Q4 2023 Carpenter Technology Corporation Earnings Call
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At this time I would like to turn the conference over to John <unk>, Vice President Investor Relations. Please go ahead Sir.
Thank you operator, good morning, everyone and welcome to the Carpenter Technology earnings Conference call for the fiscal 2023 fourth quarter ended June 30th 2023.
This call was also being broadcast over the Internet along with presentation floods.
Please note for those of you listening by phone you may experience, a time delay and slide movement.
Speakers on the call today, or Tony pain, President and Chief Executive Officer, and Tim Lane, Senior Vice President and Chief Financial Officer.
Statements made by management. During this earnings presentation that are forward looking statements are based on current expectations risk.
Risk factors that could cause actual results to differ materially from these forward looking statements can be found in carpenter technology's. Most recent S E C filings, including the company's report on Form 10-K for the year ended June 30th 2022.
<unk> 10-Q for the quarters in September 30th 2022 December 31st 2022 in March 31, 2023, and the exhibit attached to those filings.
Please note that in the following discussion unless otherwise noted when management discusses the sales or revenue that.
That reference exclude surcharge.
<unk> the operating margins that is based on adjusted operating income excluding special items and sales excluding surcharge.
I will now turn the call over to Tony.
Thank you John and good morning to everyone on the call today.
I will begin on slide four with a review of our safety performance.
For fiscal year 2023 are total case incident rate was 1.7.
Although one seven injury rate would rank as one of the safest metal manufacturing companies. It is not a right we've come to expect or except at Carpenter technology.
As we've discussed in previous quarters. The rate increase is largely due to the increase employees undertaking new tasks, either as new hires are transferred into new roles.
We continue to invest in additional training for any employee new to a job or task with frequent monitoring and follow up.
Our go continues to be a zero injury workplace.
Despite the increase this year, we believe it is possible and we will continue to invest in work tirelessly to achieve that goal.
Now, let's turn to slide five and a review of the fourth quarter.
More than a year ago, we set out to go to return to pre pandemic fiscal year 2019 profitability on a run rate basis by the end of fiscal year 2023.
It was an important milestone marking a white.
On our growth trajectory to doubling our operating income by fiscal year 2027.
Not only did we achieve that goal in the fourth quarter, we exceeded it.
And with increased productivity improved product mix and the realisation of higher prices, we demonstrated accelerating momentum on that growth trajectory.
Most notably the essay segment significantly exceeded expectations for the quarter.
Delivering 80 million and operating income above the outlook, we provided of $65 million to $70 million.
Further realized an operating margin of 16.8% a step up from the 11.9% in the previous quarter.
With increasing high levels of demand net sales increased across each of the in these markets.
Net sales, excluding surcharge for the quarter were up 14% sequentially and 39% compared to last year.
Driving our performance, where continued productivity improvements across our facilities, improving product mix and higher selling prices.
In addition to the strong profitability in the quarter, we generated $175 million of cash from operations and $144 million and adjusted free cash flow.
This further strengthen our liquidity as we finished the quarter with 393 million in total liquidity.
Now, let's move to slide six and the end use market update.
The first takeaway is that sales in all of the unused markets were up year over year and sequentially for the quarter.
Our near term and long term outlook for each of the unused market remains positive and record backlog levels support this outlook.
Our aerospace and defense induced market accounting for 53% of sales in the current quarter continues to ramp and.
And was up 22% sequentially and 65% year over year.
Global Aerospace traffic continues to increase pushing the supply chain to ramp production of new planes to meet the growing demand.
To support the growing demand customers across our commercial aerospace Submarkets continued to request higher shipments of material as soon as possible.
In addition, the defense Submarkets saw an increase in sales on a sequential basis driven.
Driven by next generation missile fixed wing and rotorcraft platforms.
The medical <unk> market accounting for 12% of sales in the current quarter was up 7% sequentially and up 24% year over year.
The increase in sales is driven by the continued strong customer manufacturing activity to meet the patient demand for elective surgeries.
The overall outlook continues to be positive as medical procedures are expected to grow throughout calendar year 2023 supported by strong procedures backlog.
