Good morning, and welcome to Carpenter's Technology's Fourth Quarter Earnings Conference Call. My name is Kim, and I will be your coordinator for today. [Operator Instructions] I would now like to turn the call over to your host for today, Mr. Mike Hajost, Vice President of Investor Relations and Treasurer. Please proceed.

Thank you, Kim. Good morning, everyone, and welcome to Carpenter's earnings conference call for the fourth quarter ended June 30, 2014. This call is also being broadcast over the internet along with presentation slides. Please note, for those of you listening by phone, you may experience a time delay in slight movement. Speakers on the call today are Bill Wulfsohn, President and Chief Executive Officer; Tony Thene, Senior Vice President and Chief Financial Officer; Andy Ziolkowski, Senior Vice President, Commercial, for Specialty Alloys Operations or SAO, as we call it; and Gary Heasley, Senior Vice President, Performance Engineered Products or PEP, as we call it. Statements made by management during this earnings presentation that are forward-looking statements are based on current expectations. Risk factors that could cause actual results to differ materially from these forward-looking statements can be found in Carpenter's most recent SEC filings, including the company's June 30, 2013, 10-K, September 30 and December 31, 2013, and March 31, 2014, 10-Qs, and exhibits attached to those filings. Please also note that in the following discussion, unless otherwise noted, when management discusses sales or revenue that reference excludes surcharge. When discussing operating income, that reference excludes pension, earnings, interest and deferrals or EID. When referring to operating margins, that is based on sales excluding surcharge and operating income excluding pension EID. I will now turn the call over to Bill.

Good morning, everyone, and thank you for joining us for Carpenter's fourth quarter earnings call. While our market environment is challenging, this is an exciting time here at Carpenter. Beginning on Page 4, sales in the quarter were up sequentially versus Q3 in both of our 2 reporting segments. PEP sales were also up versus prior year's Q4. EBITDA was a strong 22% of sales and up from our third quarter on both the dollar and percent of sales basis. Q4 operating income and earnings per share were up sequentially versus our Q3. These results were achieved through disciplined cost control and strong SAO operating margins at 17% of sales combined with a 4% increase in SAO sales tons. When compared to prior year, Q4 operating income and EPS were down as improved PEP earnings were offset by a lingering weakness in SAO sales mix and incremental depreciation expense. Cash from operating activities was a strong $96 million in the quarter. Moving to Page 5. For the 3 years leading up to fiscal year '14, we had increased our EBITDA on an average of $91 million per year. Our fiscal year '14 proved to be a challenge. Our sales mix was negatively impacted by weak demand for the ultra-premium products we provide for aerospace engines and industrial gas turbines. In this context, the Carpenter team showed the agility to respond in areas we could impact. More specifically, we grew sales volume in the Medical, Transportation and Consumer Industrial segments. We also lowered our SAO process or production cost per ton, even with the $3 million of incremental Athens variable startup related cost factored in. And finally, we reduced our SG&A by 7%. The net result was $382 million of EBITDA, which was down by 6% versus prior year. It's important…

Thank you, Bill, and good morning to everyone. This is Tony Thene. Let's start on Slide 8 with the financial overview of the quarter and then we can get into some of the details. Net income was $38 million or $0.71 per share. Net sales excluding surcharge were $489 million, a $22 million or 5% sequential increase. As I've noted in our prior earnings calls, 2 of our key in-use markets, Aerospace and Energy accounted for 58% of our total sales in the quarter. Operating margin of 13.3% was up 140 basis points sequentially. Cash flow from operations was at its annual peak in the fourth quarter at $96 million, and free cash flow was positive coming in at $35 million for the quarter. Capital expenditures were down 46% sequentially to $51 million, 63% of the total was related to Athens. And lastly, our total liquidity improved to $612 million, which includes a $120 million of cash on hand. Now let's turn to the next couple of slides and I'll give you some more detail on the results. Moving to Slide 9 in the income statement summary. Net sales in the quarter was $605 million or $489 million excluding surcharge. We realized sequential sales growth in all of our markets with the exception of Medical, which was flat, and our market position remained strong. SG&A expense increased sequentially by $1.4 million in the quarter. Our internal emphasis has been and remains to closely manage our SG&A cost versus year-over-year, while absorbing the incremental Athens cost. For FY '14, we actually reduced SG&A cost versus FY '13 by $14 million. For FY '15, we expect to manage SG&A inside a tight window compared to FY '14. Operating income was $59 million in the quarter, and $65 million excluding pension EID. Operating…

