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Carpenter Technology Reports Second Quarter Results

  Carpenter Technology Reports Second Quarter Results

  *Earnings per share of $0.62, up 19% versus prior year.
  *Second quarter net sales of $533.5 million. Net sales excluding raw
    material surcharge up 30% from a year earlier on 28% higher volume.
  *Latrobe contributed $13.2 million of operating income in the second
    quarter, or $0.05 per share accretion.

Business Wire

WYOMISSING, Pa. -- January 31, 2013

Carpenter Technology Corporation (NYSE:CRS) today reported net income of $33.0
million or $0.62 per diluted share for the quarter ended December 31, 2012,
which was up from $23.6 million or $0.52 per share in the prior year second
quarter.

“We are continuing to see strong end market demand for our Premium and
Ultra-Premium products, improving overall product mix, and delivering higher
than expected Latrobe synergies,” said William A. Wulfsohn, President and
Chief Executive Officer. “At the same time, we see weaker demand for lower
value mill product lines and destocking in the titanium medical supply chain.
We currently expect a full year operating income improvement of 20 to 30
percent versus our last fiscal year, with strong second half revenue and
earnings. We continue to believe that our sustained investment in aerospace
and energy markets will continue to drive profitable growth over the next
several years.”

Fiscal 2013 operating income growth projections exclude:

  *Any impacts from the previously announced potential sale of the
    distribution businesses.
  *Expected one-time impacts of about $3 million for various restructuring
    opportunities - mainly Latrobe-related ($0.3 million already expensed in
    YTD results).
  *Up to $3 million for system inventory consulting fees communicated as part
    of the Latrobe deal economics ($1.6 million already expensed in YTD
    results).

Second Quarter Results

Financial highlights for the second quarter of fiscal year 2013 include:

(in millions, except per share         2Q        2Q        YTD        YTD
amounts                                                          
                                       FY 2013   FY 2012   FY 2013    FY 2012
& pounds sold)
Net Sales                             $533.5   $431.1   $1,078.5  $845.2
Net Sales Excluding Surcharge (a)     $430.7   $330.3   $871.5    $643.9
Operating Income Excluding Pension
Earnings, Interest and Deferrals and  $60.7    $49.9    $130.3    $98.9
Acquisition Related Cost (from
transaction)(a)
Net Income Attributable to Carpenter  $33.0    $23.6    $72.2     $47.4
Diluted Earnings per Share            $0.62    $0.52    $1.35     $1.05
Net Pension Expense per Diluted       ($0.21)  ($0.13)  ($0.42)   ($0.27)
Share (a)
Free Cash Flow (a)                    ($51.6)  $3.7     ($154.2)  ($105.5)
Pounds Sold (000) (b)                 62,582   49,042   126,596   96,066

(a) non-GAAP financial measure that is explained in the attached tables

(b) excludes pounds sold through the distribution businesses

Net sales for the second quarter were $533.5 million, up 24 percent from the
prior year. Excluding surcharge revenue, net sales were $430.7 million, up 30
percent from a year ago on 28 percent higher volume, due largely to the
acquisition of Latrobe. Excluding the Latrobe impact, second quarter net sales
excluding surcharge revenue were up 5 percent on 2 percent higher volume.

Specialty Alloy Operations (SAO) segment net sales excluding surcharge revenue
increased 7 percent on 1 percent higher volume compared with the fiscal year
2012 second quarter. Most of this growth occurred in high value Ultra-Premium
and Premium products. SAO operating income was $49.6 million, with a 17.9
percent operating margin on net sales excluding surcharge revenue.

The Latrobe segment, which currently includes the Latrobe and Mexico
distribution businesses that are potentially going to be divested, contributed
$13.2 million of operating income in the quarter, with a 13.0 percent
operating margin. Latrobe continues to perform ahead of pace on announced deal
economics due to strong progress on operational synergies.

Performance Engineered Products (PEP) segment sales increased 13 percent in
the same period, due largely to the inclusion of the Specialty Steel Supply
(SSS) energy distribution business acquired in connection with Latrobe. PEP
operating income was $8.9 million, with a 9.7 percent operating margin.

Gross profit was $102.6 million compared with $84.3 million in the fiscal year
2012 second quarter. The higher gross profit was driven by the addition of
Latrobe, and improvement in SAO due to a higher profit per pound from a richer
product mix and higher prices.