The transportation and used market accounting for 70% of total sales in the current quarter was up 8% sequentially and up 12% compared to last year.
With high demand and low inventories of light duty vehicles build rates are expected to remain strong throughout the second half of calendar year 2023.
The energy and used market accounting for 6% of sales in the current quarter was up 22% sequentially and up 66% compared to last year.
With the growth in demand for energy continuing to exceed supply capital investment is expected to increase and as a result, the demand for raw materials solutions will rise with it.
The industrial and consumer induced market accounting for 17% of sales in the current quarter was up 1% sequentially and up 17% year over year.
And this unused market, we remained focused on high margin high growth business, including our materials solutions used in semiconductor fabrication and consumer electronics.
Now will turn it over to Tim for the financial summary.
Thanks, Tony Good morning, everyone.
I'll start on slide eight the income statements memory.
Net sales in the fourth quarter or $758 $1 million in sales, excluding surcharge totaled $560 million.
Sales, excluding surcharged increased 39% from the same period, a year ago on 19% higher volume.
Sequentially sales were up 14% on a 7% higher volume.
The higher volumes are driven by strong demand and by our improving productivity and through protocols our operations.
Consistent with the last several quarters sales growth continues to outpace volume growth, both sequentially and year over year, driven by an improving product mix and increase based prices.
Gross profit was 119 million and occurring quarter compared to $72 million in the same quarter of last year and $93.5 million in the third quarter of fiscal year 2023.
Gross profit in the current quarter is up 65% compared to the same quarter last year and up 27% sequentially.
The improvement in gross profit is primarily driven by higher sales and improving product mix and increase selling prices, partially offset by inflationary cost increases.
SG&A expenses were $56 $1 million in the fourth quarter up about $9 million from the same period a year ago.
And roughly 2 million higher sequentially the.
The increase in SG&A expenses versus the same quarter last year is primarily driven by investments and higher variable compensation accruals.
The SG&A line includes corporate costs, which totaled $22.5 million in the recent fourth quarter.
As we look ahead to the upcoming first quarter of fiscal year 2024, we expect corporate costs to be about 20% to $22 million.
Operating income was $62.9 million in the current quarter when excluding the impact of special items in the prior year quarter adjust.
Justin operating income was $14.9 million.
And in our recent third quarter operating income was $39.3 million.
Again, the improvement in profitability is being driven by the increasing productivity, enabling higher volumes along with mixed in price benefits.
Are effective tax rate for the recent fourth quarter was 21%, which is slightly below the full year effective tax rate of roughly 22%.
Earnings per share for the current quarter was 78 per share.
The results demonstrate our continued momentum supported by improving productivity and a strong demand environment.
Now turning the slide nine and RSA segment results.
Net sales for the fourth quarter, where $667 million or 477 $2 million excluding surcharge.
Compared to the same period last year net sales, excluding surcharge increased 46% on 19% higher volumes.
Sequentially net sales, excluding surcharge increased 16% on 9% higher volumes.
The year over year improvement in net sales was driven by higher shipment volumes due to productivity gains the impacts of higher prices and and improving product mix as demand across our key and use markets has strengthened even further as Tony reviewed on the market's line.
Sequentially, we continued to drive momentum in net sales as the operating efficiencies drove higher volumes combined with a stronger mix of products.
Moving to operating results.
Reported operating income of $80 million in our recent fourth quarter.
Outpacing our expectations and resulting in a significant improvement versus both the same quarter last year and our recent third quarter.
On a year over year basis. The <unk> adjusted operating income improvement of 60 million is largely due to higher sales driven by strong demand and increased production levels, which also improved cost performance.
This was coupled with an improving product mix and price increases.
These improvements are evident in the adjusted operating margin, which has increased to 16.8% in the current period as compared to 6.1% in the same period a year ago.
On a sequential basis operating income improved $31 million.
The improvement was driven by increased volumes as we continue to ramp our operations to meet the strong demand.
Looking ahead the team remains focused on increasing production levels and production flow to maximize the capacity for high value product mix, while managing production schedules to ensure preventative maintenance is performed.