Thank you, Tony. I will now cover the SAO segment depicted on Slide 13. Quarter 4 experienced sequential volume growth in all end use markets at a similar sales mix to the third quarter. Compared to a year ago, volume was up considerably, but at a weaker sales mix of less ultra-premium aerospace, and oil and gas completion materials. On an adjusted basis, sequential operating margins were flat showing signs of our continued focus on controllable expenses and lower production cost. Our backlogs continue to strengthen, up sequentially and compared to a year ago by 11% and 32%, respectively. We are also beginning to see the signs of the impact of our recent price increases and increased activity in more premium applications in the aerospace market. Having said that and looking forward to the first quarter, we expect volumes to be up over last year at a similar sales mix to Q4 of FY '14. With our current lead times and the ramp up of the approval process of the Athens facility, it will likely take some time until we see significant improvement in mix. Our Athens facility continues to make steady progress with customer approvals. In the fourth quarter, we produced a 1,000 tons of saleable product and received customer approvals for nearly 50% of our customer base to the processing of certain nickel-bearing fastener grades. Customers remained very enthusiastic and supportive of our approval plans. I will now turn the discussion over to Gary Heasley, to cover the PEP segment.

Thank you, Andy, and good morning, everyone. PEP reported revenue growth of 4% and operating income growth of 37%, compared to the fourth quarter of fiscal 2013. Sales growth resulted from strengthened demand for our titanium fastener material, better penetration of the orthopedic market and increased sales into the oil and gas market. Our improvement in operating income was a result of improvements in manufacturing processes and multiple PEP business units, higher production levels resulting in improved absorption and cost reductions. Some specific factors that drove our results for the quarter were improved performance by our newer Omega west locations as those businesses have become more established in their markets. Cost savings and commercial initiatives in our distribution businesses and improved demand for our powder metal products in some of our core powder markets coupled with operational improvements in that business unit. Looking to the first quarter of fiscal '15, we expect market conditions to remain robust, but we anticipate some compression in margins as a result of anticipated changes in our product mix. While we expect demand for aerospace fastener wire to remain strong generally, we expect some decline in shipments based on our view of customer inventories. Within the PEP companies, our team is taking actions to respond to our customers' needs and to improve results. To better serve our aerospace fastener customers, we installed and commissioned 2 additional titanium finishing lines in fiscal 2014, and we will begin installation of an additional line in the first quarter of fiscal 2015. Also, we expect further operational improvements in our powder business that will allow us to better serve our customers and improve results in that business unit. With these and other actions we are taking, we are positioning PEP for continued improvement over the long term. Thank you, and now I will turn the call back to Bill.

Thank you, Gary. It's good to see the PEP reporting segment showing year-over-year improvements again. Turning to Page 17, I'd like to highlight a couple of key growth enablers for the company. Clearly, the startup of Athens is the highlight of our quarter and fiscal year. We delivered this large complex project ahead of schedule and under budget. The plant is now fully operational. Early in the call, Andy mentioned that we produced over 1,000 tons of salable product in our quarter 4. I'd like to add that over 60% of this product is for the aerospace market. And the tons produced are richer on a profit per ton basis than our SAO system average. From a commercial viewpoint, the market timing seems right. We need to ramp up production at Athens quickly to support existing customer demand, which is outstripping our legacy system capacity. This will help us bring down lead times and also give Carpenter the capacity to target new sales from new customers and markets, such as the chemical processing industry. We are working diligently to complete the internal testing required for us to transfer more product to Athens. This will free up capacity on our currently constrained VAP-approved Reading and Latrobe operations. From an economic viewpoint, Athens will have some important impacts on our near and long-term financial results. In the near term, we already have the full overhead burden from Athens in our fiscal year '14 results, so there will be no increases in fiscal year '15 in that area. We will, however, as Tony mentioned, see incremental year-over-year depreciation, primarily in the first 3 quarters of the fiscal year. At the same time, as just discussed, Athens will enable Carpenter to expand its sales base quickly. The result is that we are targeting to…