SG&A in the current quarter was $49.9 million or 11.6 percent of net sales
excluding surcharge revenue, compared with $38.0 million or 11.5 percent of
revenue excluding surcharge for the second quarter of fiscal year 2012. The
increase in spending primarily reflects the addition of Latrobe-related
overhead costs.

Operating income for the second quarter was $52.7 million compared with $43.9
million a year earlier. Excluding surcharge revenue and pension earnings,
interest and deferrals (EID), operating margin was 14.1 percent compared to
14.4 percent in the fiscal year 2012 second quarter.

Interest expense in the quarter was $4.4 million compared to $5.8 million in
the year-ago period due to the inclusion of capitalized interest as part of
the Athens facility construction project.

Other income was $1.3 million compared to $0.4 million in the fiscal year 2012
second quarter due principally to the gain recorded from unwinding the Sandvik
powder joint ventures.

The provision for income tax was $16.4 million or 33.1 percent of pre-tax
income compared to $14.7 million or 38.2 percent of pre-tax income in the
second quarter of fiscal year 2012. The second half tax rate is projected to
be 33.5 percent.

Net income attributable to Carpenter was $33.0 million or $0.62 per diluted
share. Net income attributable to Carpenter in the same quarter a year ago was
$23.6 million or $0.52 per diluted share.

Free cash flow, defined as cash from operations less capital expenditures,
dividends, and the net impact from the purchase and sale of businesses, was
negative $51.6 million in the current quarter. Strong net income was offset by
higher capital spending, largely related to the Athens facility construction,
pension contributions, and increased working capital levels.

The Company continues to plan for a debt refinancing transaction in the third
fiscal quarter that would replace the $100 million May 2013 debt maturity and
could provide the opportunity to make a discretionary pension contribution of
up to $165 million that would eliminate similar required cash contributions
over the next several years. As a result of the net positive impact of these
actions, the proceeds from the anticipated distribution business sale, and
inventory reduction versus the original planned level, the Company expects to
end the fiscal year with a cash and liquidity position that is near its
beginning fiscal year position, despite $350 million of capex investment for
Athens and other projects.

The debt refinancing and discretionary pension contribution will drive a
one-time negative earnings impact in the current year, which is expected to be
approximately $0.13 per share from related higher interest and income tax
expense. Beginning in fiscal year 2014, and continuing for the next several
years, these actions are expected to drive an annual earnings improvement of
approximately $0.08 per share and increase free cash flow by about $17 million
per year.

Markets:

Aerospace & Defense market sales were $250.3 million in the second quarter, up
30 percent compared with the same period a year ago. Excluding surcharge
revenue, aerospace & defense sales were up 36 percent on 83 percent higher
volume (or up 10 percent on 8 percent higher volume without Latrobe). Demand
for Carpenter’s and Latrobe’s Premium and Ultra-Premium aerospace products
remains strong. Demand for super-alloy engine materials remains strong due to
higher build rates and initial pull through for new engine programs. Demand
for nickel and stainless fastener material increased year-over-year for the
tenth consecutive quarter – while shipments of titanium fastener material set
a new second quarter record, up slightly from the very strong year-ago period.
The addition of Latrobe’s structural, bearing and other complementary products
also contributed to the year-to-year growth rate.

Energy market sales of $79.5 million increased 30 percent compared to the same
period a year ago. Excluding surcharge revenue, energy market sales increased
33 percent (or up 6 percent without Latrobe and SSS). Demand growth for
material used in oil & gas applications outpaced weaker demand for power
generation materials. Despite lower North American rig activity, demand for
Carpenter materials used in oil & gas drilling increased as Amega West
remained strong by expanding its footprint and gaining share. In addition,
there are a significant number of wells that have been drilled and still
require completion, which is leading to growth of Ultra-Premium products.
Build schedules at major industrial gas turbine manufacturers are pointing
toward anticipated stronger second half growth in that sector after temporary
slowness in this area.

Medical market sales were $26.6 million in the second quarter, down 16 percent
from a year ago. Excluding surcharge revenue, medical market sales decreased
14 percent on 21 percent lower volume. Uncertainty surrounding pending
legislative impacts and economic sentiment continues to affect short-term
demand for medical materials. In addition, as largely seen in the PEP segment
results, continued inventory destocking within the titanium supply chain is
being influenced by falling titanium prices. Longer-term, Carpenter remains
well positioned to support the anticipated positive demand trend for medical
market materials.

