Good morning and welcome to the Carpenter Technology Fourth Quarter Earnings Conference Call. My name is Dominique, 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. I would now like to turn the call over to your host for today, Mr. Mike Hajost, Vice President of Investor Relations and Treasurer. Please proceed, sir.

Thank you, Dominique. Good morning everyone and welcome to Carpenter’s earnings conference call for the fourth quarter ended June 30th, 2012. This call is also being broadcast over the Internet. With us today are William A. Wulfsohn, President and Chief Executive Officer; and 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 30th, 2011 10-K, September 30th 2011, December 31st, 2011 and March 31st, 2012 10-Qs and the exhibits attached to those filings. I will now turn the call over to Bill.

Thank you, Mike, and good morning everyone. Fiscal year 2012 was an excellent year for Carpenter. As a team, we executed well and we exceeded our earnings targets. The legacy Carpenter business saw a 68% increase in operating income, excluding pension EID, which was above our 50% growth target. This profit growth was driven primarily by focus pricing action, mix management initiatives designed to free up capacity for increased sales of high value products and excellent manufacturing performance, which reduced our cost per ton for the third straight year. Combined these actions drove a $0.44 per pound or 66% improvement in SAO profit per pound, and equally as important, these actions enabled the capacity gains to sell an additional 4,500 premium tons in the year. Fiscal year 2012 was also an outstanding year for the company in terms of positioning for future growth. I would like to highlight four key areas of particular strategic importance. First, and the highlight of the year, was our acquisition of Latrobe Specialty Metals. We have now owned Latrobe for four months and the results in the business are strong. As expected, on an operating basis, the acquisition has been immediately accretive to earnings. I am also pleased to report that the integration is going extremely well. Based upon what we have learned to date, we are even more excited about the strategic value and synergy potential from this transaction. Thus in summary, Latrobe is tracking ahead of our overall deal economics and we remain confident that we will achieve at least $25 million of synergy by year three. Second, we announced earlier this year the construction of a $500 million premium products facility in Alabama. This state-of-the-art facility will enable us to support existing and increasing customer demand for our aerospace and energy products,…

Thanks Bill. We had another good quarter of results. Overall, we delivered earnings per share of $0.77, which included $0.11 of Latrobe inventory fair value cost adjustments. Without this impact, we would have been at $0.88. The Latrobe business was accretive by $0.08 on an operating basis in its first full quarter. Before commenting further on Latrobe, I will provide a few highlights on our legacy Carpenter business, which finished out a very strong year of financial performance. We had consistently strong positive spreads between our revenue growth rate and volume growth rate, reflecting successful results from our pricing and mix management strategy. We improved our average mill profit per pound by $0.44 during the year, due again to very strong mix management actions and growth of premium products. Our average mill cost per ton improved for the third consecutive year, due to strong operational efficiency and productivity. And as a result of all this, operating income, excluding pension EID on the legacy Carpenter business was up 68% for the year, which exceeded our 50% going in target. Overall, EBITDA for the year, ex-Latrobe, was $328 million, which is on track to get back to our prior-peak profit level this fiscal or a year ahead of schedule. We also feel good about the results that Latrobe is delivering. The Latrobe integration is going very well. We have already achieved about $2 million in net synergies through the first four months of ownership. This is mostly due to immediate cost synergies from overlapping third-party service agreements and purchasing contracts. The business has also gotten off to a very fast start on operational cost synergies, through the strong collaboration that is occurring between the Latrobe and Carpenter manufacturing teams. Examples of early wins include better yield performance, increases in the number of…

(Operator Instructions) Your first question comes from the line of Gautam Khanna with Cowen & Co. Please proceed.

Yes good morning.

Good morning.

Couple of questions. One, the special SAO and PEP businesses had sequential sales gain, expert thorough charge, but the operating profit was slightly down in both cases, is there any -- what explains that?

