由於營業天數減少和有針對性的組合管理。

In Aerospace, end market demand remained extremely robust. Airbus announced record order intake in 2023 and OEMs continue to target build rate increases across key platforms in 2025 and 2026. Our customers are likewise forecasting upticks in their own output and demand needs. With demand at high levels and plans to increase even further, the focus of the industry continues to be on the supply chain's ability to increase output.

在航空航太領域，終端市場需求仍然極為強勁。空中巴士公司宣布2023 年的訂單量將創歷史新高，原始設備製造商(OEM) 繼續致力於提高2025 年和2026 年關鍵平台的建造率。我們的客戶同樣預測自己的產量和需求需求將會上升。由於需求水平較高且計劃進一步增加，該行業的焦點仍然是供應鏈增加產量的能力。

Demand in defense also remains high. Over the last quarter, we've seen engagement with customers increase as planning horizons for defense needs are often much shorter than extended industry lead times. Sales to our aerospace and defense customers were down 5% sequentially and up 23% year-over-year. Most of the sequential decline was due to the timing and mix of shipments in this quarter. In addition, the substantial increase in energy sales impacted aerospace shipments as some energy products use similar manufacturing flow path.

國防需求也仍然很高。在上個季度，我們看到與客戶的互動增加，因為國防需求的規劃期限通常比延長的產業交付時間短得多。我們對航空航太和國防客戶的銷售額環比下降 5%，年增 23%。環比下降的主要原因是本季的出貨時間和組合。此外，能源銷售的大幅成長影響了航空航太運輸，因為一些能源產品採用類似的製造流程。

Just to confirm the overall aerospace market strength. As we look ahead, we expect the second half of fiscal year 2024, aerospace and defense sales to be approximately 25% higher than our first half fiscal year 2024, a significant expected increase period-over-period.

只是為了確認整體航空航太市場的實力。展望未來，我們預計 2024 財年下半年，航空航太和國防銷售額將比 2024 財年上半年成長約 25%，預計將年比大幅成長。

In the medical end-use market, demand remains strong, supported by patient backlogs and the broader macro trends of improving patient outcomes and an aging population. Like aerospace, our medical customers also remain focused on securing supply with multiple customers completing supply agreements with us over the last quarter. Our medical sales in the quarter were up 10% sequentially and up 16% year-over-year. This was a record quarter for medical sales, following a very strong first quarter and reflects concerted efforts to accelerate shipments. Our medical customers continue to emphasize the tight link between our material flow and patient surgeries, and we understand our critical role in the supply chain.

在醫療最終用途市場，需求仍然強勁，這得益於患者積壓以及改善患者治療結果和人口老化的更廣泛宏觀趨勢。與航空航太業一樣，我們的醫療客戶也仍然專注於確保供應，多個客戶在上個季度與我們完成了供應協議。本季我們的醫療銷售額較上季成長 10%，年增 16%。繼第一季表現強勁之後，本季醫療產品銷售創下歷史新高，反映出各方為加快出貨量而做出的共同努力。我們的醫療客戶繼續強調我們的物料流和患者手術之間的緊密聯繫，我們了解我們在供應鏈中的關鍵作用。

In our other end-use markets, demand for our premium solutions remains positive. Transportation demand has stabilized after supply chain disruptions over the last quarter. Energy demand, both for oil and gas and power generation remains very high as the world continues to focus on balancing energy supply with demand.

在我們的其他最終用途市場，對我們優質解決方案的需求仍然積極。在上個季度供應鏈中斷後，運輸需求已趨於穩定。隨著世界繼續關注平衡能源供應與需求，石油、天然氣和發電的能源需求仍然很高。

And in other areas like our semiconductor submarket, long-term demand remains strong, supported by solid underlying fundamentals, such as increased connectivity and computing needs. Altogether, we continue to see high demand for our premium solutions, which are critical enablers of the applications they support. In addition, our backlogs remain at record levels and customer engagement is high.

在半導體子市場等其他領域，長期需求依然強勁，這得益於堅實的基本面（例如連接性和計算需求的增加）。總而言之，我們繼續看到對我們的優質解決方案的高需求，這些解決方案是它們支援的應用程式的關鍵推動因素。此外，我們的積壓訂單仍保持在創紀錄的水平，客戶參與度也很高。

We also continue to focus on using our assets in a way most valued by our customers. To that end, in the second quarter, we saw margins improve, especially in the SAO segment, resulting in a sequential increase in our operating income. Notably, SAO's adjusted operating margin reached 20% in the quarter, up from 19.4% in the first quarter of fiscal year 2024 and 16.8% in the fourth quarter of fiscal year 2023. We anticipate our margins will continue to improve with productivity improvements and a richer product mix.

我們也繼續專注於以客戶最重視的方式使用我們的資產。為此，我們在第二季度看到利潤率有所改善，特別是在 SAO 領域，從而導致我們的營業收入持續成長。值得注意的是，SAO 本季調整後的營業利潤率達到 20%，高於 2024 財年第一季的 19.4% 和 2023 財年第四季的 16.8%。我們預計，隨著生產力的提高和產品結構更加豐富。

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

現在我將把財務摘要交給提姆。

Thanks, Tony. Good morning, everyone. I'll start on Slide 8, the income statement summary. Net sales in the second quarter were $624.2 million, with sales excluding surcharge totaling $485.3 million. Sales, excluding surcharge, increased 15% from the same period a year ago on 3% lower volume. Sequentially, sales were down 2% on 2% lower volume. The year-over-year increase was driven by the ongoing shift in product mix as we continue to focus our capacity on more complex, higher-value materials as evidenced by the growth in sales despite lower volumes.

