Good morning and welcome to Carpenter Technology’s second quarter 2010 earnings conference call. My name is Ann and I will be your coordinator for today. At this time, all participants will be in listen-only mode. After the speakers’ remarks, you will be invited to participate in the question-and-answer session towards the end of this call. I would now like to turn the call over to your host for today, Mr. Mike Hajost, Vice President and Treasurer; please proceed, sir.

Thank you, Ann. Good morning everyone and welcome to Carpenter’s earnings conference call for the second fiscal quarter ended December 31, 2009. This call is also being broadcast over the Internet. With us today are Greg Pratt, Chairman and Interim President and Chief Executive Officer; Mike Shor, Executive Vice President, AMO & PAO Operations; Doug Ralph, Senior Vice President and Chief Financial Officer, as well as other members of the management team. Statements made by management during this conference call that are forward looking statements are based on current expectations. Risk factors that could cause actual results to differ materially from those forward-looking statements can be found in Carpenter’s most recent SEC filings, including the company’s June 30, 2009 10-K and its September 30, 2009 10-Q and the exhibits attached to those filings. I will now turn the call over to Greg.

Thank you, Mike and thank you everyone, for joining us on today’s call. Similar to last quarter’s call, I wanted to provide some perspectives on where the business is today and where we see it heading. I will then ask Mike Shor to discuss our end markets and operations. Finally, Doug will cover the financial results and provide an update on full year expectations. Q-and-A will then follow. Comparing our second quarter results to first quarter and incorporating information we have received from key customers, there are strong indications that our business will continue to improve and we are well positioned as the recovery unfolds. The second quarter came in with overall shipment volumes, revenues and margins higher than first quarter. In particular, we are seeing encouraging momentum in our aerospace engine business and the return of a pulse in energy. We also improved our market share with a number of key customers helping to accelerate our recovery. We expect this improvement trend will continue in the second half and we are confident we are on track to achieve our fiscal 2010 financial goals. To ensure longer term growth, we are continuing to focus on new products and new market opportunities beyond our current portfolio of business. Lastly, I want to mention that the new CEO search is proceeding according to plan. In the meantime, I am actively engaged with all major constituencies, including management, key customers, vendors and shareholders, and the business is executing seamlessly. Finally, we remain committed to our core principles of increasing shareholder value and driving operational excellence. With that, let me turn the call over to Mike Shor, who will walk you through each of our end markets and discuss our operations. Mike?

Thank you, Greg and good morning. I’ll review the markets in the order of their contribution to net sales this quarter. Aerospace market sales were $113 million in the second quarter. Excluding surcharge revenue, aerospace sales were down 27% on 26% lower volume. Sequential volumes were flat as we benefited from the tail end of excess supply chain engine inventory, offset by continued inventory destocking in fasteners. Our fastener business typically lags a range in business by six months. On the engine side, we’re experiencing an increase in shortly time orders, the first sign of a turn in the cycle. We expect strong growth in shipments for engine materials in the second half. We are encouraged by the fact that airline revenue passenger miles are recovering from last year’s slowdown and expect the January airline monitor to maintain its forecasted build schedule. On the fastener side of our business, supply chain destocking continues, as shipments of nickel based, stainless, and titanium materials for fasteners were all down during the second quarter due to excess material in the supply chain. We expect demand for fasteners to remain flat in the second half, but improving in fiscal 2011. So let me finish aerospace by saying that with all of the dynamic changes occurring in the industry, we believe we are and will continue to be, well positioned with key market players to grow our business as build rates increase over the next several years. Industrial markets sales were $62 million, excluding surcharge, industrial sales decreased 16% on 19% lower volume. Sequentially, our industrial volumes increased 4% from the first quarter. We expect steady improvement in our industrial markets over the second half in the face of some favorable signs. For one, the U.S. industrial production index grew about 2% to $99.3 in…