Nothing that we’re concerned about from a continuing basis on the SAO business there were some negative inventory effects, with our (inaudible) accounting in the detailed inventory in the current market prices below our cost standard, the are some negative profit affects from that and we had a fair amount of inventory reduction in the quarter. And then the rest is really SG&A or overhead cost driven much of that activity related since we’re resourcing a lot of activity out of [ph]Redding. Some of it is frankly a phenomenon whose people spending near their budget money at the end of the year, and now it knows that from a total dollar SG&A standpoint when you exclude the Latrobe and Amega, we were actually down year-to-year in dollars, but a lot of that spending occurred in the fourth quarter. And there were also some performance related cost impacts in the fourth quarter, since our operation hit its targets were cost per ton and profit per pound, and those types of things. So some of those items impacted our fourth quarter on the SAO business. On the PEP business, really just some temporarily higher costs in our manufacturing operations, some are related to the new capacity that we’re bringing on stream and stepping up forward of the higher demand in that market, and some areas of performance that we’re focused on there as well.

Should we think of the margins of both segments to return to where they were in Q3 and perhaps Q2, depending on what segment you’re looking at, I’m just looking at specialty allies, but north of 21% excess surcharge in Q3. And then, PEP has been as size 14% this year and 16% last year, I’m just curious where we are trending to given the order book.

Yeah, so the things that I mentioned there will correct out, that will be partly offset in the beginning part of the year just by the fact that our volume is lower, so that we have lower volume efficiencies during the first two quarters of the year.

Okay, the other thing, there is lot of noise intra-quarter and both of the year’s earnings report of weakening after market and this in general kind of a weakening order book in the quarter. Did you see any evidence of either and maybe if you could just characterized how orders trended through the quarter June versus May and April and perhaps what you’ve seen thus far in July, Thanks.

Sure, we don’t have as much visibility on after market versus if you were the primary consumers as some of our customers who are little further down stream have it. With that being said, we’ve seen continued strength, our backlog has stayed strong. We actually had a record backlog as well as sales coming out of June with our forged bar and billet business. So, at this point overall our business is very strong, limited areas of weakness not surprisingly would be around the small percentage of business that we do through distribution, some powder related sales in Europe or tool sales, but again these are smaller components of our overall business.

In lead time, have they changed at all at either segment?

We’ve been working hard actually to -- try to bring down our lead times and we’ve been successful in some respects, although we are quoting out into the first calendar quarter of now 2013, but our backlog level is remaining high. We’re just getting more out.

Thanks a lot.

Your next question comes from the line of Edward Marshall, Jr. with Sidoti & Company. Please proceed sir.

Good morning. Question on, if I could may get too granular, but the end-market data which you have, if you have that combination Latrobe say for the aerospace and industrial businesses, I think that would be helpful.

Hi, we do call out in the press release of volumes with and without the probe impact so that you probably seen and it is one point, but I believe the other goal also has some additional data here.

Eddie, he is talking about something other than what we called out in the press release which is the year-over-year growth rates and volume and revenue of Latrobe.

Right, do you have the revenue numbers [ph]less Latrobe for the individual businesses. I don’t think that was called out in the release, was it?

It is, but I’ll just rattle down through into our aerospace business and this is all revenues excluding the apex of surcharges we always quoted. So, the aerospace business was up 24%, our energy business was up 15%, the industrial consumer business was flat in revenue terms, transportation up 19% and our medical business up 12%. So, overall of 15%.

And if you could comment on what you’re seeing in the gas turbine market because we haven’t spent that much time in there, but my senses we’re seeing a shift from what was spare in after market demand too a more OEM built backlog. Are you seeing that with your customer base?

Well, we have described in the past and would continue to say that the demand in this market is lumpy, it comes in projects and we get fairly strong orders and then they dissipate a little bit. Right now, I’d say in the short term that it is a little bit weaker, but we’ve seen and I think we all acknowledge that given the lower cost of natural gas, the fundamentals are definitely likely to drive a higher demand rate overtime. So, we’re bullish in the long run, but in the short run it is not our strongest area.

And the capacity additions which you’re putting in place, to it take place in the next 2 years, just refresh my memory and I think these are modest procedures. It is not like you are – have any chance of disruption to any other facilities or anything along those lines. This is just (inaudible) is that correct?

We are adding a couple of VSRs in the running facility a couple of VARs in the Latrobe facility, we’re moving forward on some operational efficiency efforts on our Forge and press and then we’re getting the benefit of being able to schedule the Latrobe and Redding operations if you will as one mill, so we’re getting the synergies that come from the combined capability.

But this isn’t like taking down a line to put it in a new furnace and etc.

No, it is pretty straight forward.

Okay, thank you.

Your next question comes from the line of Steve Levenson with Stifel Nicolaus, please proceed.