謝謝，托尼。大家，早安。我將從投影片 8 開始，即損益表摘要。第二季淨銷售額為 6.242 億美元，不含附加費的銷售額總計 4.853 億美元。銷售額（不含附加費）較去年同期成長 15%，但銷量下降 3%。隨後，銷量下降 2%，銷量下降 2%。同比成長是由產品結構的持續轉變所推動的，因為我們繼續將產能集中在更複雜、更高價值的材料上，儘管產量較低，但銷售額的成長證明了這一點。

As Tony covered in his remarks, our focus remains on unlocking incremental capacity by improving throughput rates to drive further volume and sales growth in the second half of fiscal year 2024. Gross profit was $122.6 million in the current quarter compared to $70 million in the same quarter of last year and $124.1 million in our recent first quarter.

正如托尼在演講中所提到的，我們的重點仍然是透過提高吞吐量來釋放增量產能，以推動2024 財年下半年銷量和銷售額的進一步增長。本季的毛利為1.226 億美元，而上一季的毛利為7,000 萬美元。去年第四季的營收為 1.241 億美元，最近第一季的營收為 1.241 億美元。

SG&A expenses were $52.8 million in the second quarter, up about $5 million from the same period a year ago and roughly $2 million lower sequentially. The increase in SG&A expenses versus the same quarter last year is primarily driven by increasing head count and higher variable compensation accruals. The SG&A line includes corporate costs, which totaled $20.7 million in the recent second quarter.

第二季的 SG&A 費用為 5,280 萬美元，比去年同期增加約 500 萬美元，比上一季減少約 200 萬美元。與去年同期相比，SG&A 費用的增加主要是由於員工人數的增加和可變薪酬應計額的增加所致。 SG&A 專案包括公司成本，最近第二季總計 2,070 萬美元。

As we look ahead to the upcoming third quarter of fiscal year 2024, we expect corporate costs to be about $22 million. Operating income was $69.8 million in the current quarter compared to $22.6 million in the same quarter a year ago and $69 million in our recent first quarter of fiscal year 2024. We continue to see profit margin improve with total company adjusted operating margin reaching 14.4%, up slightly from 14% in the previous quarter and up significantly from the 5.4% in the same period a year ago.

展望即將到來的 2024 財年第三季度，我們預計企業成本約為 2,200 萬美元。本季營業收入為 6,980 萬美元，而去年同期為 2,260 萬美元，2024 財年第一季為 6,900 萬美元。我們繼續看到利潤率有所改善，公司調整後營業利潤總額達到 14.4%，較上一季的14% 略有上升，較去年同期的5.4% 大幅上升。

The strong operating income results for the quarter reflect the ongoing impact of an improving product mix and our focused efforts to increase production activity levels to support customer demand. Again, we expect to see the benefit of these actions flow through our operating results in the upcoming second half of our fiscal year 2024 and beyond.

本季強勁的營業收入結果反映了產品組合改善的持續影響以及我們為提高生產活動水平以支持客戶需求而做出的集中努力。同樣，我們預計這些行動的好處將在即將到來的 2024 財年下半年及以後的經營業績中體現。

Moving on to our effective tax rate. For the recent second quarter, our effective tax rate was 22.6%, which is just below our expected effective tax rate of roughly 24%. The lower effective tax rate was driven by tax benefits recognized in the current quarter related to certain share-based compensation awards. For the full year, we continue to expect the effective tax rate to be in the range of 22% to 24%, which assumes that for the balance of the year, the effective tax rate will be roughly 24%.

接下來討論我們的有效稅率。最近第二季度，我們的有效稅率為 22.6%，略低於我們約 24% 的預期有效稅率。有效稅率較低的原因是本季度確認的與某些股權激勵獎勵相關的稅收優惠。對於全年，我們繼續預期有效稅率將在 22% 至 24% 之間，假設今年剩餘時間的有效稅率約為 24%。

Earnings per diluted share for the current quarter was $0.85 per share. The results demonstrate our continued momentum supported by improving profitability and a strong demand environment.

本季攤薄後每股收益為每股 0.85 美元。結果表明，獲利能力的提高和強勁的需求環境為我們提供了持續的動力。

Now turning to Slide 9 and our SAO segment results. Net sales for the second quarter were $549.4 million or $416.2 million excluding surcharge. Compared to the same period last year, net sales, excluding surcharge increased 20% on 1% higher volume. Sequentially, net sales excluding surcharge were flat on similar volume. The year-over-year improvement in net sales was driven by the impacts of higher prices and an improving product mix across our key end-use markets, as Tony reviewed in the second quarter sales slide.

現在轉向幻燈片 9 和我們的 SAO 部分結果。第二季淨銷售額為 5.494 億美元，扣除附加費後為 4.162 億美元。與去年同期相比，淨銷售額（不含附加費）成長了 20%，銷量成長了 1%。隨後，不計附加費的淨銷售額與類似數量持平。正如托尼在第二季度銷售下滑中所評論的那樣，淨銷售額的同比增長是由價格上漲和我們主要最終用途市場的產品組合改善的影響所推動的。

Moving to operating results. SAO reported operating income of $83.3 million in our recent second quarter, which outpaced our expectations. On a year-over-year basis, the SAO operating income improved by $53 million, largely due to higher sales driven by strong demand and improving product mix and higher prices. On a sequential basis, operating income improved by about $3 million. The improvements in productivity, product mix and pricing are evident in the adjusted operating margin, which has increased to 20% in the current period as compared with 8.8% in the same period a year ago and 19.4% in our recent first quarter.