Given the strength of demand incremental improvements in our productivity represents a significant opportunity to further accelerate profitability and we're pushing to exceed our targets in this area for the coming quarters.
Based on current expectations, including productivity increases and planned preventative maintenance, we anticipate <unk> will generate operating income in the range of 72% to $77 million in the upcoming first quarter of fiscal year 2024.
Now turning to slide 10 in our Pep segment results.
Net sales in the fourth quarter of fiscal year, 2023, where $118 7 million, where 107 $6 million excluding surcharge revenue.
Net sales, excluding surcharge increased 16% from the same quarter last year and 4% sequentially.
The year over year growth in net sales reflect increased volume is driven by strong demand conditions, primarily in our dynamed titanium business.
More specifically in our dynamic titanium business net sales increased in both the aerospace and defense and medical and use markets from the same quarter a year ago.
The sequential increase in net sales primarily reflects increases in both dynamed titanium sales and additive sales to the aerospace and defense and use market.
In the current quarter Pep reported operating income of five $9 million.
This compares to adjusted operating income of $8 $2 million in the same quarter, a year ago and operating income of $10.2 million in the third quarter of fiscal year 2023.
The reduction in operating income in the current quarter is primarily the result of near term timing of operating costs versus production flow and our dynamed titanium business.
As I mentioned demand for dynamics materials continues to strengthen and we are focused on matching production activities to more closely aligned to our spending via improving productivity and flow of materials throughout the operations.
We currently anticipate that the Pep segment will deliver operating income in the range of $10 million to $11 million for the upcoming first quarter of fiscal year 2024.
Now turning the slide 11, and a review of adjusted free cash flow.
In the current quarter, we generated $175 million of cash from operating activities.
Where a $170 million sequential improvement.
The increase is largely attributable to the higher earnings combined with an inventory reduction of $73 million in the current fourth quarter.
As we had signalled we reduced inventory in the second half of the fiscal year, driven by strong shipments improving productivity and a more balanced flow of materials across our operations.
And the fourth quarter of fiscal year 2023, we spend $31 million capital expenditures and finished fiscal year 2003, with 82 million and capital expenditures.
With those details in mind, we generated adjusted free cash flow of $144 million in the fourth quarter of fiscal year 2023.
As a note in the current quarter, we've modified the definition of adjusted free cash flow to exclude dividends and have updated prior periods to be consistent with this new presentation.
Our liquidity remains healthy and we ended the current quarter with total liquidity of $393 million, including $45 million of cash and $348 million of available borrowings under a credit facility.
Let's move to slide 12 to talk about selected fiscal year 2024 guidance.
We are providing the selected information to help modeling for our fiscal year 2024.
Depreciation and amortization is expected to be $131 million in fiscal year 2024 were essentially flat from fiscal year 2023.
We expect to spend about a 125 to a $130 million in capital expenditures in fiscal year 2024.
We view this as a normalised annual capex spend for our business as operations continue to ramp up.
This estimate includes amounts necessary for maintenance type capex, but also allows for opportunities to make targeted investments, where we can expand capabilities in select areas as well as expand capacity and constrained flow paths.
Moving the pension contributions, we expect to make $11 million of pension contributions to our U S qualified plans.
In fiscal 2024.
We're non-cash net pension expense, we expect net pension expense to increase to $24 million compared to $20 million a pension expense in fiscal year 2023.
For clarity about $10 million of the pension expense for next year will be included in operating income similar in fiscal year 2000 2003 the.
The balance or approximately $14 million will be reported in other income expense through the next fiscal year.
Next interest expense is estimated to remain flat to slightly lower at about 52% to $54 million in fiscal year 2024.
Lastly are reported full year effective tax rate was about 22% in fiscal year 2023.
For fiscal year 2024, we expect the effective tax rate to be in the range of 22% to 24%.
With that I will turn the call back to Tony.
Thanks, Tim.
And now to recap our fourth quarter of fiscal year 2023.
With operating income of $62.9 million, we exceeded our goal to return to pre pandemic levels of profitability on a run rate basis by the end of fiscal year 2023, a goal we communicated over a year ago.