Thanks and good morning everybody. I know you quoted lead trans added in to the first quarter next year, but can you talk about what dynamics lead times are and where you hope to get after the expansion?

Okay. Right now, they are running about 12 weeks that is pretty much of our normal lead time. We’re expanding, I mean ultimately our desire is just to step back for a moment is to have the capacity so that across our businesses we can offer those type of lead times consistently. So, demand has we believe growing and we will be strong, but we’re hoping we can stay with those kind of lead times.

Okay, do you think the ability to offer those lead times is going to affect the pricing at all or do you think pricing will remain strong.

We are not seeing affecting pricing, as we add capacity we’re very careful. We try to develop long term strategic value based supply and pricing with our customers, not move to either spike prices or to chase prices and plan exactly where we are in given fuel current supply situation. So, we don’t see it is affecting pricing.

Great thanks and on the Nicolaus front, do you see a shift away from some of the legacy super alloys (inaudible) that can handle the higher temperatures and how do you feel you’re positioned to meet the demand there?

Well that general dynamic and trend is something that we’re excited about because, as you know we invest more in research and development and we believe as a percentage of sales anybody else in our industry and so this is an area that we try to lead and be an innovator. We feel good about our position on new air craft and new engines. Some of that is still to be determined because those materials haven’t been specified, but we feel encouraged by what those trends and innovations mean to us as a company.

Okay, in the fact they are not specified yet, does that mean we still have an opportunity on some of these new engine designs.

Oh absolutely, I just – some of them aren’t finalized in their design, so though the materials aren’t specified.

Great, thank you very much.

Your next question come from the line of Jonathan Sullivan with Citi Group, please proceed t

Hi, good morning and congratulation on the quarter. If I had a quick question in terms of the operating income [ph]XEID, it looks like the first three quarters of the year were revised down, will it take about 3 million – was that related to something with the acquisition cost or what was going on there?

I am not sure what you are referencing Jonathan, to be honest?

Well, in the 3Q release I think you had operating income, excluding pension EID 169 million and then for the full year it was 237 and end 70.8 in the fourth quarter which would imply 166 in the first three quarters? Perhaps I have my math wrong.

That sounds like being not that you are off, which is about 3, would correspond to the charge in March for our inventory fair value cost adjustment. So, that could be the difference in the numbers that you are looking at. That’s not like you are up about $3 million and that was a $3 million item. So, I suspect that’s the case.

Okay, fair enough. Thanks a lot.

Okay.

Your next question comes from the line of Josh Sullivan with Sterne Agee. Please proceed.

Hi, thanks for taking my call, questions. If you look at your guidance for 2013, the incremental, how much of that is volume versus mix shift in the portfolio?

I would say generally summarize that, I would have to really kind of break down the pieces, a good chunk of that is just the full year effective of Latrobe business and the synergies. And so, I would say very, the volume there is growing, but the bigger contributors are just the full-year effect as well as the progress we are making on synergies. In the SAO segment, it will be volume-driven because it’s the effect of the 4,000 premium tons that we are adding. And in the PEP business, I would say predominantly revenue growth with some operational improvements.

Okay. And then on inventories, can you talk about inventory levels and how we should think of those coming down, in light of the aerospace OEM production ramp over the next 12 to 18 months? Actually suppliers reported varying levels of inventory preparedness and just how you guys are lining up.

At this point, we see a pretty good bounce between inventory levels and demand profiles at our customer level. We are not expecting a big pushback or a big wave to pull. We have built inventories over the course of the last year-and-a-half, and a lot of that has been really related to the increase in volume output, but also recognizing that our lead times are longer than we would like to see them. We have built some staged inventory, so we can provide better responsiveness for our customers. We are working to try to also, as Doug mentioned, see if we can focus on more efficient ways of operating our inventory. One other point that would be worth noting is as our inventories have increased and they have increased in dollar per pound basis because we have seen an improvement of our overall mix as well. So, again, inventory is an opportunity for us, but we don’t see it as either an issue on our side or the customer side.

And then just including Latrobe, does the fastener engines and narrow structures break down? Is that consistent with the 35% fasteners, 50% engines and remainders structures, does that change the feeling of Latrobe?

Latrobe has that greater percentage of aerospace business on some of the structural components. They are big supplier of materials, for example, for landing gear. So, I think you would see that being a higher percentage. They also have fastener capabilities, but I think then in terms of the engine materials, that’s probably where you would see a lower percentage from the legacy Latrobe business.