轉向經營業績。 SAO 公佈的第二季營業收入為 8,330 萬美元，超出了我們的預期。與去年同期相比，SAO 營業收入增加了 5,300 萬美元，這主要是由於強勁需求、產品組合改善和價格上漲推動銷售額增加。營業收入季增約 300 萬美元。生產力、產品組合和定價方面的改善在調整後的營業利潤率中表現得很明顯，本期營業利潤率已增至 20%，而去年同期為 8.8%，最近第一季為 19.4%。

Looking ahead, the SAO team remains focused on executing actions to further increase production levels and production flow and to actively manage the product mix to maximize the capacity for high-value products. Based on current expectations, we anticipate SAO will generate operating income in the range of $87 million to $91 million in the upcoming third quarter of fiscal year 2024.

展望未來，SAO 團隊仍專注於執行行動，進一步提高生產水準和生產流程，並積極管理產品組合，以最大限度地提高高價值產品的產能。根據目前的預期，我們預計 SAO 在即將到來的 2024 財年第三季將產生 8,700 萬至 9,100 萬美元的營業收入。

Now turning to Slide 10 and our PEP segment results. Net sales in the second quarter of fiscal year 2024 were $95.7 million or $87.9 million, excluding surcharge revenue. Net sales, excluding surcharge, decreased 10% from the same quarter last year and decreased 6% sequentially. In the current quarter, PEP reported operating income of $7.1 million. This compares to operating income of $9.3 million in the same quarter a year ago and operating income of $9.1 million in the first quarter of fiscal year 2024.

現在轉向幻燈片 10 和我們的 PEP 部分結果。 2024 財年第二季的淨銷售額為 9,570 萬美元或 8,790 萬美元，不包括附加費收入。淨銷售額（不含附加費）較去年同期下降 10%，較上一季下降 6%。本季度，PEP 報告營業收入為 710 萬美元。相較之下，去年同期的營業收入為 930 萬美元，2024 財年第一季的營業收入為 910 萬美元。

The majority of the decline in both sequential and year-over-year sales and profitability is related to our distribution business. For context, our distribution business is a North American distributor of tool and high-speed steels. Our distribution business sources its supply from unrelated third parties and sales to customers with no overlap to our other businesses. The sales from our distribution business represent less than 5% of Carpenter Technologies total sales this fiscal year-to-date.

銷售額和盈利能力連續下降和同比下降的大部分與我們的分銷業務有關。就上下文而言，我們的分銷業務是北美工具鋼和高速鋼的經銷商。我們的分銷業務從不相關的第三方獲取供應並向客戶銷售，與我們的其他業務沒有重疊。我們的分銷業務的銷售額佔 Carpenter Technologies 本財年迄今總銷售額的不到 5%。

In the context of PEP, our smaller segment, challenges in distribution sales and operating income are magnified as evidenced in the performance of PEP in our most recent quarter compared with the expectations we set.

在 PEP（我們規模較小的細分市場）的背景下，分銷銷售和營業收入方面的挑戰被放大，最近一個季度 PEP 的業績與我們設定的預期相比就證明了這一點。

The distribution business has been dealing with near-term market headwinds over the last couple of quarters related to general industrial macroeconomic conditions, including rising interest rates and falling commodity prices, which has influenced customer order patterns in the near term. While we're working to mitigate the impacts of distribution and expect the results to improve via higher volume and lower cost in the upcoming quarters, it's important to point out that our outlook does not anticipate a meaningful contribution from our distribution business for the balance of the year or in our longer-term outlook.

過去幾個季度，分銷業務一直在應對與一般工業宏觀經濟狀況相關的近期市場逆風，包括利率上升和商品價格下跌，這影響了短期內的客戶訂單模式。雖然我們正在努力減輕分銷的影響，並期望在未來幾個季度透過增加產量和降低成本來改善業績，但重要的是要指出，我們的前景預計我們的分銷業務不會對平衡的有意義的貢獻今年或我們的長期展望。

With all that said, as we look ahead, the growth driver for our PEP segment is our Dynamet titanium business. For Dynamet, the fundamentals are similar to SAO. Dynamet serves primarily the aerospace and defense and medical end use markets where demand for Dynamet's titanium solutions remain strong. We are focused on increasing productivity and throughput across the operations to meet our customers' needs and expect to see continued improvement in output in the coming quarters, driving higher profitability.

儘管如此，展望未來，我們 PEP 部門的成長動力是我們的 Dynamet 鈦企業。對於 Dynamet，其基本原理與 SAO 類似。 Dynamet 主要服務於航空航太、國防和醫療最終用途市場，這些市場對 Dynamet 鈦解決方案的需求仍然強勁。我們專注於提高整個營運部門的生產力和吞吐量，以滿足客戶的需求，並預計未來幾季產量將持續改善，從而推動更高的獲利能力。

With that in mind, we currently anticipate that the PEP segment will deliver operating income in the range of $9 million to $10 million for the upcoming third quarter of fiscal year 2024.

考慮到這一點，我們目前預計 PEP 部門將在即將到來的 2024 財年第三季實現 900 萬至 1,000 萬美元的營業收入。

Now turning to Slide 11 and a review of adjusted free cash flow. In the current quarter, we generated $15 million of cash from operating activities compared to $7 million in our recent first quarter and cash used for operating activities of $86 million in the same quarter last year.