The current quarters result represented a significant step forward from the previous quarter's operating income of $39.3 million demonstrating increasing operating momentum.
Driving the performance was improved productivity and capacity optimization, a stronger product mix and higher realized prices, particularly in the segment.
We are operating in a strengthening demand environment with positive near term and long term outlook in each of the unused markets.
Notably the aerospace Submarkets continued to accelerate the recovery.
With strong demand and improved productivity, we saw sales increase across each of the unused market.
And we generated $175 million of cash from operations further strengthening our liquidity position.
Taken all together with increasing volumes improving mix, increasing prices and improving productivity, we are accelerating our momentum heading into fiscal year 2024.
Let's turn to the next slide and take a closer look at our near term and long term outlook.
First let's review our outlook for the first quarter of fiscal year 2024.
On our last earnings call I said that we expected operating income to be flat sequentially in the first quarter of fiscal year 2024.
Representing a significant improvement over the historical trend of a sequential Q1 declined.
For the first quarter of fiscal year 2024, we expect to be in the range of 61 to 67 million of operating income.
This would put us flat to slightly up sequentially. Despite the fact that we outperformed the fourth quarter expectations.
Again, this would represent a meaningful step up compared to the historical trend of a sequential decline in profits in the first quarter of the fiscal year.
And it would exceed the operating income from the first quarter of fiscal year 2020, our most profitable first quarter in recent history.
This outlook bills and no momentum we generated in the last quarter.
As discussed throughout this call, we see strengthening demand across the <unk> markets with customers wanting more material sooner.
We saw a significant step up and productivity last quarter and are driving to further improve output across our facilities.
Our fiscal first quarter is when we have historically performed or more significant preventive maintenance activities.
This year given the band environment, we are actively managing preventative maintenance schedules to protect our unique assets, while also maximizing shipments.
Now, let's take a look at the longer term earnings growth projection.
If you recall from our Investor day in May I discussed the trajectory of our earnings growth between fiscal year 2023 and fiscal year 2027.
The chart on the right demonstrates that.
These figures imply a 40% <unk> on the operating income from fiscal year 2023 through fiscal year 2027, a very strong growth target.
I also noted that this growth wasn't going to be back end loaded and that we expected to make significant progress toward this goal in fiscal year 2024.
And clearly with momentum from our fourth quarter results and.
And strong first quarter guidance, we're setting ourselves up to take that meaningful step toward this goal in fiscal year 2024.
Additionally, we expect the second half of fiscal year 2024 to be stronger than the first half which is consistent with historical performance.
And we are working to accelerate our productivity gains to push earnings even higher.
This is an exciting time for Carpenter technology macro trends are driving increased demand across are induced market for our broad portfolio a specialized solutions.
We have leading capabilities with a difficult to replicate system of assets and we continued to drive improved productivity to unlock additional capacity to capture the demand.
This quarter, we demonstrated a significant improvement in our operations and looking ahead, we are well on our way to achieving our long term goal.
Thank you and now I'll turn the call back to the operator.
Thank you we will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad. If you are using a speaker phone. Please pick up your handset before pressing the keys.
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At this time, we will pause momentarily to assemble our roster.
Today's the first question comes from Khartoum <unk> with television talent. Please proceed.
Hey, Thank you good morning, guys.
When I got home.
Had a couple of questions Tony maybe.
Maybe I missed it on the opening remarks that the backlog in the quarter out of that trend.
Sandwich later.
Yes, the backlog was up 4% sequentially, 38% year over year.
That number is going to become less relevant Gotham because we've closed the order book a couple of times now already used to control. The flow. So you are at a very strong level.
Anticipated staying there for quite some time.
Okay. That's helpful and then.
Tony I hate to ask but.
You have any directional commentary on the December quarter, just given.
Sure.
Kind of not you you're bucking normal seasonal trends in the September quarter, but I'll need to hit the maintenance dynamic. So I'm just curious what are you thinking for December directionally.
Yeah Directionally our goal is to you know the.
The floor would be the first quarter that we just guided too.