Thanks Mike. Overall, our financial results for the quarter and our current projections for the year are tracking with expectations. We reported net income this quarter of $3.5 million, or $0.08 per diluted share, which includes $0.21 of non-cash pension expense. Our earnings also showed good sequential improvement off of our first quarter, driven by higher volume, improved mix, and lower costs. Moving on to the elements of the income statement, net sales in the quarter were $264 million or 27% below a year ago. Excluding raw material surcharge, sales were down 24%. Overall, pounds shipped decreased 19%, with special alloy products down only 4%, titanium products down 25%, and stainless steel products off 24%. Sequentially, volumes were up 7% from the first quarter. Second quarter gross profit was $35.6 million compared with $75.9 million a year ago. Excluding surcharge revenue, gross margin in the period was 17.2% versus 27.8% last year. Gross margin continues to be negatively impacted by reduced demand levels and correspondingly higher volume related costs, as well as the portion of higher pension expense that hits our cost of goods sold. Reported SG&A expenses decreased 7% year-over-year. The decrease was about 14% if you adjust for the impact of non-cash pension expense in both years. Through six months, our SG&A spending, excluding pension is down 12% versus year ago. We are continuing to tightly manage these costs, with salary and benefits costs down 15%, and discretionary items like outside services and travel 17% lower. Looking ahead to the second half, we will see increased variable compensation accruals, since we expect most of our profit to be made in the back half, compared to no performance bonuses earned last year. As we move past the downturn, we will also need to begin investing in some additional resource…

(Operator Instructions) Your first question comes from Edward Marshall - Sidoti & Co. Edward Marshall - Sidoti & Co.: My first question is on the comments you made on the energy market. You said the pulse that you’re feeling where that coming from in particular is, which markets and if you could comment on that, I’d appreciate it.

This is Mike Shor. Obviously, exploration remains weak and is still some substantial inventories in the supply chain, but what we’re seeing is rigs, which directional rigs hit all the way down at 830 at the bottom of May ‘09 is 940 now. So, more rigs are coming online, so demand for specific size requirements are starting to come in that we hadn’t seen before. So, on the oil and gas side, we’re seeing at least the beginning of things starting to improve. On the turbine side, for power generation in the large IDTs, we’re seeing inventories that are becoming better balanced and we’re expecting our shipments to improve in the second half, mainly due to the significant inventory reduction that was out there in the first half of the year. The build schedule for large IDTs is going to decline, but because of that huge inventory reduction, we’re seeing growth going forward. Edward Marshall - Sidoti & Co.: Two points on those questions. I guess the rig count going up is more of anecdotal information than real demand kind of in the model at this point is that fair?

Yes, that is true. Edward Marshall - Sidoti & Co.: Then, similarly, I guess, on the IDT, you’re saying inventory is in better balance, yet we’re seeing decreases in the turbines. I guess kind of reading through, I could probably look at the same side on the aerospace side on the engine. It looks like some of the large OEMs are saying a decrease of about 5% year-over-year, but I guess because of the better balance in the market at this point, does that mean you could see some positive trends in the aerospace engine market throughout the remainder of this year?

That’s correct. We saw significant inventory reductions at our customers and through the supply chain in the first half of the year and our first signal that things are starting to improve, in particular in the engine side of the business are the requests of our customers for short lead time, when they’re getting desperate for some materials. So, I think because of what was significant inventory reduction, we are expecting to see gains on the engine side in the second half of the year. Edward Marshall - Sidoti & Co.: Was there any LIFO effects that impacted gross margin at all?

Nothing material, Ed. Edward Marshall - Sidoti & Co.: You had mentioned that you have quite a bit of liquidity with the revolver now. You have a net cash balance. Can you discuss your uses of cash going forward, what where your focus is?

Uses of cash would be consistent, as we’ve communicated before; so our capital expending needs will always get our top priority, although we’ve been able to historically fund that within our operating cash generation. We’ve maintained our dividend rate through the downturn and while that’s not a major consumer of cash, that’s been an important part of our shareholder return strategy. At some point in time, we expect to use our financial strength to external growth, but that’s not on the near term horizon and we no longer have an active share repurchase program.

Your next question comes from Michael Gambardella - JP Morgan

I have a question on the raw materials side. Are you seeing any change in your purchases of stainless scrap versus virgin material?

Mike, I think availability has been an issue, so in certain alloys, not only in the stainless side but in the high temp side, there’s been a need to move between alloy and scrap based on availability that’s out there.

So you’re going to more virgin material then?

Not necessarily. It really depends on what scrap we are able to bring in and what we’re dealing with internally as far as our revert material. Some alloys more on the high temp side, the potential exists, but I don’t think it’s a major issue for us right now.

Your next question comes from Lloyd O’Carroll - Davenport and Co. Lloyd O’Carroll - Davenport and Co.: Could you please give us sales, etc., surcharge, by the market segments?

Sure. So this is etc., surcharge $87 million for aerospace, $49 million for industrial, $19 million for automotive, $17 million for energy or for medical and also energy, $17 million, and then $19 million for consumer.

Your next question comes from John Tumazos - John Tumazos Very Independent Research.