現在轉向投影片 11，回顧調整後的自由現金流。在本季度，我們從經營活動中產生了 1500 萬美元的現金，而最近第一季的現金為 700 萬美元，去年同期用於經營活動的現金為 8,600 萬美元。

Our earnings growth over the last year is demonstrated in our cash flow as we generated $22 million of cash from operations in the first half of fiscal year 2024 compared to cash used for operations of $165 million in the same period a year ago. Given the significant focus on increasing activity levels over the last several quarters, we deployed cash to increase inventory. We increased inventory by $158 million in the first half of fiscal year 2024 relative to an increase of $227 million in the first half of fiscal year 2023.

我們去年的獲利成長體現在我們的現金流中，我們在 2024 財年上半年從營運中產生了 2,200 萬美元的現金，而去年同期用於營運的現金為 1.65 億美元。鑑於過去幾個季度我們專注於增加活動水平，我們部署了現金來增加庫存。 2024 財年上半年，我們的庫存增加了 1.58 億美元，而 2023 財年上半年增加了 2.27 億美元。

As we look ahead to the second half of fiscal year '24, based on our outlook for production and shipment activity, we will continue to be thoughtful about how we manage inventory and currently anticipate inventory levels to moderate and trend down for the balance of this fiscal year. With our outlook for earnings and working capital, we anticipate a considerable increase in cash from operations in the second half of fiscal year 2024. In terms of capital expenditures or CapEx, in the current quarter, we spent $25 million. We continue to expect about $125 million in CapEx for the full fiscal year 2024.

當我們展望 24 財年下半年時，根據我們對生產和運輸活動的展望，我們將繼續考慮如何管理庫存，目前預計庫存水準將放緩並呈下降趨勢。財政年度。根據我們對獲利和營運資本的展望，我們預計 2024 財年下半年的營運現金將大幅增加。就資本支出或資本支出而言，本季我們花費了 2,500 萬美元。我們仍預期 2024 年整個財年的資本支出約為 1.25 億美元。

With those details in mind, we reported a negative adjusted free cash flow of $11 million in the second quarter of fiscal year 2024 or roughly negative $25 million in the first half of fiscal year 2024, compared with negative $196 million in the first half of fiscal year 2023.

考慮到這些細節，我們報告稱，2024 財年第二季調整後自由現金流為負 1,100 萬美元，2024 財年上半年約為負 2,500 萬美元，而 2024 財年上半年為負 1.96 億美元。 2023 年。

We anticipate that for fiscal year 2024, we will generate meaningful positive free cash flow. As I mentioned earlier, the free cash flow generation will be driven by increasing earnings and managing inventory levels for the balance of the year. Our liquidity remains healthy and we ended the current quarter with total liquidity of $350 million, including $60 million of cash and $334 million of available borrowings under our credit facility.

我們預計 2024 財年，我們將產生有意義的正自由現金流。正如我之前提到的，自由現金流的產生將由今年剩餘時間的收益增加和庫存水準管理來推動。我們的流動性保持健康，本季結束時流動性總額為 3.5 億美元，其中包括 6,000 萬美元現金和信貸安排下的 3.34 億美元可用借款。

With that, I will turn the call back to Tony.

說完，我會把電話轉回給東尼。

Thanks, Tim. Now let's take a look at our fiscal year 2024 and longer-term outlook. On our last call, I communicated our expectations for fiscal year 2024, most notably the significant step-up in profitability anticipated in the second half of fiscal year 2024. Having just completed a strong second quarter, setting 1 of our best first halves on record. We are reaffirming our previous guidance for a strong second half of the fiscal year. We continue to build operating momentum, unlocking additional capacity and increasing productivity rates, as we work to return to and ultimately surpass our pre-COVID production levels.

謝謝，蒂姆。現在讓我們來看看 2024 財年和長期展望。在上次電話會議上，我傳達了我們對2024 財年的預期，最值得注意的是2024 財年下半年盈利能力的大幅提升。剛剛完成了強勁的第二季度，創造了有史以來最好的上半年業績之一。我們重申先前對本財年下半年強勁成長的指引。我們將繼續增強營運動力，釋放額外產能並提高生產力，努力恢復並最終超越疫情前的生產水準。

Notably, we have certain key work centers that have additional upside potential as our mix continues to shift to more difficult to manufacture products. In the second quarter, we saw these work centers take significant steps towards collectively reaching this potential and we expect continued progress through the second half of this fiscal year. Specifically, in SAO, we drove increases in output at our primary melt work centers late in the second quarter. That output will begin to ship during the third quarter and is expected to have a meaningful impact in the upcoming fourth quarter as well.

值得注意的是，隨著我們的產品組合繼續轉向更難製造的產品，我們的某些關鍵工作中心具有額外的上升潛力。在第二季度，我們看到這些工作中心為共同實現這一潛力採取了重大步驟，我們預計本財年下半年將繼續取得進展。具體來說，在 SAO，我們在第二季末推動了主要熔煉工作中心的產量增加。該產品將於第三季開始出貨，預計也將對即將到來的第四季產生有意義的影響。

As a result of the expanding margins and increasing output we are anticipating total company operating income of $74 million to $79 million in the third quarter of fiscal year 2024 and with the additional capacity flowing through the system, we anticipate taking another significant step up in productivity and shipments in the fourth quarter of fiscal year 2024, generating $97 million to $112 million in total company operating income. In total, we currently expect $171 million to $191 million in total company operating income in the second half of fiscal year 2024.