As you well know historically the second half is going to be a jump up for us, especially since we see significant ramps and productivity.
Again got them, what really drives the message here is that the demand is there in many ways. That's locked in so it's really all about our ability to continue to improve the productivity. So I would anticipate.
Our goal is for another step up and then hitting the second half.
And very good position.
And just following up on the productivity comments, what changed sequentially, what kind of explained to the throughput increase.
What how I think the productivity, yes, specifically NSA elder team is doing a really nice job just eliminating bottlenecks understanding the flow remember the products that we're making now are quite different than what they were in 2019 and a lot of people don't realize that.
Customers have moved to different diameters, there's different specifications different testing that's required now that changes the production for quite a bit that's a big challenge that they've been able to get on top of and number two.
Just another quarter, we've made some great hire some great operators and they just got another a quarter under their belt.
Learning that system learning how to operate safely and you see it come through in the numbers.
And lastly on the performance Engineering segment.
A little bit below the expectation he laid out could.
Could you elaborate on what explained to that.
It's one of those items that we'd never speak about gossip and quite frankly.
Whole company it wasn't material, but with the size of pet that was <unk> little Miss aligned with.
The cost and the production flow I see that coming back that's not a market problem.
And we see perp quite frankly, as we get through FY 24 could see a big improvement in their profitability. So no red flags not an issue it's disappointing not.
Not happy with the way, we paste our product flow for the quarter.
But we will get that back next quarter.
Okay, I will turn it back.
Thank you Sir.
[noise]. The next question comes from Josh Sullivan with a benchmark company. Please proceed.
Okay. Good morning good.
Good morning, Josh I, just wanted to I just wanted to follow up on that comment.
Comment about closing the order book.
When you close the order book, what's the gating factor to reopen it has the customer's meeting your price or is it your ability to supply.
Neither one it's really about how far out those orders are right. So it's about will open it back up once you know for example, another quarter goes by in Europe .
12 months out in advance and say, Okay. Now it's time to announce time to open it up again.
So it's early from a timing standpoint, not to get too far ahead of us to get orders too far out there.
And then just to follow up on top as well.
Dynamic that you are talking about did it impact the.
Volume of titanium lawyer that was supplied to the market or was it more related to to a carpenter cost issue.
Yeah, not too and.
Impact our sales we got the sales out it's just where you have the product and the process flow and how your cost accounting works again.
This decision to store he really of the quarter. This is small event that stands out because we have a smaller pep segment. So.
Not an issue here at all for us.
Got it.
Interested high value aerospace products take more and more of your capacity can you talk about your non aerospace markets. What's the ceiling on how far you can push that pricing mix or maybe historically when aerospace was commanding significant sure how much of a mix shift could you get out of those non aerospace markets.
Well I'll answer it this way we have some very attractive markets outside of aerospace medical been at the forefront, we're looking for ways to grow our medical business now.
Excellent margins excellent customers. So we want to continue to grow that market on the energy side, you have customers now competing to get time on the mill with aerospace customers. For example, so margins have gone up significantly in the.
The energy market Josh.
Different from what we saw back in 2018 2019.
So that's a market that will continue to stay active in albeit at a much lower level than aerospace for sure and.
When you look at our industrial market those are very good Submarkets force as well as received very high and vows and fittings and very unique and complex.
Applications. So we're very happy that we have a broad portfolio, we think it insulates us from different macro changes.
And the key is that we're always going to operate at the very very top of the pyramid and very difficult environment very unique applications. So we're looking across all of our markets and how we can move even higher up at that supply chain.
Maybe.
Maybe just one last one on free cash flow.
What'd, you think about the cadence throughout 2024 any difference or just when your thoughts that would be great. Thank you.
Yeah, well, we have the opportunity as you well know.
As we talk to an investor day to generate significant amount of cash now.
We are going to be prudent throughout the year, because we want to make sure we serve our customers to the best of our ability, especially in this environment.
And there could be times that in a quarter to weigh a quarter ends that will build some inventory because we have the opportunity and our schedules and we're going to do that so you could see some quarters that.
That are down a bit because of that.