Congratulations on getting into the profit. In terms of looking forward a couple years as free cash flow returns, given the prognosis for 787 and 838 and joint strike fighter deliveries, and recoveries in various end markets domestically and abroad, having gone through the past tough year or to what are your likely applications of money when money rolls and in a couple of years?

Right I think the question was asked earlier about our cash deployment priorities. It would be consistent with that and so I think we’ll always be watchful beyond our organic capital investment needs for the right external growth opportunity and it will always be important for the company to preserve the financial strength and flexibility to be able to act along those lines when the right opportunity comes up.

When a new CEO is appointed in coming months, will the new CEO have significant latitude in redirecting the company’s priorities or perhaps identifying opportunities from that perspective CEO’s range of experiences and are you targeting a CEO from a particular background, such as aerospace, energy, foreign sales, etc.,?

This is Greg Pratt speaking. The answer is yes, the CEO will have an opportunity to input and merge his or her ideas in terms of, what they believe is necessary for Carpenter’s future growth and no, we don’t have a specific industry in mind. We have an open field at this point and are looking for the best possible candidate we can find. We are on track and expect it will close within our guidance that we gave you previously, which was six to nine months.

Your next question comes from Wayne Atwell - Casimir Capital.

Could you outline the inventory levels at your customers at this point?

What we have seen it certainly varies by market, but we have seen that our customers mainly in the aero engine, the power generation, and the automotive markets have worked through their inventories and we’re seeing the beginnings of some strong pull there, but on the aero fastener side and on the oil and gas side for us, drill collars, we still see fairly heavy levels of inventory in those particular areas.

Could you outline that some products you’re developing that you’re excited about that could have an impact within the next maybe six to 12 months?

The product that we’ve talked about most in the past month or so has been an alloy called PremoMet for engine applications. It’s an alloy that has a patent pending unique thing about this alloy is it’s a very strong yet very tough alloy that has very high fracture toughness all of which is good when you’re worried about strength to weigh and we believe that can have significant benefit in the automotive market, in particular, the heavy duty engine applications. So we’re doing a lot now of promotion and discussion related to that alloy. One of the other items we’re working on that we’ve begun to talk about is specialty blades we have great capabilities for narrow strip and we believe we have a series of applications that can grow to some fairly significant revenue because of the alloys we’re making having superior edge retention and corrosion resistance. So there are two of the most recent we’ve got some longer term activities we’ve worked on, but that we continue to work on; but they’re the two shortest term items and the most recent.

Anything in aerospace that’s exciting?

Well, I think what’s exciting in aerospace is some existing alloys that we are not currently, for a variety of reasons, in that we feel very strongly will allow us to get into some supply chains we’ve not been in before. We’re in the middle of developmental efforts on that. So, that is a real positive for us and obviously, the return of the engine business also is significant, as is the fact that we feel very good about some contracts that we’ve recently negotiated, including some share gain.

Your next question comes from Gautam Khanna - Cowen and Co.

Yes. Could you characterize for us what you expect your pension expense would be in fiscal ‘11? I know it’s early, but assuming the returns that you have in your plans that you know about, and if discount rates don’t change from your prior expectations.

Yes, it is early, Gautam, as you say if we were to taking estimate right now; it’d probably be around $0.70 a share, but, of course, there’s a lot that can change between now and then.

So, in $0.11 plus year-over-year or whatever, $0.14, better?

We’re at $0.83 this year so it’d be $0.13 better. That’s just a preliminary calculation based on today’s reality.

The PAO margins were actually quite strong sequentially. Could you talk about I mean, was this mostly can you characterize the strength sequentially? I mean, you had over 50% incremental margins. Was it purely a function of mix? I mean marginally higher volume? Can you walk through kind of what we can expect going forward? Is there something unusual about Q2? Thanks.

Well, mix was particularly strong in the quarter in that part of the business. There was a modest positive effect, just that some of the timing of our raw material hedges when there were push outs that created some timing effects earlier, that then created some positives as that volume is being taken in the current quarter, but that is our most profitable business, as the volume returns and we see good growth in that business, particularly in the aerospace engine side that’s positive for mix.

I guess what I’m trying to get at is considering the second half, you’re expecting this abating destock at the engine side at PAO. Should we expect kind of 25% as sort of the baseline going forward?

I think if you look at our fiscal year-to-date performance on PAO and use that as a proxy going forward, that be a fair way to look at it.

Your next question comes from Dan Whalen - Capstone Investments.

