Carpenter Technology : Q3 2024 Carpenter Technology Earnings Conference Call

May 1, 2024

CARPENTER TECHNOLOGY CORPORATION

3rd Quarter Fiscal Year 2024

Earnings Call

© 2024 CRS Holdings, LLC. All rights reserved.

Cautionary Statement

Forward-looking statements

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected, anticipated or implied. The most significant of these uncertainties are described in Carpenter Technology's filings with the Securities and Exchange Commission, including its report on Form 10-K for the fiscal year ended June 30, 2023, Form 10-Q for the fiscal quarters ended September 30, 2023, and December 31, 2023, and the exhibits attached to such filings. They include but are not limited to: (1) the cyclical nature of the specialty materials business and certain end-use markets, including aerospace, defense, medical, transportation, energy, industrial and consumer, or other influences on Carpenter Technology's business such as new competitors, the consolidation of competitors, customers, and suppliers or the transfer of manufacturing capacity from the United States to foreign countries; (2) the ability of Carpenter Technology to achieve cash generation, growth, earnings, profitability, operating income, cost savings and reductions, qualifications, productivity improvements or process changes; (3) the ability to recoup increases in the cost of energy, raw materials, freight or other factors; (4) domestic and foreign excess manufacturing capacity for certain metals; (5) fluctuations in currency exchange and interest rates; (6) the effect of government trade actions; (7) the valuation of the assets and liabilities in Carpenter Technology's pension trusts and the accounting for pension plans; (8) possible labor disputes or work stoppages; (9) the potential that our customers may substitute alternate materials or adopt different manufacturing practices that replace or limit the suitability of our products; (10) the ability to successfully acquire and integrate acquisitions; (11) the availability of credit facilities to Carpenter Technology, its customers or other members of the supply chain; (12) the ability to obtain energy or raw materials, especially from suppliers located in countries that may be subject to unstable political or economic conditions; (13) Carpenter Technology's manufacturing processes are dependent upon highly specialized equipment located primarily in facilities in Reading and Latrobe, Pennsylvania and Athens, Alabama for which there may be limited alternatives if there are significant equipment failures or a catastrophic event; (14) the ability to hire and retain a qualified workforce and key personnel, including members of the executive management team, management, metallurgists and other skilled personnel; (15) fluctuations in oil and gas prices and production; (16) the impact of potential cyber attacks and information technology or data security breaches; (17) the ability of suppliers to meet obligations due to supply chain disruptions or otherwise; (18) the ability to meet increased demand, production targets or commitments; (19) the ability to manage the impacts of natural disasters, climate change, pandemics and outbreaks of contagious diseases and other adverse public health developments; and (20) geopolitical, economic, and regulatory risks relating to our global business, including geopolitical and diplomatic tensions, instabilities and conflicts, such as the war in Ukraine, the war between Israel and HAMAS, and Houthi attacks on commercial shipping vessels and other naval vessels as well as compliance with U.S. and foreign trade and tax laws, sanctions, embargoes and other regulations. Any of these factors could have an adverse and/or fluctuating effect on Carpenter Technology's results of operations. The forward-looking statements in this document are intended to be subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. We caution you not to place undue reliance on forward- looking statements, which speak only as of the date of this presentation or as of the dates otherwise indicated in such forward-looking statements. Carpenter Technology undertakes no obligation to update or revise any forward-looking statements.

Non-GAAP and other financial measures

Financial information included in this presentation is unaudited. Some of the information included in this presentation is derived from Carpenter Technology's consolidated financial information but is not presented in Carpenter Technology's financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Certain of these data are considered "non-GAAP financial measures" under SEC rules. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. Reconciliations to the most directly comparable GAAP financial measures and management's rationale for the use of the non-GAAP financial measures can be found in the Appendix to this presentation.

© 2024 CRS Holdings, LLC. All rights reserved.

2

3rd QUARTER FISCAL YEAR 2024

Tony Thene | President and Chief Executive Officer

3

Safety is Our Highest Value

Total case incident rate

3.3

2.1 2.2 2.0

1.7 1.7

								1.3
					1.2
									1.1
															1.0
														0.6

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24 YTD

© 2024 CRS Holdings, LLC. All rights reserved.	4

Performance: Beat Q3 FY24 Guidance; Raising Q4 FY24 Outlook

Beat Q3 FY24 guidance by ~18% with improved operating performance and expanding margins

Raising Q4 FY24 outlook by ~8%, building on operating momentum from Q3 FY24

Adjusted Operating Income ($M)

	~18%
	90
74-79
Q3 FY24 Previous	Q3 FY24 Actual*
Guidance

Adjusted Operating Income ($M)

~8%

110-115

97-112

Q4 outlook is ~25%

increase over Q3

Q4 FY24	Q4 FY24
Previous Outlook	Updated Outlook

© 2024 CRS Holdings, LLC. All rights reserved.