由於利潤率不斷擴大，產量不斷增加，我們預計 2024 財年第三季公司總營業收入將達到 7,400 萬至 7,900 萬美元，並且隨著系統產能的增加，我們預計生產力將進一步大幅提高2024 財年第第四季的出貨量和出貨量，為公司總營業收入帶來9,700 萬至1.12 億美元。總的來說，我們目前預計 2024 財年下半年公司總營業收入將達到 1.71 億至 1.91 億美元。

Combined with our strong first half, we are currently projecting to deliver the most profitable year in the history of the company, with $310 million to $330 million in total company operating income.

結合上半年的強勁表現，我們目前預計將迎來公司歷史上利潤最高的一年，公司總營業收入將達到 3.1 億至 3.3 億美元。

Now let's take a look at how the second half fiscal year 2024 outlook fits in with the longer-term fiscal year 2027 earnings growth projections on the next slide. As I've detailed in previous calls, our goal is to double fiscal year 2019 operating income by fiscal year 2027. These figures imply a 40% compounded annual growth rate on the operating income from fiscal year 2023 through fiscal year 2027. As you can see, we are projected to take a meaningful step this fiscal year with projected operating income in the range of $310 million to $330 million, we expect to realize approximately 50% of the opportunity in fiscal year 2024.

現在讓我們來看看下一張投影片中 2024 財年下半年的前景如何與 2027 財年的長期獲利成長預測相吻合。正如我在之前的電話會議中詳細介紹的那樣，我們的目標是到2027 財年將2019 財年的營業收入翻一番。這些數字意味著從2023 財年到2027 財年，營業收入的複合年成長率為40%。看，我們預計本財年將採取有意義的一步，預計營業收入將在 3.1 億至 3.3 億美元之間，我們預計將在 2024 財年實現約 50% 的機會。

Further, we believe that there's opportunity to accelerate the realization of the current FY '27 target. And given our strong position in the market, that growth opportunities will continue beyond fiscal year 2027. As outlined on this call today, Carpenter Technology offers a unique value proposition to investors. We are committed to our strategy of serving customers with high-value applications in high-growth markets that value our unique material solutions. We continue to improve our productivity and expand our margins, consistently delivering strong financial performance quarter after quarter.

此外，我們認為有機會加速實現目前的 27 財年目標。鑑於我們在市場中的強勢地位，這種成長機會將持續到 2027 財年之後。正如今天的電話會議所概述的那樣，Carpenter Technology 為投資者提供了獨特的價值主張。我們致力於在重視我們獨特材料解決方案的高成長市場中為客戶提供高價值應用的策略。我們持續提高生產力並擴大利潤，持續季度復一季地提供強勁的財務表現。

The near-term and longer-term demand outlook is strong across our end-use markets for our broad portfolio specialized solutions.

我們廣泛的專業解決方案組合的最終用途市場的近期和長期需求前景強勁。

We have leading capabilities with a difficult-to-replicate system of assets and we continue to drive improved productivity to unlock additional capacity to capture the demand. Finally, we have a strong growth outlook in both the near term and longer term with opportunities to further accelerate and increase profitability.

我們擁有領先的能力和難以複製的資產系統，我們將繼續提高生產力，釋放額外的能力來滿足需求。最後，我們在短期和長期都有強勁的成長前景，並有機會進一步加速和提高獲利能力。

Thank you. And now I'll turn the call back to the operator.

謝謝。現在我將把電話轉回給接線生。

(Operator Instructions)

（操作員說明）

Our first question comes from Gautam Khanna from TD Cowen.

我們的第一個問題來自 TD Cowen 的 Gautam Khanna。

I had a couple of questions. First, perhaps I missed it, but what was the backlog growth sequentially in the quarter?

我有幾個問題。首先，也許我錯過了，但本季積壓訂單的環比成長是多少？

Sequentially, the backlog was relatively flat year-over-year, it was up about 20%. But remember, Gautam, we're moderating that as we manage our order book. So it could definitely been higher if we wouldn't have done that.

隨後，積壓訂單比去年同期相對持平，增加了約 20%。但請記住，高塔姆，我們在管理訂單簿時正在對此進行調節。因此，如果我們不這樣做的話，價格肯定會更高。

Understood. And so where are lead times today in terms of number of weeks?

明白了。那麼今天的交貨時間以周數計算是多少呢？

I assume you're speaking about aerospace billet and in that case, they're 65-plus weeks.

我假設您談論的是航空航天鋼坯，在這種情況下，它們的壽命將超過 65 週。

Great. Could you talk about are there any long-term agreements with customers that are coming up for renewal over the next 6 to 12 months? And how significant might those price resets be?

偉大的。您能否談談是否有與客戶簽訂的長期協議將在未來 6 到 12 個月內續訂？這些價格重置的影響有多大？

The answer is yes and -- to the first part of your question. And secondly, also, yes, they will be significant to the overall structure.

對於你問題的第一部分，答案是肯定的。其次，是的，它們對整體結構也很重要。

Okay. And can you quantify like maybe what that -- how much of the aerospace business those contracts might represent?

好的。您能否量化一下這些合約可能代表多少航空航太業務？

Well, there's always, at any time, multiple contracts that we are renewing. We had several in this last quarter. As you know, on the aerospace side, those are primarily a handful of large customers, and there's still a couple of those that will renew over the next year or 2.

