Carpenter Technology Corporation (CRS) Earnings Call Transcript & Summary

Welcome to the 2020 Annual Meeting for Carpenter Technology Corporation. Our host for today's call is Tony Thene, President and CEO. [Operator Instructions] I will now turn the call over to your host, Mr. Thene, you may begin.

Good morning. The company is excited to be hosting our meeting virtually, which allows us to potentially reach a greater number of our stockholders. Following the conclusion of the business to be conducted at this meeting, we will finish by answering questions that are presented. Before we get to the business of the Annual Meeting, I just wanted to provide a few opening comments regarding the fiscal year 2020. Clearly, the COVID-19 pandemic has created significant challenges to our business as well as the global economy. Our response to these challenges has been impressive. We lean heavily on our established safety culture and highly engaged workforce to quickly adapt to the current environment and are extremely proud of the fact that we have been able to continuously and safely operate our facility since the beginning of the pandemic. Our resiliency in the face of the pandemic has enabled us to support our customers' needs for mission critical, never-fail products. We have also taken meaningful actions to reduce our costs and further strengthen our liquidity position. I am confident that the actions we have taken have made us a stronger company, both today and in the future. Lastly, I wanted to thank you for your continued support and confidence in Carpenter Technology. With that, I will turn it over to Mr. Greg Pratt, the Chairman of the Board, to conduct the business portion of our meeting.

Good morning. I am Gregory A. Pratt and I am the Chairman of the Board of Carpenter Technology Corporation. It is 11:00 a.m. Eastern Standard Time on October 13. And in accordance with the notice of the meeting, I call this meeting of stockholders officially to order. Before proceeding with the business of the meeting, I would like to introduce the directors present with us this morning. I will introduce them based on their tenure on the Board, starting with the most senior member. Stephen M. Ward, Jr. has been a Director since 2001. Mr. Ward is the retired President and Chief Executive Officer of Lenovo Corporation and is the chairperson of the Board's Corporate Governance Committee. As I mentioned earlier, I am Gregory A. Pratt, I have been a Director since 2002 and served as Chairman of the Board. I also served as President and Chief Executive Officer of the company in the fiscal years 2010 and 2015. I am nominated for a 3-year term today. I. Martin Inglis, has been a Director since 2003. Mr. Inglis is the retired Executive Vice President and Chief Operating Officer of Battelle and serves as a chairperson of the Audit Finance Committee. Dr. Jeffrey Wadsworth has been a Director since 2006 and is the retired President and Chief Executive Officer of Battelle. Dr. Wadsworth, serves as Chairperson of the Science and Technology Committee. Robert R. McMaster, who will be retiring from the Board today has been a Director since 2007 and is retired Chairman and Chief Executive Officer of Westward Communications and a prior area managing partner at KPMG. I would like to extend our sincerest thanks to Mr. McMaster for his many years of valuable service and beneficial contributions, both to the company and to the Board of Directors. Steven E. Karol, who is nominated for a 3-year term today, has been a Director since 2012 and is the managing partner and founder of Watermill Group. Mr. Karol is Chairperson of the Strategy Committee. Tony R. Thene, who is also nominated for a 3-year term today, has been a Director of the company since 2015, when he also became Carpenter Technology's President and Chief Executive Officer. Kathleen Ligocki has been a Director since 2017. Ms. Ligocki serves as CEO of Agility Fuel Solutions, and she is Chairperson of the Board's Compensation Committee. Dr. Viola L. Acoff, has been a Director since 2019. Dr. Acoff is the associate Dean for undergraduate and graduate programs at the University of Alabama, College of Engineering. Dr. A. John Hart has been a Director since 2019, Dr. Hart is a Professor of Mechanical Engineering at the Massachusetts Institute of Technology. Additionally, we are joined here today by [ Chris Grmac ] of PricewaterhouseCoopers, our independent auditors. I would also like to introduce James Dee, who is Carpenter Technology's Senior Vice President, General Counsel and Secretary. Mr. Dee will act as Secretary of this meeting, and I will ask him to deal with the meeting's procedural issues.