[Operator Instructions] Your first question comes from the line of Julie Yates from Crédit Suisse. Julie Yates Stewart - Crédit Suisse AG, Research Division: Tony, how should we think about the magnitude of free cash flow that you'll generate in FY '15 taking into account the lower CapEx and some of the working capital initiatives?

Well, I would frame it this way, Julie. The big piece of that is going to be CapEx and you know where that's going range. We did approximately $350 million in FY '14. I gave you a range of $160 million to $175 million. From a working capital standpoint, we expect volumes to go up. So we know our receivables are going to go up but we anticipate holding our inventory at a rate lower than the increase in sales. So at the very least, you'll get a push on the working capital side. And then you'll get our earnings growth. So if you put those 3 together, I think you get a pretty good idea of the magnitude change it will have year-over-year. Julie Yates Stewart - Crédit Suisse AG, Research Division: Okay. And then is there any update on how you'll prioritize cash deployment or at what point you'll communicate a more formal strategy?

As you can imagine, Julie, we are just moving now to a strong positive free cash flow position, and we want to sustain that, and we want to put some of that if you will, quickly in the bank. But that being said, we're excited about prospects for acquisitions, and we see a number of interesting opportunities that are out there. And we have been quite consistent in stating that we're focused on accretive, cost, synergy-based acquisitions that are essentially completed at a reasonable purchase price. And if those are not available to us, then we would look at other mechanisms to get that back to -- that cash back to the shareholders. We do have additional organic opportunities but frankly, we have been putting a pretty high standard here to push back to limit the amount of capital investment within Carpenter, the Legacy Carpenter, because we've made a fair investment over the last few years back into the business. Julie Yates Stewart - Crédit Suisse AG, Research Division: Okay. And then just -- is there any color you can provide on what is going on in aerospace. I think it's declined now for 4 quarters in a row, year-on-year, and I think it was 2 quarters ago that you said the demand had stabilized and engine destocking was largely over. So is there any -- are there any other factors you can attribute the weakness to given where production rates are?

Julie, this is Andy Z. And I would stay consistent with our guidance that we've given in the past in terms of the engines we are seeing. As we said, backlogs continuing to -- continued to improve and increase. And our expectation is that, that will be working its way out over the next couple of quarters.

One point, Julie, that I just add to maybe provide a little additional color on that, is just that our backlogs have been extended and have extended out further. So we -- we're working our way through, if you will, the legacy backlog that we had with -- is more legacy mix, and that will take a little bit more time, but it's beginning to change as we work our way through Q1.

Your next question comes from the line of Gautam Khanna from Cowen and Company.

I wanted -- given Tony and Bill, you've given some color on the below the line items. Last quarter you mentioned that you'd expected gradual sales recovery and you've also made the comments on EBITDA improving year-on-year now, starting in Q2. I was hoping you could give us some more direct feedback to calibrate expectations, because when I look at consensus, EPS expectations are looking for a 44% year-over-year gain in fiscal '15 on well above 10% sales growth. Can you please calibrate us more directly on above the line items? What you expect is the reasonable growth rate both for sales and perhaps for EBITDA given all these moving pieces?