嗯，我們隨時都會續簽多份合約。上個季度我們有幾個。如您所知，在航空航太方面，這些主要是少數大客戶，仍有一些客戶將在未來一兩年內續約。

Any way to comment on how much the ones that were renewed, repriced stock relative to the legacy contracts like...

有什麼辦法可以評論相對於舊合約而言，更新、重新定價的股票有多少，例如…

Yes, there were significant price increases. I think it's known in the industry that you're looking at sometimes 40% price increases in some of these products. It certainly it varies. As you know, there's a lot of different alloys, but these are a significant reset to prices, knowing that some of these contracts were -- that are renewing, not just with us, but I'm sure with others sometimes 5 or 10 years long. So you're seeing a pretty long period of time there before contracts reset in a market today that is extremely strong. So it's not surprising that you'd see that type of movement.

是的，價格大幅上漲。我認為業內都知道其中一些產品的價格有時會上漲 40%。它肯定會有所不同。如您所知，有很多不同的合金，但這些都是對價格的重大重置，因為我們知道其中一些合約正在續簽，不僅與我們續簽，而且我確信其他人有時會續簽 5 或 10 年長的。因此，在今天極其強勁的市場中，在合約重置之前，您會看到相當長的一段時間。因此，您看到這種類型的運動並不奇怪。

Got it. Last 1 for me, just on the non-aero markets, where you mentioned there were some sensitivity. Again, just outside of the aero business, does that only relate to that distribution piece? Or are you seeing weakness in the order book for other end markets, whether it be transportation or some of the other ones?

知道了。對我而言，最後一個問題是關於非航空市場，您提到存在一些敏感性。再說一遍，在航空業務之外，這是否只與分銷部分有關？或者您發現其他終端市場的訂單疲軟，無論是運輸還是其他一些市場？

Yes, that comment, it just relates to that distribution business. I mean that was -- that's a small business that we acquired as part of the larger acquisition 10-plus years ago. So it buys in resales material that is not Carpenter Technology. So it really is a stand-alone entity. So we were referring to weakness only in that market and not in our other markets that SAO or Dynamet serves.

是的，這個評論，它只與分銷業務有關。我的意思是，那是一家小企業，也是我們十多年前收購的大型企業的一部分。因此，它購買了非 Carpenter Technology 的轉售材料。所以它確實是一個獨立的實體。因此，我們僅指該市場的弱點，而不是 SAO 或 Dynamet 服務的其他市場的弱點。

Our next question comes from Josh Sullivan from The Benchmark Company. Josh, you may proceed.

我們的下一個問題來自 Benchmark Company 的 Josh Sullivan。喬希，你可以繼續了。

As far as the current kind of 3Q to 4Q cadence assumed here in guidance, what are the major differences now, if any, from kind of the initial perspective or the perspective last quarter?

就目前指引中假設的第三季到第四季的節奏而言，從最初的角度或上季的角度來看，現在的主要差異是什麼（如果有）？

Really no difference for us. Our third and fourth quarter internal forecasts have remained relatively the same. So I'd ask you maybe freight a little bit different, there's something, I'm missing there.

對我們來說真的沒有什麼差別。我們對第三季和第四季的內部預測保持相對不變。所以我想問你，也許運費有點不同，有一些東西，我失踪了。

No, I just wanted to get kind of your perspective if anything had really changed there and it does...

不，我只是想了解一下你的看法，是否真的發生了任何變化，而且確實發生了…

Yes. No. I mean you remember last quarter -- sorry for that. If you remember the last quarter, we gave guidance for the second half in total, which was roughly 28% to 35%, that gave you roughly that $310 million to $330 million. So we're reaffirming that guidance. Now what we did this time was give you specifically Q3, right, which we did in last quarter that allows you to back into Q4. Now that Q4 has a pretty healthy increase. But we're comfortable with that only because if you recall from my comments that we saw some really improved productivity in our primary milk assets towards the end of this past quarter.

是的。不，我的意思是你還記得上個季度——對此感到抱歉。如果您還記得上個季度，我們給出了下半年的整體指導，大約為 28% 至 35%，這為您提供了大約 3.1 億至 3.3 億美元。因此，我們重申這項指導意見。現在我們這次所做的是專門為您提供第三季度，對吧，我們在上個季度所做的，讓您可以回到第四季度。現在第四季已經有了相當健康的成長。但我們對此感到滿意，只是因為如果您從我的評論中回想起，我們在上個季度末看到我們的初級牛奶資產的生產力確實有所提高。

So in the December time frame, because of the lead times that it takes to get through the plant, we'll see some of that benefit in the third quarter, but significant benefit in the fourth. So that's really what you're seeing. You're seeing those improvements in productivity that really show themselves 4 to 6 months later in shipments, and that's what you're seeing in that fourth quarter number. So we have very clear line of sight to that.

因此，在 12 月的時間範圍內，由於通過工廠所需的交貨時間，我們將在第三季度看到一些好處，但在第四季度將看到顯著的好處。這就是你所看到的。您將看到生產力的提高在 4 到 6 個月後的發貨中真正體現出來，這就是您在第四季度的數字中看到的。所以我們對此有非常清晰的認知。

And then just as far as the 737 MAX issues and production rates as those are digested. How quickly can you change your aerospace spot demand to move into the aftermarket or other programs? Or just within the spot market, how -- what do you expect as far as the fungibility of demand? And do you expect the big impact from the MAX near term?