Transportation market sales were $31.8 million, an increase of 1 percent from
a year earlier. Excluding surcharge revenue, transportation sales increased 8
percent on 1 percent lower volume (or up 5 percent on 3 percent lower volume
without Latrobe). Increasing fuel efficiency standards require automobiles to
become lighter and engines to operate at higher temperatures. These design
specifications continue to create demand for higher-value materials used for
turbo-charger, gasket, valve and fuel system applications. This has led to
revenue growth outpacing volume growth. The recent announcement with United
States Steel to develop additional high volume transportation applications
from Carpenter’s proprietary high-strength, low-weight alloy, Temper Tough^TM,
further demonstrates Carpenter’s strong growth opportunities within this
end-market.

Industrial & Consumer market sales were $111.6 million in the second quarter,
up 6 percent compared with the same period a year ago. Excluding surcharge
revenue, sales increased 13 percent on 8 percent higher volume (or up 4
percent on 1 percent lower volume without Latrobe). This market remains more
sensitive to economic uncertainty which is reflected in the powder metal
portion of the PEP segment and Value products within Latrobe. Carpenter’s
strategy to focus on specialized, high value niche applications with
strategically important customers has offset overall demand softness in more
commodity type products and distributor channels.

International sales in the second quarter were $158.1 million, an increase of
11 percent compared with the same quarter a year earlier - driven by a 30
percent increase in Asia/Pacific sales, a 49 percent increase in sales to
Canada and a 3 percent increase in European sales. Growth in Asia/Pacific was
led by strong demand from the aerospace end market as the supply chain grows
in that geography. Growth in Europe and Canada was led by demand for materials
used for aerospace and oil & gas applications.

Pension Effects

During the second quarter, the Company recorded expense associated with its
pension and other post-retirement benefit plans of $17.1 million or $0.21 per
diluted share. Pension expense in the prior year second quarter was $9.8
million or $0.13 per diluted share. The Company made cash contributions of
$9.8 million during the second quarter of fiscal year 2013, and expects to
make additional minimum cash contributions of approximately $24 million over
the balance of fiscal year 2013. As previously mentioned, the Company
continues to evaluate an additional discretionary pension contribution of up
to $165 million.

Non-GAAP Financial Measures

This press release includes discussions of financial measures that have not
been determined in accordance with U.S. generally accepted accounting
principles ("GAAP"). A reconciliation of the non-GAAP financial measures to
their most directly comparable financial measures prepared in accordance with
GAAP, accompanied by reasons why the Company believes the measures are
important, are included in the attached schedules.

Conference Call

Carpenter will host a conference call and webcast today, January 31, at 10:00
a.m., ET, to discuss financial results and operations for the fiscal second
quarter. Please call 610-208-2222 for details of the conference call. Access
to the call will also be made available at Carpenter's web site
(http://www.cartech.com) and through CCBN (http://www.ccbn.com). A replay of
the call will be made available at http://www.cartech.com or at
http://www.ccbn.com.

About Carpenter Technology

Carpenter produces and distributes premium alloys, including special alloys,
titanium alloys and powder metals, as well as stainless steels, and alloy and
tool steels. Information about Carpenter can be found on the Internet at
http://www.cartech.com.