Or just the opposite so I mean at the end of the day, we Wanna, We Wanna serve our customers the best we can.
Better than most over that three to four year period, that's going to be significant cash generation. So I think that's the best way to look at it.
Great. Thank you for the plan.
Thank you Josh.
As a reminder, if you do have a question. Please press Star then one.
Our next question comes from Michael the shock with Keybanc capital markets. Please proceed.
Hey, good morning, good morning.
First I wanted to ask on your one Q guidance I know, that's typically a heavier plan maintenance quarter and weaker seasonality and you called out planned maintenance is a priority. So I want to better understand the moving pieces that drive that flat to up EBIT guide is there gonna be some sort of element of seasonality.
Maybe on the volume side, that's going to be offset by pricing mix.
Given some of the plan maintenance that you're taking.
Well I think guiding the 61% to 67 answers. Your question right I mean, usually the first quarter is down significantly viewed causes seasonality now off of a very.
Very strong fourth quarter were saying it's flat.
Two sequentially up so that kinda takes off the plate any issues around seasonality.
But it's the seasonality on the volume site is going to be similar to what you've seen in the past and and the pricing and mixes can offset that.
No.
You said I think this puts to rest any seasonality for the for the first quarter, you've got customers now that are wanting this.
As much material as we can get them sooner of course, there's gonna be some.
Work stoppages or whatever from some of our customers as they do those but the demand environment now just overshadows that.
So I don't I don't see that I think the gating factor are the factors you look over the next several quarters.
From results because demand is so robust that I can ship everything I produce.
And many times the difference between quarter to quarter is going to be when I strategically take preventative maintenance.
Ridges, that's going to be one of the driving factors.
As well as continuing to increase productivity.
Got it and then an essay Oh, how do you see margins their progression progressing throughout fiscal 2004.
Four Q as a very strong quarter and I know you have some price increases flowing through on a lag and just wondering how much how much further do you CSA O margins progressing and what needs to occur for that to happen.
I think it was approximately a five percentage point increase quarter over quarter of this time prior.
Prior to the pandemic, we essay O as in the 20% range.
Our target to get back there that we have line of sight to that and.
You know the where we're at right now where the the market is so strong it really is about our ability to drive productivity, which.
The translation of that is higher margins.
We are running.
Many pieces of our equipment above nameplate capacity and will continue to find ways to get more and more avenue, the equipment and very efficient manner. So.
That's what that's what they do out on the manufacturing for everyday is trying to to get more and more out of that system. Because we have very good customers that want it.
And then lastly for me.
Engine sales could you provide that number for the quarter, either either sequentially or year over year.
Jet engines.
Up 92% year over year, 34% sequentially.
Okay.
Alright, thanks, guys.
Thank you.
The next question is a follow up from gotten Cahill was TV Cowan. Please proceed.
Yeah, Tony you mentioned, the medical demand being pretty strong what have you seen in terms of.
Aerospace fastener demand.
787 related titanium and non titanium.
Feedstock.
Both of those are increasing forest got them I can tell you that sequentially fastener submarket was up 31% year over year, 135%.
Okay, and and you expect that to continue I mean at least that these absolute levels to continue to arise.
Thank you I'll look we'll start looking at sequential right because the year over year, it's going to fall off in many cases that year year over year, we're still compared to.
Very low quarters, obviously, a year ago. So his nose roelof I think will focus on the sequential growth.
But we know we're not at the at the top there as far as satisfying demand across many of the aerospace submarkets.
Mm don't.
Hello, you've talked about pricing being more favorable than not clothing business out too far in advance as a result.
Could you remind us on the <unk>.
<unk> how much of the business is under longterm contract.
Maybe how much of that business turns over every year in terms of pricing.
Just to give us a sense of what the potential tailwind wood, yeah. It's a difficult years, yeah. It's a difficult question you know the contracts are spaced out differently. It seems like every year year and a half there is a.
Significant one that comes up I will tell you all of the <unk>.
Primary customers.
Customers that you would consider the largest and most strategic industry are under some form of longterm contract with us.