Great, thanks.

And your next question comes from the line of John Tumazos with Independent Research. Please proceed.

Congratulations on the good results and conditions.

Thank you.

As you budget for the capacity increase and the 700 series alloys, what rate of growth in world commercial airline traffic do you use for the next 10 years? And I don’t want to ask you your market share assumption, but I am not smart enough to think of a different way to hide that question. But implicitly, you have to be making an assumption as to whether your competitors identically expand? You know how sometimes people don’t notice what the other guys are doing. I am not asking the second part of the question in a more clever way.

Yes, the way I would break that down, John is that for the number of builds themselves, we rely on sources like airline monitor and over the period of time that you are talking about, it’s about a 7% compounded annual growth rate and just the number of builds. When we look at the material content, because of the larger planes, etcetera, we get that up to about a 10% type of ongoing growth rate. And then from a market share standpoint, we feel like we have been growing our market share in the marketplace, and since we are being proactive about adding the capacity to support the future growth that we would expect that to continue as well.

I am sorry. You didn’t exactly answer my first question. What is your traffic assumption for the next 10 years for growth? Traffic may correlate better to whether the engines are on fire and used.

We do track the actual historical, if you will, miles and hours, airline hours, available seat miles, revenue passenger miles, ton miles. I don’t know that we look at that as much going forward, but it’s predicted to be roughly airline traffic, roughly 5% per year.

Thank you.

Your next question comes from the line of Lloyd O'Carroll with Davenport & Company. Please proceed.

Just sounds that we are absolutely clear of what’s happening, there has been some confusion on the base in ’12, in which your 30% guidance. What is the dollars in fiscal ’12 that we should apply the 30% to?

Yes, Lloyd, in the table on I guess page 4 of the press release or at least the version that I have printed out here, it would be that $237.1 million of operating income, excluding pension EID and the acquisition-related costs.

Okay. Because we are just confused sometimes, is Latrobe in or out, (inaudible) in the latest quarter for Latrobe in our out. So, that’s a reason for the question.

Right. Hopefully that table gives you the numbers that you need, and if you have any questions, you can call us and we can take you through.

Okay. And then, can you give us the sequential growth in volume of end use market for the quarter? Yes, and we are looking tonnage rather than revenue.

So, this would be excluding Latrobe.

Yes.

That’s versus last year.

Yes, versus the previous quarter.

You have to stay with me a second here. So, these numbers now include Latrobe. So, aerospace is up 45%, our energy business is down 1%, industrial and consumer up 13%, transportation up 1% and the medical business up 15%.

Okay. Thank you.

You are welcome.

Your next question comes from the line of Phil Gibbs with KeyBanc Capital Markets. Please proceed.

Good morning Bill, Doug, Mike. How are you?

Good morning.

Good morning.

You talked about in the past as energy being your fastest growing business. I am just curious if you could talk about some of the success that you have had and going outside some of your\, call it historically legacy markets like non-magnetic drill collars and land-based gas turbine and some of the success you have had in some of the areas like completion and exploration.

Sure. Obviously, a lot of our growth that we have seen has been related to Amega, its growth in terms of the position in the market and its share. But we have also focused on providing some of our custom series materials for mud motors and for completion. In addition to that, we have been able to sell our (inaudible) materials for used and nuclear market that’s used continuing material for containing radiation. So that’s been a big part of our growth story. And we have focused on some new innovative materials. We will be talking a little bit more about these in September. The (inaudible) materials which are beginning to be used for wind turbine and other applications in the energy markets. I would hide like those as three areas outside of our core.

Okay. And then also, can you update us on a progress in the aerospace structural piece of the portfolio?

Well, to begin with, the 747-8 consumes about 39000 pounds of custom 465 for flat tracks that’s a big gain for us. Obviously the 787 which uses a significant multiple of titanium fasteners versus an equivalent 737 in size, those would be two areas that I would try to highlight immediately for you.

Okay, perfect. And just a couple of housekeeping, Doug do you have any sense of the LIFO impacts in your June quarter?

Yes, the figure that we had quoted previously, which is just the straight effect of LIFO on the inventory changes that was negative 2 million in the fourth quarter.

Okay. So, it was a headwind for you?

Yes.

Okay. Thanks a lot guys. Great results.

Yes, you are welcome.