Forward-Looking Statements

This press release 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’s filings with
the Securities and Exchange Commission including its annual report on Form
10-K for the year ended June 30, 2012, the 10Q for the quarter ending
September 30, 2012 and the exhibits attached to those filings. They include
but are not limited to: (1) expectations with respect to the synergies, costs
and other anticipated financial impacts of the Latrobe acquisition transaction
could differ from actual synergies realized, costs incurred and financial
impacts experienced as a result of the transaction; (2) the cyclical nature of
the specialty materials business and certain end-use markets, including
aerospace, defense, industrial, transportation, consumer, medical, and energy,
or other influences on Carpenter’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;(3) the
ability of Carpenter to achieve cost savings, productivity improvements or
process changes; (4) the ability to recoup increases in the cost of energy,
raw materials, freight or other factors; (5) domestic and foreign excess
manufacturing capacity for certain metals; (6) fluctuations in currency
exchange rates; (7) the degree of success of government trade actions; (8) the
valuation of the assets and liabilities in Carpenter’s pension trusts and the
accounting for pension plans; (9) possible labor disputes or work stoppages;
(10) the potential that our customers may substitute alternate materials or
adopt different manufacturing practices that replace or limit the suitability
of our products; (11) the ability to successfully acquire and integrate
acquisitions, including the Latrobe acquisition; (12) the availability of
credit facilities to Carpenter, its customers or other members of the supply
chain; (13) the ability to obtain energy or raw materials, especially from
suppliers located in countries that may be subject to unstable political or
economic conditions; (14) Carpenter’s manufacturing processes are dependent
upon highly specialized equipment located primarily in facilities in Reading
and Latrobe, Pennsylvania for which there may be limited alternatives if there
are significant equipment failures or catastrophic event; and (15) Carpenter’s
future success depends on the continued service and availability of key
personnel, including members of our executive management team, management,
metallurgists and other skilled personnel and the loss of these key personnel
could affect our ability to perform until suitable replacements are found. Any
of these factors could have an adverse and/or fluctuating effect on
Carpenter’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, and Section 21E of the
Securities Exchange Act of 1934, as amended. Carpenter undertakes no
obligation to update or revise any forward-looking statements.


PRELIMINARY
CONSOLIDATED BALANCE SHEETS
(in millions)
(Unaudited)
                                                       
                                             December 31,   June 30,
                                             2012           2012
                                                            
ASSETS
Current assets:
Cash and cash equivalents                    $  63.1        $ 211.0
Accounts receivable, net                        286.5         354.2
Inventories                                     733.6         642.0
Deferred income taxes                           5.9           10.6
Other current assets                           38.8        31.9    
Total current assets                            1,127.9       1,249.7
                                                            
Property, plant and equipment, net              1,017.6       924.6
Goodwill                                        256.7         260.5
Other intangibles, net                          102.1         109.9
Other assets                                   77.9        83.1    
Total assets                                 $  2,582.2    $ 2,627.8 
                                                            
LIABILITIES
Current liabilities:                                       
Accounts payable                             $  188.4       $ 236.1
Accrued liabilities                             186.6         217.1
Current portion of long-term debt              101.0       101.0   
Total current liabilities                       476.0         554.2
                                                            
Long-term debt, net of current portion          305.2         305.9
Accrued pension liabilities                     336.3         377.3
Accrued postretirement benefits                 178.1         179.8
Deferred income taxes                           31.5          31.4
Other liabilities                              67.8        66.1    
Total liabilities                              1,394.9     1,514.7 
                                                            
STOCKHOLDERS' EQUITY
Carpenter stockholders' equity:
Common stock                                    274.5         274.0
Capital in excess of par value                  253.8         252.7
Reinvested earnings                             1,162.7       1,109.6
Common stock in treasury, at cost               (111.6  )     (120.0  )
Accumulated other comprehensive loss           (392.1  )    (412.5  )
Total Carpenter stockholders' equity           1,187.3     1,103.8 
Noncontrolling interest                        -           9.3     
Total equity                                   1,187.3     1,113.1 
Total liabilities and equity                 $  2,582.2    $ 2,627.8 
                                                                      


PRELIMINARY
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)
(Unaudited)
                                                                
                               Three Months Ended      Six Months Ended
                               December 31,            December 31,
                                                                     
                               2012        2011        2012          2011
                                                                     
NET SALES                      $ 533.5     $ 431.1     $ 1,078.5     $ 845.2
Cost of sales                   430.9     346.8     866.5       679.7 
Gross profit                     102.6       84.3        212.0         165.5
                                                                     
Selling, general and             49.9        38.0        97.7          73.8
administrative expenses
Acquisition-related costs       -         2.4       -           3.8   
Operating income                 52.7        43.9        114.3         87.9
                                                                     
Interest expense                 (4.4  )     (5.8  )     (9.6    )     (12.7 )
Other income (expense), net     1.3       0.4       3.9         (0.4  )
                                                                     
Income before income taxes       49.6        38.5        108.6         74.8
Income tax expense              16.4      14.7      35.9        27.2  
                                                                     
Net income                       33.2        23.8        72.7          47.6
                                                                     
Less: Net income
attributable to                 0.2       0.2       0.5         0.2   
noncontrolling interest
                                                                     