Okay, I guess and so given that you expect kind of pricing to continue to be a tailwind as we move out 12 months 24 months et cetera or.
Yeah have we had the reset and from here just kind of state yeah. There's still some over the next year that will reset. So there are still significant contracts to be negotiated over the next.
12 months.
And can you give us an update on Athens, I know your view, though the production system across.
Uh-huh the three major facilities, but.
Any sense for like utilization levels how much.
Where are you at Athens with respect to output.
Uh-huh, where do you like to pay over the next year.
Still ramping up Athens, obviously, we run.
Set of our aerospace business through there.
The energy business that I spoke about earlier getting more attention there and we do a fair amount of conversion work through the air as well in terms of ramping up I will tell you right now we're still we're still hiring people at Athens, So we still have a.
A fair amount of people that we that we want to hire in Athens, right now maybe another 10% on the current workforce debated even pushed more value amount of that plan.
And is it still kind of a lower cost facility as as you have been ramping it is proving now to be that way.
Well, it's a lower cost facility just because the flow is much more compact and much more efficient it's a straight line so that by itself.
Advantages over our other facilities.
They share some of the same cost when it comes to energy.
Supplies and some of that but certainly from a from a flow standpoint is more efficient.
Okay.
And you know just lastly.
You're not a huge beneficiary of <unk>.
Being kind of displaced but.
In the titanium wire coil world have you seen any kind of inroads maybe.
Maybe with the medical customers, where they had some traction switching over to carpenter or.
Does it <unk>.
We see.
Large increase in our demand.
In the titanium side, regardless of what's going on with the MP up right. So we're driving market share mainly because of the solutions that we provide certainly out there in the market I mean, we're not military's of titanium. So this hovious M. P O C.
Scenario really plays too.
Areas.
Entities that milk titanium and certainly you're seeing a shift there.
Yes, but not so much on the downstream where they.
They stood up of facility.
Seven or eight years ago, I'm not trying to that may be.
Where at where at where.
Sold out levels customers want anymore, and it has nothing to do with <unk>. We have a good product to market is growing and they are looking to carpet of technology to be to be that supplier.
Last one for me just any update on soft magnetics and.
Automotive penetration there.
Yeah. Thanks I. Appreciate your question allow that gets lost because aerospace is so dynamic right now but.
We're doing really well as far as filling up at that new mill there in writing a lot of interest from.
Eva tall crowd as these.
Companies tried to get FAA certification, even quicker so you're seeing a lot more activity there and we're very.
Very happy with the pace there, obviously, that's a little longer term than the current aerospace market we have today.
But we feel it's important for us to always be involved in some of these other submarkets that will have significant growth may be past. The 12 month period that we're always looking at the continued to enhance our earnings going forward.
Thanks, a lot guys I appreciate it thanks.
Thanks for the questions.
The next question is a follow up from Josh Sullivan with the benchmark company. Please proceed.
Yeah, I just wanted to follow up on that as well so the the consumer electronics demand you call out in the presentation is that <unk> that.
Stuffy nose without strict no <unk> well, it's different right. There's there's it's really on electrification side I just mentioned <unk> is one one area that's not a lot of volume in that area right now as you well know because.
That's gonna be muted until they get FAA certification, but that's one area that is a very attractive for us going forward and in them more more immediate mode.
That's not having the same impact obviously, it's more on some of the traditional electrification areas.
That this driving that growth and on the semiconductor side, it's still strong.
Yeah on the semiconductor sediments some others.
Material providers will call that out as a as a softer market. So just curious the strength you seem there is that is that on some of these new capital builds or just where the semiconductor market have you seen the strength.
I've I've seen that we have not experienced that at all remember our product goes into.
Manufacturing the equipment that then makes the semiconductor still a very harsh environment and that's what our product goes into and we've we've not seen any.
Any softness in that area.
Okay. Thank you.
Thank you.
At this time.
I'm showing no further questionnaires in the queue and this does conclude our question and answer session I would now like to turn the conference back over to you John Hewitt for any closing remarks.
Thank you operator, and thank you everyone for joining us today for our fiscal year 2023 fourth quarter conference call have a great rest of your day.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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