Well, Gautam, you do a very good job of digging into the details and working through your model. And so you've articulated, I think, some important points. We're very bullish in so many respects and the underlying demand in our core markets. Clearly, we need to continue to ramp up the output of Athens to enable sales growth. And we feel very good about that, but our legacy system is pretty well tapped out so Athens is really an important component of that. That will be to some degree the rate-limiting step in terms of volume growth from Carpenter. And from a mix standpoint, we see the improved or richer order entry mix, and we see it in our backlog. We see it if you were projected to begin in Q2, but just like you, we'd like to see it start hitting our sales before we begin to stretch expectations too far. So I think this is a year which is going to be a transition year for us, and we have internally aggressive targets, and I think externally some people have maybe more aggressive targets than we have ourselves.

Okay. And maybe to drill down, at SAO you do have incremental depreciation kicking in, in the September quarter. It sounds like you had some of it in the June quarter as well. Do you expect the net operating margin at SAO ex-surcharge given you had a tough Q1 compare from last year, being above, equal to or below that of fiscal '14 to 17.3% that you reported ex-surcharge?

Gautam, that's probably at a level of detail that we wouldn't get into right now. But I think you are correct. We will have the incremental depreciation, but it's important to note that for the most part, we had that in our Q4 numbers. So we started up operations essentially on April 1, and while there are a couple of pieces of equipment that arrived in the quarter, we have the bulk of depreciation in our Q4 numbers. So that's why we talk about normal seasonality and the factor of depreciation, you can see it in our Q4 results already.

And to clarify your earlier comment, Bill, you mentioned, obviously, the backlog number that SAOs sequentially have picked up now for 2 quarters in a big way, yet the conversion into revenue, is that gated by the backlog you had to get out the door that's lower-priced and, if you will, legacy, or is it the orders or purchase orders you're getting have ship-to-dates that are way out in the future and that's the gating factor?

Well, the ship-to-dates are not way out in the future. They're, for the most part, driven by the first available shipped date given the loading on our system. And as I mentioned, for example, if we were to take an order today for an exciting new application with an exciting new margin, we would be quoting essentially delivery in January. So that gives you the type of time that it's taking to work through our existing backlog. And I think if you were to reflect back as we have, upon what happened in fiscal year '10, we began to see our backlog go up and it was several quarters later, where we saw that translate into the margin improvement on a direct contribution per pound, so we made comments about that in the past and obviously our past earnings calls. But there was a lag that happened before and we see a lag which is essentially consistent with that in this current market cycle.

Your next question comes from the line of Chris Olin from Cleveland Research Company.

I guess I just wanted to circle back to your comments on the titanium wire business. Can you give us a little bit more color on what you're seeing regarding this inventory situation? How long do you think it would take to get balanced? I mean is there anything in there that's changed your outlook, and I guess I asked because some of the other companies that have reported started to talk about the inventory, at least within the Boeing channel, getting better, and I guess I wanted a little more perspective from you.

No, no macro change. This is Gary Heasley speaking. We don't anticipate any macro change. We think demand will remain robust as I said. We had very strong shipments in the fourth quarter. We think we'll have robust shipments in the first quarter, but we don't if they'll be quite as strong because some stuff, some of the material has to work through the system. We spoke about the additional capacity we're bringing online. We need that capacity going forward to make sure we properly serve our customers. So again, not a macro change, and we think that market will remain strong for us.

And Chris, this is Bill. We have not necessarily felt or seen that there was a buildup of titanium fastener wire inventory in the system. I think where we've seen and felt that has really been more on the nickel and stainless side. And that side, again from the order intake pattern, it appears as though the consumption rate is picking up, and from our viewpoint, more in line with actual consumption at the OEM level.

Okay. And then just one more question. As this Airbus A350 ramps in its production, will you see a benefit from that on the finish -- on the wire side?

No question about that. It will not only, of course, use fasteners but with the composite materials that are used it expands the use of titanium and our fasteners -- titanium fasteners and we will logically benefit from that demand growth.

Your next question comes from the line of Phil Gibbs from KeyBanc Capital Markets.