NET INCOME ATTRIBUTABLE TO     $ 33.0     $ 23.6     $ 72.2       $ 47.4  
CARPENTER
                                                                     
EARNINGS PER SHARE:
Basic                          $ 0.62     $ 0.53     $ 1.36       $ 1.06  
Diluted                        $ 0.62     $ 0.52     $ 1.35       $ 1.05  
                                                                     
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic                           52.9      44.4      52.8        44.4  
Diluted                         53.5      45.1      53.4        45.1  
                                                                     
Cash dividends per common      $ 0.18     $ 0.18     $ 0.36       $ 0.36  
share
                                                                             


PRELIMINARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
                                                                
                                                       Six Months Ended
                                                       December 31,
                                                                    
                                                       2012         2011
                                                                    
OPERATING ACTIVITIES:
Net income                                             $ 72.7       $ 47.6
Adjustments to reconcile net income to net cash
provided from (used for) operating activities:
Depreciation and amortization                            51.1         37.2
Deferred income taxes                                    (0.3   )     13.6
Net pension expense                                      34.3         19.7
Net loss on disposal of property and equipment           0.5          0.4
Changes in working capital and other:
Accounts receivable                                      69.8         22.5
Inventories                                              (88.8  )     (110.3 )
Other current assets                                     (8.3   )     1.9
Accounts payable                                         (48.0  )     (21.5  )
Accrued liabilities                                      (20.4  )     (4.1   )
Pension plan contributions                               (57.9  )     (15.4  )
Boarhead Farms settlement                                -            (21.8  )
Other, net                                              (2.5   )    2.4    
Net cash provided from (used for) operating             2.2        (27.8  )
activities
                                                                    
INVESTING ACTIVITIES:
Purchases of property, equipment and software            (136.9 )     (60.3  )
Proceeds from disposals of property and equipment        0.1          0.2
Acquisition of business, net of cash acquired            -            (1.4   )
Proceeds from sale of equity method investment           7.9          -
Proceeds from sales and maturities of marketable        -          30.4   
securities
Net cash used for investing activities                  (128.9 )    (31.1  )
                                                                    
FINANCING ACTIVITIES:
Payments on long-term debt                               -            (100.0 )
Dividends paid                                           (19.1  )     (16.2  )
Purchase of subsidiary shares from noncontrolling        (8.4   )     -
interest
Tax benefits on share-based compensation                 3.3          0.8
Proceeds from stock options exercised                   1.9        1.5    
Net cash used for financing activities                  (22.3  )    (113.9 )
                                                                    
Effect of exchange rate changes on cash and cash        1.1        (0.9   )
equivalents
                                                                    
DECREASE IN CASH AND CASH EQUIVALENTS                    (147.9 )     (173.7 )
Cash and cash equivalents at beginning of period        211.0      492.5  
                                                                    
Cash and cash equivalents at end of period             $ 63.1      $ 318.8  
                                                                             

                                                    
PRELIMINARY
SEGMENT FINANCIAL DATA
(in millions, except pounds sold)
(Unaudited)
                                                             
                            Three Months Ended        Six Months Ended
                            December 31,              December 31,
                            2012         2011         2012          2011
Pounds sold* (000):
Specialty Alloys              47,572       47,078       94,784        91,288
Operations
Performance Engineered        3,228        3,434        6,612         6,872
Products
Latrobe                       14,464       -            30,570        -
Intersegment                 (2,682 )    (1,470 )    (5,370  )    (2,094 )
                                                                    
Consolidated pounds sold     62,582     49,042     126,596     96,066 
                                                                    
Net sales:
Specialty Alloys
Operations
         Net sales
         excluding          $ 277.1      $ 258.1      $ 550.0       $ 492.6
         surcharge
         Surcharge           91.2       102.4      180.0       203.7  
                                                                    
Specialty Alloys             368.3      360.5     $ 730.0      $ 696.3  
Operations net sales
                                                                    
Performance Engineered
Products
         Net sales
         excluding            91.7         81.2       $ 189.3       $ 164.2
         surcharge
         Surcharge           1.2        1.1        2.3         2.3    
                                                                    
Performance Engineered       92.9       82.3      $ 191.6      $ 166.5  
Products net sales
                                                                    
Latrobe
         Net sales
         excluding            101.4        9.5        $ 207.6         19.6
         surcharge
         Surcharge           12.5       -          28.2        -      
                                                                    
