Mike Hajost – VP and Treasurer, IR Greg Pratt – Chairman, Interim President and CEO Mike Shor – EVP, AMO and PAO Operations Doug Ralph – SVP, Finance and CFO

Edward Marshall – Sidoti & Company Chris Olin – Cleveland Research Steve Levenson – Stifel Nicolaus John Simazo [ph] Brian Yu – Citi Phil Gibbs – KeyBanc Capital Markets Luke Folta – Longbow Research Gautam Khanna – Cowen & Company

Good morning and welcome to Carpenter Technology's third quarter 2010 earnings conference call. My name is Glenn 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 the question-and-answer session towards the end of this call. At this time, we will review the procedure for asking your questions. (Operator Instructions) I would now like to turn the call over to your host for today, Mr. Mike Hajost, Vice President and Treasurer. Please proceed.

Thank you, Glenn. Good morning, everyone and welcome to Carpenter's earnings conference call for the third fiscal quarter ended March 31, 2010. This call is also being broadcast over the Internet. With us today are Greg Pratt, Chairman and Interim President and Chief Executive Officer, Mike Shor, Executive Vice President, AMO and PAO Operations, 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, 2009 10-K and its September 30, 2009 and December 31, 2009 10-Qs and the exhibits attached to those filings. I will now turn the call over to Greg.

Thank you, Mike and thank you, everyone for joining us today on our third quarter call. Similar in sequence to our last call, I will start off this morning by updating you on our view of the business today and where we see it heading. Mike Shor will then walk you through our end markets and the steps we are taking to position ourselves operationally as our markets return and Doug Ralph will then review our financial results and outlook. After that, we will be happy to take your questions. As you can tell, from our news release this morning, we are continuing to benefit from strengthening end markets and the expansion our customer base and product portfolio. The momentum in our business is reflected in further sequential improvement and our quarterly financial results. We expect this trend to continue into the fourth quarter, allowing us to achieve our full year financial goals of positive earnings per share and free cash flow, but this is really just a start for us. We’ve made solid progress towards our goal of emerging from recession, a stronger and better position company, operationally, financially and strategically. Moving forward, we are well positioned with our customers and attractive end markets. We have strong R&D capability and world class premium melt capacity to meet every increasing demand for higher value products. Our balance sheet remains strong and we continue to make progress on operating efficiency and cost reduction. Finally, let me finish by providing an update on the CEO search. As stated last October, we believe it would take six to nine months to find the most fit person to lead our company in the future. The search committee of the board of directors is in the final stage of the search process and we expect to have an announcement by the end of our fiscal year. In the mean time, the business continues to execute seamlessly and the operation has proven nimble in reacting to surges and market demand as they occur. Now, let me turn the call over to Mike Shor who will review our end markets and operations. Mike?

Thank you, Greg and good morning. I'll review the markets in the order of their contribution to net sales this quarter. Our aerospace market sales were $149 million in the third quarter. Excluding surcharge revenue, aerospace sales were down 4% on 2% lower volume. On a sequential basis, overall aerospace volumes increased 36% between the second and third quarters. The sequential improvement mainly relates to increases in demand in our engine business. Current order and trends reflect increase market demand, better position with customers, the ramp-up of new engine programs and some inventory restocking. On the fastener side of aerospace, third quarter shipments were down versus a year ago due to supply chain de-stocking. Fastener volumes were up sequentially as there are some signs of inventory depletion in distributive channels. Typically, we see fastener demand like engines by six months. Since, we still believe there is excess inventory in the fastener supply chain, demand for fasteners may be several quarters away. Overall, the aerospace market is beginning to stabilize as traffic volumes increase for both passenger and freight. Recent communication on production rate increases by Boeing and Airbus reinforce this improving trend in passenger miles. We are also encouraged by the shift in mix to more advance material intensive planes, the result of which should grow usage of aero types of materials at a rate that is one and a half times the plane build rate. We expect these improving factors to generate a stronger sustain demand for aero materials. Sales for the industrial market of $74 million reflect year-over-year in the third quarter, excluding surcharge, industrial sales decrease 6% on 25% higher volume. The year-over-year result reflects a temporary mix shift to lower value products including stainless redraw rod and stainless bar sold to distributors. It is typical that…