Thank you.

Your next question comes from the line of Gautam Khanna with Cowen & Co. Please proceed.

Yes, just a couple of follow-up questions. I think Bill mentioned staging inventory to help out the customers, did you see any evidence given nickel fell quite a bit in the quarter of customer destocking on the engine alloy side?

No, we really didn’t. Even though nickel prices have not been strong, obviously they have been in the $7 to $8 range, not a huge swing in pricing. So, at this point my impression is that customers are more focused on making sure they have the right supply of materials than trying to – in kind of time or be opportunistic here. Plus, as you know, a lot of our contract suite, we either hedge or they hedge, so it takes out a lot of activity to try to gain that.

Yes. You mentioned the fastener business is at on your peak and, the prior peak I should say, can you give us some color around sequential fastener metal trends? If I recall, late last calendar year, it is sort of flattened out sequentially, and how has it trended in the March and June quarter in terms of volume for titanium and nickel?

The titanium demand we saw has a greater pickup, beginning last year we saw that. If you are early on the cycle and that makes sense given some of the poll associated with the 787. We have seen some pickup now, continuing in the titanium fastener market. In the nickel area, we continue to see growth coming forward and that accelerating and we expect that that will accelerate as aircraft builds continue.

I just want to be clear, sequentially, did you see both of those areas up?

Yes, titanium was up 28% from the third quarter to fourth quarter of our last fiscal year and nickel was closer to flat from quarter-to-quarter. But we expect that it will pick up as the builds increase here this fiscal year.

And just, on Latrobe, if you could share any sort of initial customer feedbacks that on the first four months it’s good or bad? And maybe if you could comment on the integration kind of the willingness of the folks at Latrobe to kind of adopt the Carpenter’s system and if there have been any issues on that front? Thanks.

Sure. So far the feedback, which obviously have been – my counterparts has been from customers is very favourable. I think customers, there were certain customers that had a legacy high regard for Latrobe and they are happy with the expanded capabilities that Carpenter brings. And there are those which were legacy Carpenter customers and also felt that there was a gain because of the increased product capabilities and capacity that the two companies together could bring. We are delighted with the integration and working with the Latrobe team. It’s really a great group of people. I think that we are working very well together. It feels very comfortable. Even though it’s two different companies, we really look at it there is the two Pennsylvania companies with long history producing products in similar markets. There is a lot of compatibility. I think people are excited about the prospects of what that does for the combined company. So, we just have really enjoyed working with the Latrobe folks and I think it’s going very well.

Thanks.

(Operator Instructions) Your next question comes from the line of Josh Sullivan with Sterne Agee. Please proceed.

I just have a follow-up on the Amega West order that you had, I think you said your first deepwater order? I mean, is this a new area for you guys? If you could (inaudible) that? Thanks.

It is a newer area for us in terms of our products. While it is not an order that I would call out as fundamental changing our volume profile. From the specific order of what it does is that it shows a signed confidence from both our part and our customers’ parts that we are working very closely with them. We are innovating with new materials and we are getting access to new applications in areas that have been outside of what we have traditionally been able to provide to them. So, we are very excited about where this takes us. Obviously, there is a lot more activity in the deepwater drilling and so that means that we will be able to participate and grow with that market as it grows.

And then just internationally right now, what’s the breakdown?

In the oil and gas area?

Yes.

I would say the majority is North American centric. I am not sure the exact split between the US and Canada but if we take those together it is North American centric. As you know, we did make an acquisition that gave us a footprint in Singapore and also in the Middle East. So we are well positioned to grow geographically as the demand in China and even Australia begins to pickup. So, we expect that drilling activity in North America is about 70% of the overall activity. And as that number changes over time we will focus on following around the globe where the need is the greatest.

Okay, thanks.

Your next question comes from the line of Gautam Khanna with Cowen & Co. Please proceed.

One last one. I just wanted to ask if you had seen any evidence of new entrants in the fastener stock marketplace, any traction with some of your larger customers if that bill waives off?

There is nothing that we have seen there has been any sort of – anything to wave a flag over – we just haven’t seen it.

Okay. Thank you.

We have no further questions. I would like to turn the call back over to Michael Hajost for closing remarks.

Thank you again for participating on today’s call. We look forward to speaking to you again next quarter. Thank you and goodbye.

Well, ladies and gentlemen, we thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect and have a wonderful day.