Latrobe net sales            113.9      9.5       $ 235.8       19.6   
                                                                    
Intersegment
         Net sales
         excluding            (39.5  )     (18.5  )     (75.4   )     (32.5  )
         surcharge
         Surcharge           (2.1   )    (2.7   )    (3.5    )    (4.7   )
Intersegment net sales       (41.6  )    (21.2  )    (78.9   )    (37.2  )
                                                                    
                                                                    
Consolidated net sales      $ 533.5     $ 431.1     $ 1,078.5    $ 845.2  
                                                                    
Operating income:
Specialty Alloys            $ 49.6       $ 50.9       $ 104.1       $ 97.2
Operations
Performance Engineered        8.9          10.4         20.4          22.2
Products
Latrobe                       13.2         0.7          28.9          1.2
Corporate costs
(including                    (10.6  )     (12.6  )     (20.9   )     (22.8  )
acquisition-related
costs)
Pension earnings,             (8.0   )     (3.6   )     (16.0   )     (7.2   )
interest & deferrals
Intersegment                 (0.4   )    (1.9   )    (2.2    )    (2.7   )
                                                                    
Consolidated operating      $ 52.7      $ 43.9      $ 114.3      $ 87.9   
income
                                                                             

In January 2012, the Company announced it had made changes to its reportable
segments. The Company now has three reportable business segments, Specialty
Alloys Operations (SAO), Performance Engineered Products (PEP) and Latrobe.
Previously, the Company's reportable segments consisted of Premium Alloys
Operations (PAO), Advanced Metals Operations (AMO) and Emerging Ventures.

The SAO segment is comprised of Carpenter's major premium alloy and stainless
steel manufacturing operations. This includes operations performed at mills
primarily in Reading, Pennsylvania and the surrounding area, South Carolina,
and the new premium products manufacturing facility being built in Limestone
County, Alabama.

The PEP segment is comprised of Carpenter's differentiated operations. This
includes Dynamet titanium business, the Carpenter Powder Products (CPP)
business, the Amega West business and the SSS distribution business that was
acquired in connection with the Latrobe Acquisition. The businesses in the PEP
segment are managed with an entrepreneurial structure to promote speed and
flexibility and drive overall revenue and profit growth. The pounds sold data
above for the PEP segment includes only the Dynamet and CPP businesses.

The Latrobe segment is comprised of the operations of the Latrobe business
acquired effective February 29, 2012. The Latrobe segment provides management
with the focus and visibility into the business performance of these newly
acquired operations. The Latrobe segment also includes the results of
Carpenter’s distribution business in Mexico, which is being managed together
with the Latrobe's distribution business. As the Latrobe business becomes
integrated with Carpenter, its results will likely be reported within the SAO
business segment sometime in the future.

The service cost component of net pension expense, which represents the
estimated cost of future pension liabilities earned associated with active
employees, is included in the operating results of the business segments. The
residual net pension expense, or pension earning, interest and deferrals
(pension EID), is comprised of the expected return on plan assets, interest
costs on the projected benefit obligations of the plans, and amortization of
actuarial gains and losses and prior service costs, is included under the
heading "Pension earnings, interest & deferrals."

* Pounds sold excludes sales associated with the distribution businesses.


PRELIMINARY
NON-GAAP FINANCIAL MEASURES
(in millions, except per share data)
(Unaudited)
                                                              
                                                                    
                               Three Months Ended      Six Months Ended
                               December 31,            December 31,
FREE CASH FLOW                 2012        2011        2012         2011
Net cash provided from (used   $ 38.9      $ 46.2      $ 2.2        $ (27.8  )
for) operating activities
Purchases of property,           (80.5 )     (33.0 )     (136.9 )     (60.3  )
equipment and software
Proceeds from disposals of       0.1         -           0.1          0.2
property and equipment
Purchase of subsidiary
shares from noncontrolling       (8.4  )     -           (8.4   )     -
interest
Proceeds from sale of equity     7.9         -           7.9          -
method investment
Dividends paid                   (9.6  )     (8.1  )     (19.1  )     (16.2  )
Acquisition of business, net    -         (1.4  )    -          (1.4   )
of cash acquired
                                                                    
Free cash flow                 $ (51.6 )   $ 3.7      $ (154.2 )   $ (105.5 )
                                                                             

Management believes that the free cash flow measure provides useful
information to investors regarding our financial condition because it is a
measure of cash generated which management evaluates for alternative uses.