Thanks Mike. As you've just heard the business has an encouraging top-line momentum right now. This is also beginning to show up in our bottom-line results. Driven by returning volumes and lower cost, our operating income, operating margin and base earnings per share before onetime charges, were all higher in the quarter versus our second quarter. Our operating margin, excluding surcharge and pension impacts was nearly 9% in the quarter. So we are well on our way to the 10%. We told you we'd be at, by the end of the fiscal. We expect to report further improvement in our financial metrics between the third and fourth quarters. This is despite some negative impact on nickel prices which had risen about 50% in the last three months. This creates a negative short-term profit impact from the lag in our pricing surcharge mechanism. Nevertheless, we remain on track to comfortably achieve our financial targets for the year. With that let me now take you through our income statements and other results for the quarter. We reported net income this quarter of $2.1 million or $0.5 per diluted share, which includes a one-time $0.13 non-cash charges associated with the new healthcare reform loan and $0.21 of non-cash pension expense. Net sales in the quarter were $337 million or 2% about a year ago. Excluding raw material surcharge, sales were down 4% but up 24% sequentially from the second quarter. Overall pounds ships increase 20% from year ago, with special alloy products up 17%, titanium products up 8% and stainless steel products up 22%. Sequentially volume drop 35% from our second quarter. Gross profit was $46.3 million compared with $49.2 million in the 2009 third quarter. The impact of higher volumes on this quarter's gross profit was more than offset by a weaker…

(Operator Instructions). Your first question comes from the line of Edward Marshall of Sidoti & Company. Please proceed. Edward Marshall – Sidoti & Company: Good morning, guys.

Good morning. Edward Marshall – Sidoti & Company: My first question surrounding the topline guidance which you provided for us for fiscal '11. Does that include the impact or exclude the impact for surcharges?

Any revenue that we would include, or exclude surcharges. Edward Marshall – Sidoti & Company: The PAL margins were again relatively strong, last quarter there were some hedging activity. Did that reoccur in this quarter?

We had a small amount of hedging activity, hedging timing effects as we would call them this quarter as well. Edward Marshall – Sidoti & Company: What was the benefit to the operating cost for the margin there or operating loss?

In the order of millions, millions and a half dollars. Edward Marshall – Sidoti & Company: How important is the aerospace aftermarket, would passage or traffic miles picking up to the overall surge in demand. Is there – I don't know if you can break it out, since all of our business kinds of goes O.E. But is the aerospace aftermarket important to your business in anyway?

We look at about 30%. And this is a rough number of our engine market being aftermarket activity and much less net on the customer side, we see probably 10% or less. Edward Marshall – Sidoti & Company: Thank you, guys very much.

Thank you.

Your next question comes from the line of Chris Olin of Cleveland Research. Please proceed. Chris Olin – Cleveland Research: Good morning.

Good morning, Chris. Chris Olin – Cleveland Research: Just wondering, back to the guidance for the topline. Could you provide thoughts on what you think in volumes will look like?

We prefer to express it in revenue terms. There is not any material difference I would say in terms of volume growth that we would expect next year. Chris Olin – Cleveland Research: And can give us maybe an update on where your utilization levels are for the melt and tasers?

Sure. Chris, Mike Shor. Utilization rates and we are part stainless, part high temperature alloy mills. So I will go back and forth between the two. Our air melt and continuous caster facilities which are mainly use for stainless steel of about 70%, are been and now we are including the full impact of the new 25 ton VIM furnace, so we are about 60. We talked about the fact that VIM was going to add about 40, so the old capacity is pretty well filled right now. Remelting, that ESR and VAR have 75%, hard working in the big stuff about 75 to 80%, hard working of the bar and wire about 50 and finishing so many facilities, throughout the plant, in the general range of 60 to 80%. Chris Olin – Cleveland Research: That's the question I had. You had a deal with titanium metals a while back, to fabrications and with the engine. Are your fabricating any volume jets for the titanium effect?

Sure. We've had an ongoing joint venture with them, with TIMET and the exchanges with brasses store, hardworking facilities, some of their titanium product and then our Dynamet titanium facilities purchases and get sold [ph]. That has been going on and continues. Chris Olin – Cleveland Research: Any kind of numbers with TIMET [ph]?

No. Typically, there are not the types of numbers that we release. Chris Olin – Cleveland Research: Okay. Thanks a lot.

The next question comes from the line of Steve Levenson of Stifel Nicolaus. Please proceed. Steve Levenson – Stifel Nicolaus: Thanks. Good morning, everybody.

Good morning, Steve. Steve Levenson – Stifel Nicolaus: This is a question, I guess for Mike. You alluded to trying to keep the lead time short on some items. Can you get some idea what the lead times are on some of the popular aerospace alloys, like 6-4 Titanium and 718 nickel?