How should we think about the engine business, kind of moving through '15 into the '16 as far as what -- where we should expect an inflection? You described it in -- I believe in the press releases as demand weakness. So I'm trying to think about that, and then also how you're seeing the spares market unfold?

Sure. Again, this is Bill, and Andy can provide some additional comments. But when we referred to demand weakness, I think from our perspective that was essentially reduction of inventory further down in the supply chain because the number of aircraft being built is increasing and is expected to increase further. I think there is going to be some interesting supply-chain dynamics over the course of the next couple of years as the OEMs transition from 1 model and 1 engine to another. There'll be some builds and there'll be some prebuilds and then there'll be some periods where inventory will be worked down. So I think it's going to be a growing dynamic market over the next year or so. And we believe that the consumption of materials will increase not just based upon the organic growth rate, but we don't see the trend towards destocking being at least as strong as it was over the past year.

And Phil, this is Andy. I would say that we're well positioned for growth on the new platform. So I mean if you look at our legacy share positions with a core component like rims, discs and bearings and super alloys and Ti fastener materials, and then the contracts that we've announced and we've talked about in prior earnings calls and are currently in negotiations for super alloys and powder, we see increased share position on the new platforms.

Your next question comes from the line of Josh Sullivan from Sterne Agee. Josh W. Sullivan - Sterne Agee & Leach Inc., Research Division: Can you expand on the dynamics in your oil and gas markets, and why have completions been so weak here with the other rig counts up?

Josh, this is Andy. I'll take that one again. Just looking at primarily we have to split the business between the PEP side and SAO. But basically completions coming through SAO manifest mostly in the distribution supply chain. So when you look at that supply chain and what they've been doing with their stock levels, we've seen that they've been destocking over the prior couple of quarters, but we're seeing that start to moderate now and more normal patterns start to come in. So we expect that to -- as Bill made some comments about what we're seeing in the backlog and for oil and gas, and we think that should moderate going forward.

In the area of the drill power demand that has been strong both from a rental as well as a sales perspective. So... Josh W. Sullivan - Sterne Agee & Leach Inc., Research Division: And then just switching over to the Dynamet expansion, has this been driven by contractual demand with customers or are you guys expanding for strategic reasons?

I would say that it is really a combination of the 2. I mean we do have established supply agreements that require us and we're happy to provide material to the growing demands of say, Airbus and Boeing and others. At the same time, we view this as a strategic business for us, and we know that one of the key success factors for us to be a core dependable supplier in a market that really has very few suppliers, is to make sure that we have absolutely outstanding customer satisfaction, that we have quick lead times and the ability to handle surges in demand. And so we're investing strategically so that our customers feel as comfortable and hopefully even more comfortable working more closely with us as their demand continues to grow.

Your next question comes from the line of Steve Levenson from Stifel. Stephen E. Levenson - Stifel, Nicolaus & Company, Incorporated, Research Division: I know your strategy in the past has been not to do anything that competes with customers but some of your peers have completed some downstream acquisitions. So with free cash flow improving coming up next -- in the coming fiscal year, the one that's just started, is there any need to or feel any pressure to do something similar?

Well, I would say that we still feel very, very good about the approach that we've taken in terms of supplying the market. We do from time-to-time find ourselves in a similar space as some of our customers. It's hard to not have any overlap there. But for the most part, what we've done is really focus on making sure that customers know that they can depend upon us, that we're a good partner and that we're not, if you will, supplying ourselves at a preferential rate. So we look at each opportunity as it comes up. We see opportunities to do acquisitions and grow in directions that won't put us in, if you will, direct competition with our customers. And so right now, we're staying the course and it's important to note that there are a number of companies out there that have the ability to manufacture their own metal, but they have somewhat of a tapered integration strategy that allows us to supply them as well. And so even as some customers have moved downstream, it doesn't mean that we're not able to supply them and that they don't feel good about supplying them. In fact, it's just the opposite. I think we're focusing to be excellent suppliers to them as well.