                                 Three Months Ended   Six Months Ended
                                    December 31,          December 31,
NET PENSION EXPENSE PER DILUTED     2012      2011       2012       2011
SHARE
                                                                      
Pension plans expense               $ 14.8     $ 9.3      $ 29.6      $ 18.8
Other postretirement benefits        2.3      0.5      4.7       0.9  
expense
Net pension expense                   17.1       9.8        34.3        19.7
Income tax benefit                   (6.0 )    (3.8 )    (12.0 )    (7.5 )
Net pension expense, net of tax     $ 11.1    $ 6.0     $ 22.3     $ 12.2 
                                                                      
Net pension expense per diluted     $ 0.21    $ 0.13    $ 0.42     $ 0.27 
share
                                                                      
Weighted average diluted common      53.5     45.1     53.4      45.1 
shares

Management believes that net pension expense per diluted share is helpful in
analyzing the operating performance of the Company, as net pension expense may
be volatile due to changes in the financial markets, which may result in
significant fluctuations in operating results from period to period.

OPERATING MARGIN EXCLUDING                                      
SURCHARGE AND
PENSION EARNINGS, INTEREST     Three Months Ended      Six Months Ended
AND DEFERRALS
AND ACQUISITION-RELATED        December 31,            December 31,
COSTS
                              2012        2011        2012          2011
                                                                     
Net sales                      $ 533.5     $ 431.1     $ 1,078.5     $ 845.2
Less: surcharge revenue         102.8     100.8     207.0       201.3 
Consolidated net sales         $ 430.7    $ 330.3    $ 871.5      $ 643.9 
excluding surcharge
                                                                     
Operating income               $ 52.7      $ 43.9      $ 114.3       $ 87.9
Pension earnings, interest &    8.0       3.6       16.0        7.2   
deferrals
Operating income excluding
pension earnings, interest
and deferrals                  $ 60.7      $ 47.5      $ 130.3       $ 95.1
                                                                     
Acquisition-related costs       -         2.4       -           3.8   
                                                                     
Operating income excluding
pension earnings, interest
and deferrals and              $ 60.7     $ 49.9     $ 130.3      $ 98.9  
acquisition-related costs
                                                                     
Operating margin excluding
surcharge and pension
earnings, interest
and deferrals                   14.1  %    14.4  %    15.0    %    14.8  %
                                                                     
Operating margin excluding
pension earnings, interest
and deferrals and               14.1  %    15.1  %    15.0    %    15.4  %
acquisition-related costs

Management believes that removing the impacts of raw material surcharges and
acquisition-related costs from operating margin provides a more consistent
basis for comparing results of operations from period to period. In addition,
management believes that excluding the impact of pension earnings, interest
and deferrals, which may be volatile due to changes in the financial markets,
is helpful in analyzing the true operating performance of the Company.


PRELIMINARY
NON-GAAP FINANCIAL MEASURES
(in millions, except per share data)
(Unaudited)
                                                                 
                                   Three Months Ended     Six Months Ended

                                   December 31,           December 31,
ADJUSTED LATROBE OPERATING         2012        2011       2012        2011
RESULTS
                                                                      
Latrobe segment operating income   $ 13.2      $ 0.7      $ 28.9      $ 1.2
Specialty Steel Supply operating
income included in Performance
Engineered                           0.8         -          2.7         -

Products segment results
Carpenter distribution business
operating income in Mexico
included                             (0.2  )     (0.7 )     (0.9  )     (1.2 )

in Latrobe segment results
Latrobe pension EID included in     (0.6  )    -        (1.2  )    -    
pension EID expense
Adjusted Latrobe operating           13.2        -          29.5        -
results before income taxes
Income taxes                        (4.6  )    -        (10.3 )    -    
Adjusted Latrobe operating         $ 8.6      $ -       $ 19.2     $ -    
results
                                                                      
Adjusted Latrobe operating         $ 0.16      $ -        $ 0.36      $ -
results per diluted share
Dilutive impact of shares issued
in connection with Latrobe          (0.11 )    -        (0.24 )    -    
acquisition*
                                                                      
Net accretion from Latrobe's       $ 0.05     $ -       $ 0.12     $ -    
operating results
                                                                      
Weighted average shares             53.5      45.1     53.4      45.1 
outstanding
                                                                             

* In connection with the Latrobe Acquisition, Carpenter issued shares of
common stock to the former owners which resulted in an

additional 8.1 million weighted average shares during the three and six months
ended December 31, 2012.