*Detailed schedule included in Non-GAAP Schedules in Appendix. 5

Third Quarter Summary

• Delivered record adjusted operating income of $90.0 million, up 29% sequentially and 129% year-over-year, outperforming third quarter outlook
• Exceeded expectations in SAO segment with operating income of $103.5 million, realizing adjusted operating margin of 21.4%
• Generated $61.9 million of adjusted free cash flow
• Accelerated growth with higher volumes sequentially and improved mix, primarily in Aerospace and Defense and Medical end-use markets
• Continued to see strong demand for our unique portfolio of solutions across end-use markets, with backlog at record levels

Exceededexpectationswith acceleratedgrowththrough expandingmarginsand improvedproductivity

© 2024 CRS Holdings, LLC. All rights reserved.	6

Third Quarter Sales

MARKET	Q3-24 NET SALES EX.	% NET SALES EX.	VS. Q2-24
SURCHARGE ($M)*	SURCHARGE
	$315.1	57%
AEROSPACE & DEFENSE			+28%
	$84.2	15%
MEDICAL			+15%
	$26.3	5%
TRANSPORTATION			-2%
	$27.8	5%
ENERGY			-24%
	$77.1	14%
INDUSTRIAL & CONSUMER			-4%

Optimizing mix for profitability in strong demand environment

• Sales up 14% sequentially on higher volumes, improving mix and pricing actions
• Aerospace and Defense and Medical end-use markets increased sales with improved primary melt output
• Energy sales down after strong second quarter, with mix- shift back to Aerospace material; continue to see strong demand
• Strong bookings across end-use markets continue, with backlog at record levels

© 2024 CRS Holdings, LLC. All rights reserved.	7

3rd QUARTER FISCAL YEAR 2024 FINANCIAL OVERVIEW

Tim Lain | Senior Vice President and Chief Financial Officer

8

Income Statement Summary

$ millions, except per share amounts	Q3-24	Q2-24	Q3-23	SEQUENTIAL	YEAR-OVER-
CHANGE	YEAR CHANGE
Pounds ('000)	50,208	49,082	57,302	1,126	(7,094)
Net Sales	684.9	624.2	690.1	60.7	(5.2)
Net Sales ex. Surcharge Revenue*	553.8	485.3	491.5	68.5	62.3
Gross Profit	147.0	122.6	93.5	24.4	53.5
Selling, General and Administrative Expenses	57.0	52.8	54.2	4.2	2.8
Operating Income	75.9	69.8	39.3	6.1	36.6
Special Item included in Operating Income	14.1	-	-	14.1	14.1
Operating Income ex. Special Item*	90.0	69.8	39.3	20.2	50.7
Adjusted Operating Margin ex. Surcharge Rev. and Special Item*	16.3%	14.4%	8.0%	1.9%	8.3%
Effective Tax Rate	37.6%	22.6%	22.5%	15.0%	15.1%
Net Income	6.3	42.7	18.6	(36.4)	(12.3)

Diluted Earnings per Share	$0.12	$0.85	$0.38	($0.73)	($0.26)
Adjusted Diluted Earnings per Share ex. Special Items*	$1.19	$0.85	$0.38	$0.34	$0.81

© 2024 CRS Holdings, LLC. All rights reserved.

*Detailed schedule included in Non-GAAP Schedules in Appendix. 9

SAO Segment Summary

$ millions	Q3-24	Q2-24	Q3-23	SEQUENTIAL	YEAR-OVER-
CHANGE	YEAR CHANGE
Pounds ('000)	50,846	50,114	56,516	732	(5,670)
Net Sales	608.5	549.4	603.4	59.1	5.1
Net Sales ex. Surcharge Revenue*	483.0	416.2	411.5	66.8	71.5
Operating Income	103.5	83.3	49.0	20.2	54.5
Adjusted Operating Margin ex. Surcharge Revenue*	21.4%	20.0%	11.9%	1.4%	9.5%
Q3-24 Business Results	Q4-24 Outlook

• Record quarterly operating income results on growing sales and expanding margins
• Net sales excluding surcharge increased 16% sequentially on higher shipment volume with strong demand for high value products in Aerospace and Defense and Medical end-use markets
• Continued to build operating margin momentum with increased productivity, improving product mix and higher price realization

• Demand conditions remain strong across end-use markets, especially Aerospace and Defense and Medical
• Realize benefits of increasing productivity and optimizing capacity for higher-value product mix
• Q4-24operating income expected to be in the range of $124 million to $127 million

© 2024 CRS Holdings, LLC. All rights reserved.

*Detailed schedule included in Non-GAAP Schedules in Appendix. 10