Your next question comes from the line of Sohail Tharani from Goldman Sachs.

I wanted to ask you on the Athens facility and the growth in that part of the business, is the hurdle of the bottleneck right now is just the qualifications? It means that if you were qualified right now, you can immediately get some more orders?

There certainly is no question about that, and I'd like to use your question here which is an important and good question to point out a couple of important concepts. One, 20% to 30% of the premium and ultra-premium product that we sell is not VAP approved. Sometimes there are location approvals but frankly, we've been seeing very good customer interest and success in getting those site approvals. But we know that the, say, rotating disc longer cycle VAPs will take a longer period of time. The real bottleneck right now today is not customer approvals, but as you can imagine, we have a very rigorous approval process and standard that's required before we transfer existing production, even if it's not VAP to another location. And we essentially just began moving from modeling to production in Athens in the first quarter. So we are getting the internal approvals proving out our ability to produce the quality product that our customers expect, even in non-VAP applications. And that is the key step, if you will, at this point in time, in terms of getting more sales through Athens. It's -- of course, we need customer approvals and that's an important part of what we need to get done. But right now, we are just working very hard to complete the initial production on different products to complete the testing associated with it. So we feel comfortable moving additional grades and sizes into Athens.

I think we have a great effort on that, and we're making good progress, but that's really the bigger step at this point in time. And if I could, I'm going to throw in one more point because there -- we're very excited, of course, about Athens and we'll be tracking some very important metrics on Athens including its utilization and it's cost per ton and other key aspects like that. But I want to emphasize that Athens, the vision from it from the start, is that it's part of the overall SAO system. So as an example, in Athens, we have remelt furnaces. We have a radio press and we have, if you will, downstream processing. And while ultimately we'll be focused on products that will start with 1 and go all the way through the end, we're leveraging capacity that we have in the remelt furnaces and downstream in the finishing operations, right now to debottleneck our legacy, Latrobe and Reading operations, even while we're working through some of those internal approvals for Athens. So I know you're going to want more detail and we will -- I think we've showed ourselves to be quite transparent in terms of how we portray the things that we're doing in the strategic initiative and we will continue to provide information on that front. But I just want to emphasize that we're -- this really is a system gain that we're trying to drive. And if you look at fiscal year '14, we were running at a very high level. So we need the system to grow and that will be sometimes using the remelt furnaces, sometimes it will be the radio press and sometimes it will be the turning and the finishing, and sometimes it will be all 3. So that's probably more than you're looking for, but I think there are couple of important notes about how we're looking at Athens and its role within our system, which I wanted to emphasize. So thank you for asking that question.

I appreciate the details. And if I look at your total capacity now, you're going to have at the Athens events folded on top and the SAO, do you think if you look at the builders over the next 2 years, you can fully utilize this capacity?

We have said from the time we put the capital request before the board for our investor presentations and continue today to think that we'll be able to use that capacity within roughly a 4-year period and we are still believing that, that's the case. It's interesting because it's possible that, that could -- that capacity could be used more quickly if the markets grow a little faster. And as I mentioned, we're increasingly focusing on some other markets which are very attractive to us that we have not been not able to support in the past. And then, we don't have visibility as to the capacity, capabilities that other -- just a couple of other suppliers, but to those other suppliers in the industry. And so it's not clear if we'll end up tapping some of the capacity we have quicker just as the overall market gets tighter.

And 1 more for Gary before I pass on the baton. Gary, you mentioned in your prepared remarks 2 things, margin squeeze in the first quarter and also some inventory destocking. Can you tell us which products we're talking about and is the margin squeeze temporarily, and is it because of the pricing or is it because of the cost issues in the first quarter?

That's a great question. In the products that we see some margin compression coming, it's more of a mix shift. We don't see it in cost, where we actually see our cost getting a little bit better. But we are growing our presence in some markets that we have not been as strong in, where margins are a bit compressed or a bit tighter than what we've been doing otherwise. So it's just a matter of growing the business and shifting into a broader segment of the market, and again, participating in segments where margins are just a bit tighter. So I think that answers the question.