IMPACTS OF FACILITY START-UP,    Three Months Ended      Six Months Ended
MANUFACTURING FOOTPRINT                               
OPTIMIZATION AND INVENTORY       December 31,            December 31,
REDUCTION INITIATIVE COSTS
                                 2012       2011        2012       2011
                                                                     
Facility start-up costs          $ 1.3       $ -         $ 2.2       $ -
Manufacturing footprint            0.2         -           0.3         -
optimization costs
Inventory reduction initiative    1.0       -         1.6       -     
costs
Operating income impact          $ 2.5      $ -        $ 4.1      $ -     
                                                                     
Consolidated net sales           $ 430.7    $ 330.3    $ 871.5    $ 643.9 
excluding surcharges
                                                                     
Impact of facility start-up,
manufacturing footprint
optimization and inventory
                                  0.6   %    0.0   %    0.5   %    0.0   %
reduction initiative costs on
operating margin excluding
surcharges
                                                                     
Operating income impact          $ 2.5       $ -         $ 4.1       $ -
Income tax benefit                (0.9  )    -         (1.4  )    -     
Net income impact                $ 1.6      $ -        $ 2.7      $ -     
                                                                     
Impact per diluted share         $ 0.03     $ -        $ 0.05     $ -     
                                                                     
Weighted average shares           53.5      45.1      53.4      45.1  
outstanding

Management believes that removing the impacts of costs associated with (i.)
start-up of our Athens, AL facility, (ii.) manufacturing footprint
optimization associated with evaluating and executing opportunities primarily
as a result of the Latrobe acquisition to optimize manufacturing efficiencies,
and (iii.) an inventory reduction initiative aimed at identifying
opportunities reduce inventory levels and improve inventory turnover across
the mill operations are helpful in analyzing the operating performance of the
Company, as these costs are expected to be nonrecurring in nature and may
result in significant fluctuations in operating results from period to period
during fiscal years 2013 and 2014.

PRELIMINARY
SUPPLEMENTAL SCHEDULES
(in millions)
(Unaudited)
                                                                  
                                      Three Months Ended   Six Months Ended
                                      December 31,         December 31,
NET SALES BY END USE MARKET           2012       2011      2012        2011
                                                                       
End Use Market Excluding Surcharge:
Aerospace and defense                 $  194.6   $ 142.6   $ 389.9     $ 271.0
Industrial and consumer                  85.4      75.8      172.0       149.3
Energy                                   69.0      51.7      138.4       102.1
Transportation                           24.2      22.5      50.3        44.5
Medical                                  24.2      28.2      52.0        57.4
Distribution                            33.3     9.5      68.9       19.6
                                                                       
Consolidated net sales excluding         430.7     330.3     871.5       643.9
surcharge
                                                                       
Surcharge revenue                       102.8    100.8    207.0      201.3
                                                                       
Consolidated net sales                $  533.5   $ 431.1   $ 1,078.5   $ 845.2
                                                                       
                                                                       
                                                                       
                                      Three Months Ended   Six Months Ended
                                      December 31,         December 31,
NET SALES BY MAJOR PRODUCT CLASS        2012     2011     2012       2011
                                                                       
Net Sales by Product Class
Excluding Surcharge:
Special alloys                        $  157.5   $ 136.3   $ 326.4     $ 264.3
Stainless steel                          139.3     120.4     260.2       232.2
Titanium products                        36.5      36.7      76.2        75.4
Powder metals                            12.2      15.2      27.0        29.0
Alloy and tool steel                     46.2      4.1       100.2       9.3
Distribution and other                  39.0     17.6     81.5       33.7
                                                                       
Consolidated net sales excluding         430.7     330.3     871.5       643.9
surcharge
                                                                       
Surcharge revenue                       102.8    100.8    207.0      201.3
                                                                       
Consolidated net sales                $  533.5   $ 431.1   $ 1,078.5   $ 845.2

Contact:

Carpenter Technology Corporation
Media Inquiries:
William J. Rudolph, Jr., 610-208-3892
wrudolph@cartech.com
or
Investor Inquiries:
Michael A. Hajost, 610-208-3476
mhajost@cartech.com
 
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