I will talk mainly about the nickel based, super alloys aerospace. What we are doing, Steve is we are working off our forecast which we review on a monthly basis and based on that forecast, we are stocking what is called ingot which is the product add of our melting operating or billet which is the product that goes in our hardworking operations. And with those types of buffer stocks in there, we are able depending on their product to achieve somewhere between 6 and 12 weekly times on those products. As we have seen the increase in demand, than some of that intermediate stock has been used up and we are quickly going back and we are melting it, so we can maintain those lead times. It's not been easy, but we are working though that and trying to work hard get those backs more consistently at those numbers. Steve Levenson – Stifel Nicolaus: Thank you. And I was just curios, how much of the revenue do you project is covered on the long-term agreements? How much will they sell on stock prices?

In general terms, about 40% of our business is long-term agreements, about 60% is transactional. I would tell you that on the aerospace side much higher percentage is long-term agreement on the stainless, it is less. Steve Levenson – Stifel Nicolaus: Thank you. And lest item, are you subject to any other special duties that China has been imposingly someway?

No. We are not. Steve Levenson – Stifel Nicolaus: Thanks very much.

Thank you.

Thank you.

Your next question comes from the line of John Simazo [ph], private investor. Please proceed.

John Simazo, Very Independent Research. Thank you. With the prospect through the A380 the 787, A350 each have very good volumes two, three year from now. Are the capacity expansions you undertook a couple years ago enough? Do you foresee being able to make enough of the titanium special alloy products for those product line for airplanes. And if you would drop about steel stainless for low value products. Are they essentially using the same facilities to the aerospace material we used?

John, is Mike again on the titanium side, involvement in titanium is on the faster side of the business. No issuer all with capacity there we acquire the product that we have been half role at our Dynamet facility and finishing their rule. A bring on the volume we will low that all the way. So that’s not issuer it all. On the Nicole side the vacuum adduction building furners we added again is about 40% addition we expect that to last us from many, many year be that 5 or 10 not sure but right now it provide us with long-term capacity. On the remolding side, we size those to be able to handle the next year two versus demand a much smaller amount of capital and their nascence plug in. so we can move very well on that as capacity increases. In half working we have piece of machinery called Erie Forge, we are in the process we're only working two cruise and we're in process of adding a third cruise right now to expand our capacity there. And finally, typically these products go through different sets of equipment, than does the stainless steel and cut the lower value products. So there is no competition between the two for capacity.

So which product lines, if they recovered would push out the stainless bar steel et cetera?

Higher end stainless were out, stainless steel. You know, you can look at stainless steel through a gradient and there is a more distributor Oriented stainless steel and then there is the more -- what I call higher value stainless steel. They are typically going through the same set of assets.

Where are examples of the higher value stainless products to end markets?

I'd say there are across the board, I'll give you some examples of fuel inject material small bar for stainless, for fuel injectors, stainless steel for fitting applications, even some aerospace applications where we were use the same stainless. They would be typical applications; so the semi-conductor quality stainless steel is another. So there is variety of what I called a higher end stainless that we believe as I said my comments are beginning to come back.

Okay.

The other one is that I did not mentioned, I should is oil and gas also utilizing fair amount of stainless and we hope as we grow that business for more of that capacity we’ve used there.

Thank you.

You’re welcome.

Next question comes from the line of Brian Yu of Citi. Please proceed. Brian Yu – Citi: Hi, good morning.

Good morning, Brian. Brian Yu – Citi: You mentioned early that average pricing is down looks like a largely because of mix. Can you discuss, if the pricing for specific products or end market outside of mix is that stabilizing given the volume improvement. Are you seeing any pricing power?

Yeah. We -- on a pricing I'd say pricing for a premium products has held up well through the downturn since much of that was covered by long-term agreements. Pricing for the lower end of the stainless mix the more transactional type business, as we talked about in the past it's been competitive, but we believe that has stabilized. Our goal here and our job here is to focus customer on a value that we provide some pricing that's non on the list, but also bottom line for us is as we continue to see demand increases we will evaluate price increases where we believe we have the opportunity. Brian Yu – Citi: So for now looks like prices in general bottom down like, not much pricing power has yet?

Hopefully, yes.

Yeah. I'd say its demand begins to come back we will work to recover what we have lots in the downturn. Brian Yu – Citi: Okay. Is there any particular end market that’s closer to the point where you think my bill get incremental margin improvement outside of operating leverage?

Our focus. Where we are getting busier now and where we look at opportunities is on both of the low-end products, which have suffered through some significant price decreases and also when some of the higher end premium products, as we see some significant demand coming out of some of the engine side. So we'll look pretty much across the board. Brian Yu – Citi: Okay. Thank you.

Thanks, Brian.

Your next question comes from the line of Phil Gibbs of KeyBanc Capital Markets. Please proceed. Phil Gibbs – KeyBanc Capital Markets: Hey, guys. Good morning.