And which part of inventories are high are we talking about? Is it titanium only?

Yes, the only comment I made on inventory was that in our -- we had very strong shipments of titanium fastener wire in the fourth quarter. As we roll into the first quarter, our goal is to rebuild our internal inventories, make sure we got inventories where they need to be for all of our customers and to really, actually, improve our support to them. But there may be a little bit of material that has to work its way through the system in the first quarter. Again, there is no change in the macro view that titanium fastener demand is going to remain very, very strong. And as we put in this new capacity, we will get to a point where we hopefully have a little bit of headroom, so that we can be much more responsive to our customer short-term needs. And so that we can really make certain that they're always properly supplied. So what I was really speaking to is a very near-term circumstance based on strong shipments in Q4 and nothing longer-term in that.

Your next question comes from the line of Michael Gambardella from JPMorgan. Michael F. Gambardella - JP Morgan Chase & Co, Research Division: I have a question, I'm sorry if you responded to Sal's question with this answer. I -- the operator broke in and I couldn't hear your response. But just if you could assume that from the beginning of the fiscal year that just ended, that you had Athens at -- capable of its full capacity having ramped up already, starting the beginning of the year. Where do you think Athens would have produced for the year? What production number? And how much of that would have been incremental to the company, and how much of it would have taken volumes off of the load in your other Carpenter facilities? Just ballpark.

Right, the first part of your question, I need you, if you wouldn't mind, just to explain it again, so I understand the reference period or the kind of scenario that you're profiling. I would say that at this point, virtually every process ton we run through our Athens operation is incremental in terms of our ability to produce product for Carpenter, because we're full on our press and our forge and our remelt furnaces and so forth in our legacy operation. So anything we can do down in Athens is really incremental to our system. Michael F. Gambardella - JP Morgan Chase & Co, Research Division: Well, I was just saying, if you had Athens at full -- capable of its full capacity at the beginning of this year that just ended, the fiscal year, how -- what would you think you'd run Athens at for the full year that just ended? And how much of that would be incremental and how much of it would be taking some product away from some of the other Carpenter facilities, because I would assume since Athens is going to be your low-cost higher-margin operation that you'd want to base load Athens to maximize profitability for the whole company.

When you start the operation as we are right now, the ability to produce will say non-VAP product in Athens, freeze up capacity in our VAP equipment legacy, Carpenter, Latrobe and Reading, and over time, we believe the market's going to grow such that we'll be able to, as we get approvals, run more VAP product through Athens and our other facilities will stay full as well. We're not looking to transfer existing production to Athens. We're looking to support our customers as we believe their demand is growing. In terms of the question you had about, if Athens was fully qualified kind of across the circuit, fully operational across all aspects, that's a great question and we could kind of throw out an answer but I think it would really deserve a little bit more thought. And I say that because we have -- we're very specific about our sales efforts and when a market place is slower, we tend to look a little bit broader on when you're booked out for, if you will, through the end of December or middle of December. We're not pushing to necessarily pull in always new customers and new applications. So it's a little bit of a hard hypothetical for me to throw an answer out, and I'm not avoiding your question. We just need to ponder that a little further. Our vision is to not only participate more with our customers -- existing customers, but also to be in some other markets that we just couldn't support or chase in the past. So I wish I could be more precise, but I just don't have a fingertip number on that. It's a scenario we haven't really run.

Your next question comes from the line of Gautam Khanna from Cowen and Company.

Gary, I was hoping you could comment on the new capacity on the titanium wire finishing operations. What the cost structure looks like, and if you are in talks with any of your major downstream customers for kind of longer-term tenure type contracts with firm pricing?