然後就 737 MAX 的問題和生產率進行消化。您能多快改變航空航太現貨需求以進入售後市場或其他項目？或者就在現貨市場內，您對需求的可替代性有何期望？您預計 MAX 近期會產生巨大影響嗎？

Let me take a step back just as I had a couple of notes and maybe answer it this way, Josh, and see if I hit your point and please follow up because I think it is an important point that was big news that came out obviously, late last night. And I can say, we see no material impact to our second half of FY '24, obviously, just because of the lead times.

讓我退一步，就像我有一些筆記一樣，也許可以這樣回答，喬什，看看我是否擊中了你的觀點，請跟進，因為我認為這是一個重要的觀點，顯然是重大新聞， 昨天深夜。我可以說，顯然，我們認為 24 財年下半年不會受到任何實質影響，這只是因為交貨時間。

The financial projections that we put out there today. If you move more to the long term, I think it is important to recognize because it is -- it does get a very hot topic that there's really no changes to the underlying demand for air travel or the significant increases that are projected going forward, right? So airlines need more airplanes delivered to them. That's why you see record Airbus orders last year. And that point has been reaffirmed, I think, over and over by airline operators who continue to push for more planes to be delivered.

我們今天發布的財務預測。如果你更長遠考慮，我認為認識到這一點很重要，因為它確實成為一個非常熱門的話題，即航空旅行的基本需求實際上沒有變化，或者預計未來的顯著增長，正確的？因此航空公司需要交付更多的飛機。這就是為什麼去年空中巴士訂單創紀錄的原因。我認為，航空公司營運商已經一遍又一遍地重申了這一點，他們不斷推動交付更多飛機。

Obviously, you talked about MRO, the industry needs new planes as we get older planes flying and that increases MRO needs. So in this case here, if you would see any type of movement on the OEM side, that MRO demand would go up even further. And certainly, Carpenter Technology, we're central part and delivering that demand, whether it be OEM or MRO because as you know where we're at in the supply chain, our product can branch out into many different ways.

顯然，您談到了 MRO，隨著舊飛機的飛行，該行業需要新飛機，這增加了 MRO 需求。因此，在這種情況下，如果您看到 OEM 方面有任何類型的變動，MRO 需求將會進一步增加。當然，Carpenter Technology 是滿足這一需求的核心部分，無論是 OEM 還是 MRO，因為如您所知，我們在供應鏈中所處的位置，我們的產品可以擴展到許多不同的方式。

So I think really what we're discussing here with this specific news is how and over what period of time, the supply chain is going to be able to meet that demand. But make no mistake, that demand is going to be there. And if I could say 1 more thing, meeting that demand in a safe, responsible and quality way is what Carpenter Technology is already focused on. You've heard us talk about that all the time. We're not going to push rates up that's going to sacrifice safety or quality.

因此，我認為我們在這裡討論的具體新聞實際上是供應鏈如何以及在多長時間內能夠滿足該需求。但毫無疑問，這種需求將會存在。如果我還能說一件事，以安全、負責任和高品質的方式滿足這項需求是 Carpenter Technology 已經關注的重點。你一直聽到我們談論這件事。我們不會提高費率，從而犧牲安全或品質。

So we totally agree with the approach being taken in the wider industry, that should be the focus. And as you bring that type of discipline to the entire supply chain. You'll see those build rates push out, obviously. And I believe you'll see the super cycle extend, which is really good news for suppliers like Carpenter Technology.

因此，我們完全同意更廣泛的行業所採取的方法，這應該成為重點。當您將這種類型的紀律引入整個供應鏈時。顯然，你會看到這些建置率不斷提高。我相信你會看到超級週期延長，這對像卡朋特科技這樣的供應商來說確實是個好消息。

Hopefully, that answered your question, Josh, but happy to take any follow-up.

希望這回答了你的問題，喬什，但很樂意採取任何後續行動。

Yes. No, it does. Just kind of on the follow-up though, just taking that together in your comments during the call just about the upside pressure to the '27 targets. I imagine that all incorporates into that. And so I think you did cover that.

是的。不，確實如此。不過，這只是後續行動，只是將您在電話會議期間的評論中結合起來，討論 27 年目標的上行壓力。我想一切都融入其中。所以我認為你確實涵蓋了這一點。

(Operator Instructions)

（操作員說明）

Now we have a question from Chris Olin from Northcoast Research. Chris, please go ahead.

現在我們有來自 Northcoast Research 的 Chris Olin 提出的問題。克里斯，請繼續。

Wanted to just ask a question on Dynamet. I realize that business uses surcharges to pass through the higher cost like titanium. But I'm wondering if there is any risk to margins given the upward movement that we're seeing in the titanium sponge market now? I guess, in other words, does Dynamet have any exposure to fixed pricing on the aerospace side? Or is there a point where we start thinking about elasticity of demand or like some of the customers halting purchases because the price points get too high?

只是想問一個關於 Dynamet 的問題。我意識到企業會利用附加費來轉嫁較高的成本，就像鈦一樣。但我想知道，鑑於我們現在海綿鈦市場的上漲趨勢，利潤率是否有任何風險？換句話說，我想 Dynamet 在航空航太方面是否有固定定價的風險？或者我們開始考慮需求彈性，或者像一些客戶因為價格太高而停止購買一樣？

Well, as you well know, Chris, that can be a pretty complicated question. As you said, we have surcharge mechanisms that protect Dynamet. Certainly, there can be movements between quarter-on-quarter, if any of those are material and they haven't been in the past. We certainly call those out. But no issues, no issues there. And our surcharge moves from time to time based on the current market. So we have that in place.