Hi, Bill.

Hi, Bill. Phil Gibbs – KeyBanc Capital Markets: I just have some questions here on the mix shift that we saw in the third quarter, as this has been change in your marketing strategy or just reflective of end market demands?

It’s been reflective of end market demand as we moved into the downturn and we saw often lot of open capacity, one of our job was the keep our employees operating. So we’ve look at some business, which we have and look at in the past which was historically lower margin business for Carpenter. So we win after that, but as I said in the previous question and no way does that compete with anything on a high-end that we’ve got. Phil Gibbs – KeyBanc Capital Markets: Okay. And on the 10% EBIT margin that we're looking at here for the fourth quarter. Did you achieve that in the month of March or was that more or less achieved in the April?

Yeah. I mean, we don’t report any specific monthly result there is some volatility to our monthly results. But we have finished at 8.7% for the quarter and that’s an operating margin excluding our pension effects. And expect it still be at 10% in our fourth quarter. Phil Gibbs – KeyBanc Capital Markets: Okay. And then the 2011 outlook is that assume a similar mix to this year or does that assume a richer mix a product in the higher end?

We would assume that we'll see some improvements in our product mix year-to-year. Phil Gibbs – KeyBanc Capital Markets: Perfect. Thanks, guys.

You’re welcome.

Your next question comes from the line of Luke Folta from Longbow Research. Please proceed. Luke Folta – Longbow Research: Good morning, guys.

Good morning. Luke Folta – Longbow Research: I had a question first of, as far as the restocking there we're seen in the engine channel, do you think that -- can you give us a feel for what inning we might be as far as the restocking process is concern?

That is your question. Luke, could you repeat the question we broke up on this end. Luke Folta – Longbow Research: Do you think -- when you think about the restocking in the engine channel, is it something that's just starting to get moving or something that you think is half way through or more significantly?

I'd say we have seen for less couple of months, significant demand coming our way and so I would say that we're started well into it now. Luke Folta – Longbow Research: Okay. So you think, you'll see a couple of more quarters a benefit from further restocking in engine channel?

The most interesting is there is certainly some restocking taken place. But we think it's relatively small I have to talk newer customers and what we're seeing is a real pool now for some of the programs that has been on the side lines for while. And we're also seeing because there has been such a lack inventory based on '09 being so like. That we're seeing more request for shortly, time and things will pull through. So yes, we believe we got a couple more quarter of this type of demand. Luke Folta – Longbow Research: Okay. Great. And then on the titanium side, can you give us some color as far as what the environment is regarding availability and maybe also what you're seeing as far as stock pricing trends on great five engine spread?

I'll talk about availability; availability for us is in very good shape. We have long-term agreement I mentioned the time I joined venture. We also have other long-term agreements on titanium. So we feel very good as far as where we are, as far as supply that both short-term and long-term. And air pricing mechanism works in essence with a pass through and pricing. So we are pretty much -- whatever the price is we'll pass along our customers. Luke Folta – Longbow Research: Okay. Thanks a lot.

Thank you.

(Operator Instructions) Your next question comes from the line of Gautam Khanna of Cowen & Company. Please proceed. Gautam Khanna – Cowen & Company: Yes. You know, even if you exclude the hedging game, at the yield this quarter margin was above your estimate of -- I think last quarter you're talking about 20% in the third quarter. As volumes continue to rise with year do you expect, what kind of -- what do you would except to see the upper limit pf PAA margins that we're reaching?

As our fiscal year-to-date is margin is in the high 20s, 29 I’m not mistake and I think our -- the year would end up right about at that level. Gautam Khanna – Cowen & Company: Okay. And Doug also can you help us understand how pension expense will be allocated next year; and I know you mentioned a $0.19 year-to-year improvements. With that all be -- will that different all be at the EIT line or some of your come through incitements of area?

There is some of that that we come through the segments our annual service cost would come through the segments. Gautam Khanna – Cowen & Company: Okay. So…

Most of them would any ID. Gautam Khanna – Cowen & Company: Got it. Okay.

But somewhat go through the segments. Gautam Khanna – Cowen & Company: And also AMO just looking back I think it was I remember exactly when a couple year it's May -- it was last year actually when you have similar sales in the third quarter much higher margins and that was despite high cost inventory and utilization drop into the quarter. So I mean the operating profit at AMO given the current rate of sales, I mean should we just expect to not get towards double digit given the mix any time soon or how should we think about kind of incremental of this low levels?