With Carlton being purchased by a competitor, can you provide an update on how market share gains are offsetting potential loss sales from the acquisition and if you could provide any color in terms of the impact that had on the quarter.

Sure. Yes, this is Mike again, Dan. I’ll make a variety of points on this first; our position with Carlton is in place and will be in place for, in rough terms, about another two years. So beyond that timeframe, there are also a number of products that we supply to Carlton that we believe have very high value to them and we would expect to continue to purchase in the future. We have plans in place obviously; we can’t get into details beyond that two year timeframe to offset potential loss at Carlton via aggressively pursuing share gain elsewhere. So, our focus has been, continues to be we understand the reality of what’s going on we feel good for a relatively short period of time. There are products we believe they will continue to buy and elsewhere, we’re looking at gaining share and we have a lot of work in progress on that right now. We have had good success overall recently with contract negotiations and we have wrapped up a fair amount of negotiations recently in the aero fastener, the industrial, the automotive, and the engine world, all with positive results. We did not lose share and, in fact, over the last three to six months, we’ve seen gains in engine, gains in implant, and gains in auto and our push is not only the quality of our products, but it’s a service package that we offer. So, we’ll continue to push out there we know there are some roadblocks we face and we’ll tackle them.

Your next question comes from Kevin Money - Cleveland Research Co.

Just touching on the CEO search again is it necessarily an outside candidate that you’re considering? Or is there an opportunity for an internal candidate?

There is an opportunity for an internal candidate.

Your next question comes from Phil Gibbs - KeyBanc.

Yes, I had a question on the LIFO impacts in the quarter. Were there any?

As I answered previously, very, very modest what will trigger LIFO effects in any period is changes in inventory on top of changes in raw material costs and while raw material costs were different year-over-year, our inventory was relatively flat from where we started the year. So any time we do a good job of managing to a level inventory position, that’s going to minimize any LIFO impacts; and as I commented in the script, minimize any margin volatility that we see.

I just have a quick housekeeping question on the other income. How should we think about that and you compared it year-over-year in your release and that’s been lumpy. Should we continue to think that will be the case?

Yes, I mean one exceptional item in other income, and it has been for the last number of years always in the second quarter, is the CDSOA that I mentioned. So, that’s a $5.8 million item that will just be a second quarter item.

Lastly, what are you seeing in the titanium markets as far as the raw material supply chain I mean, we’ve seen a little bit of bounce off the bottom on the scrap side? Would you echo that as far as what you’re seeing there?

We’re certainly seeing the fact that prices had been low and we’re seeing some indications that there is a little bit of recovery there. As, we’re not a titanium melted, so we acquire material to go into our Dynamet titanium operations. So we’re seeing fairly stable pricing and we are seeing inventory in general out there being in slightly better balance.

Your final question comes from Brian Yu - Citi.

A question regarding your capacity if I recall, all this added capacity, it was supposed to boost it by about 40% in 2009. So, I’m arriving at a figure in excess of 300 million pounds per year. Is that correct?

No, I think your volume that well, let me tell you what we said publicly. I’ll first talk about our premium melt expansion. Premium melt is obviously critical for us it goes in aerospace, energy; a lot of the industrial customers that we have go through our premium melt facilities. We’ve put in a new VIM, which has started up along with four VAR furnaces and two ESR furnaces and what we’ve said in our premium melt capacity, that it will improve our capacity by about 40%, which equates, as it fills up to about $150 million in additional revenues in some of our top products in the company. So, significant capacity available and it’s about 40% to about $150 million.

So with the additional capacity you have, how are you operating your portfolio of mills? Any ones that you’re leaving idled or are they flexible enough where you can operate them all at relatively low utilizations, and therefore ramp it up fairly quickly too?

The answer is yes to both of your last questions. Our stainless facilities, which are mainly our air melt product, are in the 65% range of utilization and our premium melt facilities are about 50% and our hot working is about 60%. So, all it takes is, as we improve our forecast, getting the right manpower in place; but we’ve got significant capacity to handle growth.

And there are no further questions at this time.

Okay. Thank you very much. I would like to thank everyone for taking time to join us today. Thank you for your continued interest in Carpenter. I would just like to leave you with the notion that we are not waiting for the new CEO to do what’s right for the business. We see our key markets strengthening, there’s good overall momentum in our business and we are pleased with the progress of the company and we feel are confident in our ability to execute against our growth plan and finally, we look forward to speaking with you next quarter. Thank you and good bye.

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the presentation and you may now disconnect. Have a wonderful day.