Thank you, Mr. Chairman. Thank you. The company has appointed Mr. [ Thomas Ty ] of Broadridge Financial Services to act as inspector of elections. [ Mr. Ty ] will assist with the tabulation of proxies and ballots at this meeting. [ Mr. Ty ] has previously signed an oath to execute his duties as inspector with strict impartiality and to the best of his ability. This oath will be filed with the records of this meeting. After the formal meeting has been adjourned, we will provide time for general questions. Only validated stockholders may ask questions in the designated field on the web portal. [Operator Instructions]. Please note that no one attending this meeting via the webcast or telephone is permitted to use any audio recording device. The Board of Directors fixed August 14, 2020 as the record date for determining stockholders entitled to vote at this meeting. An affidavit has been delivered attesting to the fact that the documents, including the notice of this meeting were mailed on or about September 17, 2020, to all stockholders as of the record date. The stockholder list shows that as of the record date, there were 47,946,758 shares of common stock outstanding and entitled to vote at this meeting. We are informed by the inspector of elections that there are represented in person or by proxy shares of common stock representing 43,957,296 votes or approximately 91.67% of the voting power on the record date. Because more than a majority of Carpenter Technology's outstanding shares of common stock are represented here today, a quorum is present. The meeting is duly constituted, and we may proceed with the business of the meeting.

Thank you, Mr. Dee. Now I will present the matters to be voted upon. The first proposal to be acted upon by the stockholders is the election of 3 directors to serve for a term of 3 years. In accordance with Carpenter Technology's bylaws, stockholders desiring to nominate directors must provide advance written notice prior to the Annual Meeting. Because no stockholder notices of director nominations were received this year, we will only entertain a motion to nominate the nominees listed in the proxy statement. The persons nominated by the Board of Directors for election at this meeting are Steven A. Karol, Gregory A. Pratt and Tony R. Thene. Proposal 2 is the approval of the appointment by the Board of Directors of PricewaterhouseCoopers LLP as Carpenter Technology's independent registered public accounting firm for fiscal year 2021. Proposal 3 is an advisory vote to approve the compensation of our named executive officers. Our stockholders previously indicated that their preference was to hold such a vote on an annual basis, and the Board has elected to do so. Although this is a nonbinding vote, the Compensation Committee and the Board will consider the results of the vote when making future compensation decisions. The final proposal submitted for stockholders' actions this morning is the approval of the amended and restated stock-based compensation plan for officers and key employees. The polls for the matters to be voted on at this Annual Meeting are now open. Most stockholders have already submitted proxies or voted by telephone or Internet. Any stockholder who has not yet voted or wishes to change their vote, may do so by clicking on the voting button on the web portal and following the instructions there. Stockholders who have previously [ submitted ] proxies or voted via telephone or Internet and do not want to change their vote, do not need to take any further action. [Voting]

Now that everyone has had an opportunity to vote, I now declare the polls for the 2020 Carpenter Technology Annual Stockholder Meeting closed. Mr. Dee, do we have preliminary voting results?

We do. We have been informed by the inspector of elections that the preliminary vote report shows that the nominees for election to the Board have been duly elected for 3-year terms. The independent registered public accounting firm of PricewaterhouseCoopers has been appointed to audit the financial statements of the company for the fiscal year ending June 30, 2021. The advisory vote on the compensation of the company's named executive officers has been approved, and the amendment and restatement of the Carpenter Technology's stock-based compensation plan for officers and key employees has been approved by the stockholders. We will be reporting the final vote results in a filing with the SEC.

Thank you, Mr. Dee. There being no further business to come before the meeting, the 2020 Annual Meeting of Stockholders of Carpenter Technology Corporation is now adjourned. At this point, we would like to open things up for stockholders' questions and comments. Please feel free to enter any questions you may have on the web portal, if you have not already done so. Also, please note that only questions -- the only questions that are germane to the meeting and appropriate to the company related topics will be addressed.

Mr. Chairman, we have no questions submitted.

Thank you very much, Mr. Thene. So hearing that there are no questions, we will bring the meeting to a close. Thank you, everyone, for your participation. Thank you very much, and have a great day, a safe day. Bye now.

This now concludes the meeting. Thank you for joining and have a pleasant day.