Carpenter Technology Corporation (NYSE:CRS) Q3 2024 Earnings Call Transcript May 1, 2024 10:00 AM ET

Company Participants

John Huyette - VP of IR
Tony Thene - President and CEO
Tim Lain - SVP and CFO

Conference Call Participants

Gautam Khanna - TD Cowen
Josh Sullivan - The Benchmark Company
Michael Leshock - KeyBanc Capital Markets

Operator

Good morning, and welcome to the Carpenter Technology Corporation Third Quarter 2024 Fiscal Conference Call. All participants will be in 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 John Huyette, Vice President of Investor Relations. Please go ahead.

John Huyette

Thank you, operator. Good morning, everyone, and welcome to the Carpenter Technology earnings conference call for the fiscal 2024 third quarter ended March 31, 2024. 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, Senior Vice President and Chief Financial Officer.

Statements made by management during this 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, Forms 10-Q for the quarters ended September 30, 2023, and December 31, 2023, and the exhibits attached to those filings.

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.

I'll now turn the call over to Tony.

Tony Thene

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. Through the third quarter of fiscal year 2024, our total case incident rate was 1.7. This marks an improvement over the last quarter, reflecting the impact of ongoing employee engagement programs. We continue to diligently work towards our goal of a zero injury workplace.

Now let's turn to Slide 5 for an overview of our financial performance and outlook. Our third quarter performance was exceptional. And has set us up for an unprecedented finish to fiscal year 2024. We beat our third quarter guidance by approximately 18%, generating $90 million in adjusted operating income. This was our most profitable quarter on record, up 29% from the second quarter of fiscal year 2024, and we expect to take another historic step forward in the fourth quarter. We are raising our guidance for the fourth quarter to a range of $110 million to $115 million in operating income. This marks an 8% increase over our previous fourth quarter guidance and a 25% increase over our all-time record third quarter performance just achieved. With our third quarter earnings beat and increased fourth quarter guidance, we expect to end fiscal year 2024 with $339 million to $344 million in adjusted operating income, which would be an annual earnings record for Carpenter Technology.