Sure. From a cost structure standpoint, we don't obviously have the various cost structures of different process lines, but these will be very efficient lines, and as they're incremental to what we already have, we should get better absorption of our fixed cost across those lines. So that's all positive for us. The goal in establishing those lined, as I said a moment ago, is to not just have the ability to supply everything that's needed but to make sure that we're serving our customers even better, they have a time, shorter-term needs that we may struggle to respond to. We want to get in a position where when they have a challenge, we are able to respond very, very quickly, because I think that is going to make them just more effective on what they're trying to do in serving their customers who also at times have a bit of a mix shift in what their demand is.

And Gautam, in terms of the contracts of, as you can imagine there are different customers with different cycles, some are several years, some are year-over-year, and some are looking longer-term. I will tell you as a company and philosophically, we know that if customers aren't going to depend upon us, then we need to be prepared to participate with them in a partnering manner to match up the length of our contracts if they're interested with the length of their contracts. And we also recognize that they have to step up for some commitments to make their, if you will, commercial relationship work. And if we're going to be a partner, we have to step up with them. So we are very flexible, very open and we have different contract lengths, but really we want to be customer-driven on this. We need to be a partner in the supply chain.

And to that point, Bill, you see all of the various subcontract manufacturers to Boeing especially talk about some incremental pricing pressure, at least cost pressure under partnering for success, whatever the other OEMs might want to call it. How does that relate to your business, you've mentioned some price increases you've announced. I presumed you're giving deflationary pricing from your Aerospace business, and how should we think about net pricing year-to-year fiscal '15 and beyond, given all these moving pieces?

The price dynamics that we see are to a great extent there are probably more related to transactional side of our business because of just supply/demand dynamics over the last 12 months. We work with our customers to again try to provide price structure for the length of the contract that makes sense where we have a commitment to help them achieve their objectives in terms of, if you will, their ability to offer the product for a lower price to the OEM. We try to set up, as you can imagine, first and foremost, efforts to drive increased system efficiencies and productivity. And we're actually pretty successful in doing that in many cases. So it's not just a product in a box, but working with the customer to drive those efficiencies. And there are situations where their over the life of a contract, especially a longer-term one, there are some price reductions, which are there especially if we can't drive the productivity improvements that we want. So that's why it's important for us to continue to enhance our mix, bring on new business, continue to innovate with new technology, and to manage our production costs internally so that we can do that in a way that actually enhances our margins as opposed to lead to a contraction. And so far, we feel pretty good about that approach.

I understand. I guess I'm asking more specifically in terms of many of us model sales growth kind of with the view that it's correlated one-to-one with volume growth, and that pricing sort of nets to 0 year-to-year. Is that a correct assumption or should we assume that you're going to get net price given the price increases you've announced in the spot business? Or should we be thinking that it might in fact be down year-over-year given the deflationary characterization of most of the Aerospace business out there today? Just help us calibrate.

Sure. I don't think it should be flat because you saw the sharer, our tons were up and our revenue was down, but I would say again that the primary driver for that was not price. There was some aspect of price there and so we would see as the market tightens up, we'd like to think that the pricing on transactional business will actually have some improvement. But we'd also -- are targeting, anticipating and expecting that we'll see a richer mix of products come back into the system. And so we -- our plans for the year are based on improving, if you will, the revenue per pound, not decreasing it. And I don't know that all of that will be price, some of it will be, but again that will be more on the transactional side. Our long-term agreements, I mean, if you look at it, Gautam, and again, I hope this is helpful detail, but we've been under the same basic long-term agreements in most cases for the last 3 to 4 years because they are long-term contracts. So the dynamics in terms of pricing are the same this year as they were last as they were 2 years ago and 3 years ago. There's nothing fundamentally that shifted in terms of those dynamics.

And that concludes the question-and-answer portion of today's call. Let me now turn it over to Mr. Michael Hajost for closing remarks. Please go ahead, sir.

Thank you, again, for participating on today's call. We look forward to speaking with you again next quarter. Thank you, and goodbye.

This concludes today's conference. Thank you for your participation. You may now disconnect and have a great day.