I think certainly the third quarter level of 3.5% is reflected both for our product mix there. I would also say that, when we have the discussion before that as long as our volume is at the lower levels there is still is running at right now. The AMO business because it has more of our finishing operations in assets is disproportionately affected by lower overall volume in the PIO business would be. And so you still have that impact on our AMO business. Gautam Khanna – Cowen & Company: Okay. And lastly, CapEx you mentioned would be roughly $70 million next year, which is up a bit what, are there any new big projects that you guys were pursuing or is that purely a maintenance CapEx number that we should think as a ongoing credit number?

: Gautam Khanna – Cowen & Company: Thanks.

You’re welcome.

Your next question as a follow-up from the line of Chris Olin of Cleveland Research. Please proceed. Chris Olin – Cleveland Research: What are your thoughts on the jet engine market I have been hearing some discussion that maybe the OEMs are not producing that’s enough giving Canada new delivery outlook? Do you have any feel for maybe daily increasing production over a next couple months or anything looks there?

Chris, it’s Mike. We certainly are seeing pulling certainly some spears I think also the new air frame schedules that are out 747, 787 plus increase to A320 build framing up or help. When you look through all the points out there they either announced increases or increases are about the common as you know including the 787 as a new plan is built for that. So we're seeing our customers getting busier we are seeing them pull significant amount from us right now. They are saying an up building stocks so might be who is keeping up it’s just -- we are seeing a lot more volume from it. Chris Olin – Cleveland Research: What do you think on the 737?

737, I read the same articles you do. There are 31.5 months with everyone keeps talking about all over it’s the one that has and publish there as are going to moved that up to about 34. We have not heard that officially but with everything else moving up it make some sense. Chris Olin – Cleveland Research: If you look about the next shoot for years, do you feel most confident about aerospace, oil or the power generation that we equalized [ph]?

Well, it’s pretty much -- the three markets we've talked about which are our growth markets. We feel pretty good about the growth rates and all of them we talked about air traffic growing at about 5% a year and that’s growing faster than -- I would talked about energy with a weighted average between power-gen and non-magnetic grow colors, 5% a year and don’t forget we've talked about how this is truly a growth market as we move in the other segments to be on the segments where in. And medical we have seen even through the downturn good 35% growth. So we look at all of them a positively, we believe we can growth faster than the market in those key market force based on the capacity we've put and the focus on the additional market segment. So like them all. Chris Olin – Cleveland Research: And then just lastly. I'm just -- whole market share gaining within into alloy in order is there anything that you can help me to understand how you have been successful with this?

Key customers satisfaction we've worked very hardly with the PCC and Carlton the acquisition we certainly didn't know that was coming but we anticipated. We've been working hard around that and we've been working hard in areas that quite we have not had strong share positions and we work to achieve those. So it's an everyday battle, everything in Aerospace revolves around quality and we've done our best there to be -- to make sure that we continue to do that on the automotive side. The number one issue was what we've talked about, we had a customer a very good customer areas that had a significant issue with source to supply because of the market dynamic, changes in supply side of the industry, so we stepped in and held out there, that's one of our lower margin products but they also purchase higher margin products and we're going to be working with them to make sure that we secure that higher margin product also. Chris Olin – Cleveland Research: Okay. I think you guys did a great job keep it up.

Thank you.

Thank you.

Next question is a follow up from the line of Gautam Khanna with Cowen and Company. Please proceed. Gautam Khanna – Cowen & Company: Hey, just wanted a square comment you just made with comments made by some of your competitors. Everyone elegizes to be gaining share.

I know. Gautam Khanna – Cowen & Company: Throughout big market whether it's ATI, PCP…

Right. Gautam Khanna – Cowen & Company: Well, can you give us some specific with who specifically you're gaining share. We know ATI get the world contract here PCP and their conference call is talking about continue gains with their existing customers. Where are you guys picking up share?

Well, we obviously long term will lose some share is at the PCC Carlton side. So we've looking in next [ph] rings, so we've looked on the ring side there and beyond that really prefer not to get in the details but we have ongoing discussion throughout the supply chain and I think the bottom line is -- we're going to continue to focus on, I know everyone is saying the same thing and I think we should need to hold this whole sold account before the results we show quarter-after-quarter, related to volume. Gautam Khanna – Cowen & Company: You're point though is on the ring rolling side that's where you're going to see some share in gains?

In part, yes. Gautam Khanna – Cowen & Company: Got it. Thank you.

Okay.

There are no further questions at this time; I will now like to turn the call over to Greg Pratt for closing remarks.

Okay. Thank you very much. I just like to take this opportunity to thank everyone for joining us today and thank you for your continued interest in Carpenter. And we look forward to speaking to you next quarter. Good bye.

Okay. Thank you for your participation in today's conference. This concludes the presentation and you may now disconnect. Good day.