嗯，正如你所知，克里斯，這可能是一個非常複雜的問題。正如您所說，我們有保護 Dynamet 的附加費機制。當然，季度與季度之間可能會出現變動，如果其中任何一個是實質性的，而且過去沒有發生過的話。我們當然會指出這些。但沒有問題，沒有問題。我們的附加費會根據當前市場狀況不時變動。所以我們已經做好了。

I think the bigger story with Dynamet is the potential that it has to move -- even generate more earnings. They're very similar to SAO in that standpoint with the markets they serve, 95-plus percent aerospace and medical demand is very strong, and we're looking for ways to increase our supply out of Dynamet. So as we look forward, Dynamet is a big growth driver for us. And I don't anticipate any risks around that titanium sourcing.

我認為 Dynamet 更大的故事是它必須發展的潛力 - 甚至產生更多收入。從他們所服務的市場的角度來看，他們與 SAO 非常相似，95% 以上的航空航太和醫療需求非常強勁，我們正在尋找增加 Dynamet 供應的方法。因此，展望未來，Dynamet 是我們的一大成長動力。我預計鈦採購不會有任何風險。

Okay. Commodity nickel pricing has been falling. I'm just wondering if that had any negative impact on the business at all even when you think about some of the distribution markets.

好的。商品鎳價格一直在下跌。我只是想知道，即使考慮到某些分銷市場，這是否會對業務產生任何負面影響。

We just announced a record quarter and said that we're going to increase it significantly over the next 2 quarters and have the highest profitability year in the history of the company. So no, we do not see any negatives in terms of nickel billet pricing.

我們剛剛宣布了一個創紀錄的季度業績，並表示我們將在接下來的兩個季度大幅提高這一業績，並實現公司歷史上盈利能力最高的一年。因此，我們沒有看到鎳方坯定價有任何負面影響。

And we will follow with a question from Samuel McKinney from KeyBanc Capital.

接下來我們將回答來自 KeyBanc Capital 的 Samuel McKinney 的問題。

First, speaking to your energy end markets sales, you had a big sequential and year-over-year sales improvement. Within that, what are you seeing from power generation? Could we assume that's a bigger piece of the energy pie than oil and gas?

首先，就您的能源終端市場銷售而言，您的銷售額連續和同比都有很大改善。其中，您對發電有何看法？我們是否可以假設它在能源蛋糕中所佔的份額比石油和天然氣更大？

That's a fair comment. These orders are placed some time out. So as they come into the queue, that's how it laid out in our second quarter. And certainly the power generation is a small market for us, but as you can tell, a profitable one, and you saw some of that spike in demand comes through the second quarter. So that's good news for us as we're more than happy to take that type of business and prices in that market are obviously moving in step with current aerospace pricing.

這是一個公平的評論。這些訂單是在一段時間內下達的。因此，當他們進入隊列時，這就是我們第二季度的安排。當然，發電對我們來說是一個小市場，但正如你所知，這是一個有利可圖的市場，你看到第二季的部分需求激增。因此，這對我們來說是個好消息，因為我們非常樂意接受此類業務，而該市場的價格顯然與當前的航空航天定價保持同步。

Okay. And then any way to quantify or discuss the power gen versus oil and gas split within energy?

好的。那麼有什麼方法可以量化或討論發電量與能源中石油和天然氣的分配呢？

Well, energy is a small part of our overall portfolio. So you could say that it's roughly 50-50, but that moves -- that can move from quarter-to-quarter based on the market. And in this case, in the quarter we just completed, that was primarily power gen.

嗯，能源只是我們整體投資組合的一小部分。所以你可以說大約是 50-50，但這種變化——可以根據市場的情況逐季度變化。在這種情況下，在我們剛完成的季度中，主要是發電。

Okay. That's helpful. And then next for me, can you just outline the jet engine revenues quarter-over-quarter for us?

好的。這很有幫助。接下來，您能否為我們概述一下噴射引擎季度收入？

Our jet engine, I can say it this way from a volume standpoint. We talked about overall aerospace being down 5% sequentially. Again, that's really due to the timing and the mix of shipments. There's no issue from a demand standpoint. We stated that aerospace sales for us would be approximately 25% higher in the second half versus the first half. So engines and fasteners follow that same range. We had aero engine down approximately 10%, and I think fastener was down sequentially approximately 5% or 6%. You'll see large increases in that in the second half versus first half.

我們的噴射發動機，我可以從體積的角度這樣說。我們談到整體航空航太業季減了 5%。再說一次，這實際上是由於發貨的時間和組合造成的。從需求的角度來看，沒有問題。我們表示，下半年我們的航空航太銷售額將比上半年成長約 25%。因此引擎和緊固件遵循相同的範圍。我們的航空引擎下降了約 10%，我認為緊固件連續下降了約 5% 或 6%。與上半年相比，您會發現下半年的增幅大幅增加。

And this concludes our question-and-answer session. So I would like to turn the conference back over to John Huyette for any closing remarks. Please go ahead.

我們的問答環節到此結束。因此，我想將會議轉回約翰·休耶特（John Huyette）發表閉幕詞。請繼續。

Thank you, Marliese, and thank you, everyone, for joining us today for our fiscal year 2024 second quarter conference call. Have a great rest of your day.

謝謝 Marliese，也謝謝大家今天參加我們的 2024 財年第二季電話會議。祝您有個愉快的一天。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Have a good day.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。祝你有美好的一天。