3. 3
What is our game plan?
Our focus is on critical aerospace forging
applications using sophisticated materials that
are highly complex metallurgically, where there is
a strong barrier to entry, and where value can be
added beyond the forging.
We focus on stainless, titanium and nickel materials
where often there is not enough industry capability.
We add value through post forging operations
(blasting, machining, heat treatment).
We focus on applications with current and potential
customers where there are customer approval
barriers or quality requirements (NADCAP, AS9100)
4. 4
Auxiliary Power Unit (APU)
Forged Titanium
impeller for the
exhaust section
Forged titanium
inlet compressor
section
Engine
We provide forgings for the following
applications
5. 5
Aircraft Structural
Landing gear
Closed die
Forging for the
engine attach
pylon from 15-5ph
steel
Closed die forging
for landing gear
strut from 300
Maraging Steel
We provide forgings for the following
applications
6. 6
Flight Control
Forged high strength
17-4 ph steel for
flight control
actuators
We provide forgings for the following
applications
7. 7
We have lost share in the aerospace market since the
recession in 2009. We have been flat since 2011.
Sales History – California Drop Forge
CAGR 1.6% (2009 – 2014FC)
$M
’09-’14
CAGR
10.7%
1.9%
-1.9%
APUs
Engines
Airframe
Medical
-13.5%Landing Gear
1.6%Total
We have been growing well in APUs, but have been
challenged in other areas.
In Medical, we lost to low cost competition and are not
focused on growing there due to a wealth of opportunity
in aerospace.
-12%
FCS 0%
8. 8
Margins grow markedly over time
CDF Gross Margins by Product Line
Gross margins improve overall by 610
basis points since 2005
12 mos 12 mos 12 mos 12 mos 12 mos 12 mos 12 mos 12 mos 12 mos 9 mos
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Product Line
APUs 24.3% 23.3% 30.1% 26.8% 30.0% 22.4% 18.4% 16.8% 20.9% 26.5%
Engines 18.2% 22.3% 33.0% 34.3% 31.5% 27.0% 22.5% 24.4% 27.7% 31.3%
Airframe Structural 20.7% 34.9% 44.3% 49.2% 52.9% 51.8% 44.4% 40.5% 45.3% 47.3%
Medical 34.2% 25.3% 27.0% 27.8% 42.4% 51.1% 38.4% 38.9% 38.1% 31.7%
Landing Gear 11.3% 29.8% 32.6% 31.7% 30.5% 23.9% 21.1% 29.1% 27.2% 28.9%
Flight Control 19.4% 21.6% 49.0% 43.7% 39.4% 35.9% 21.9% 27.7% 29.1% 32.0%
Die Fab 17.1% 25.2% N.A. 25.7% 42.0% -7.8% 27.5% 54.4% 46.2% 28.8%
Total 25.4% 26.3% 33.6% 32.6% 37.8% 33.4% 27.4% 27.0% 29.0% 31.5%
9. 9
We have grown in our top customers because of Honeywell
(which is labelled as Honeywell, LPI and Aeronamic below)
Sales History – Cal Drop.
For Top-10 Customers$M
Honeywell
Lockheed
Total
Due to responsiveness, we have grown Honeywell significantly.
Beckman declines because of our share loss to Chinese competition.
We have lost many customers such as CT Tool, Berkshire, Capo, Northstar Aero, BTL due to
inflexibility of our T’s & C’s.
We lost at Ducommun due to a design change to composites.
We will drill into our lost historical customers to determine root cause and corrective action.
Aeronamic
Beckman
.
LPI
ALP
’09-’14
CAGR
12%
29%
-6%
9%
7%
66%
NMF
10. 10
We have not penetrated new aircraft platforms. This causes
a problem for us in the future because the growth in
Aerospace is on these new programs
We have content on the 787 on
the APU, but no other content
on the 787 or other new aircraft
(E2, A350, C-Series, A320-
NEO, A330-NEO, 737-MAX,
777-X, JSF)
Some Content No Content
Boeing 787
Embraer E2
Airbus A350
Bombardier C-Series
Airbus
A320/330 Neo
Boeing
737-Max
Boeing
777-X
11. 11
The diagrams below show forging applications on an
aircraft. CDF can provide most of the items below. PMP
can do items in red (up to 80 pounds).
APU
Fuel Injection Nozzle
Rotor Compressor
Shrouds
Shaft
Impeller
Engines
Hot Zone
Combuster
Discs
Bliscs
Shaft
Cold Zone
Compressor
Rings
Discs
Impeller
Gear Box
Blades/Vanes
12. 12
Landing Gear
Nose
Drag Brace
Main Shaft
Side Brace
Cylinders
Strut
Torque Arms
Wheel Axle
Airframe/Structural (see next page)
Pylon
Rudder
Flap Track
Stiffeners
Nacelle
Flight Controls
Actuators
Servocylinders
Thrust Reversers
The diagrams below show forging applications on an
aircraft. CDF can provide most of the items below. PMP
can do items in red (up to 80 pounds).
14. 14
This is the market for all forged products in
Aerospace
Forgings in the Aerospace Market
HBD is a small player focused on APUs. We win
because others have difficulty doing complex forgings.
We believe we can extend into engines and airframes
without much difficulty (target is Precision Cast Parts)
15. 15
This the market for forgings by customer. We have a
position in APUs, but little outside APUs despite having
capability to compete.
Customers in the Aerospace Market
We already have approvals at Spirit (because we are Boeing approved), UTC and
Honeywell. For many parts we already have tooling. We believe we can grow with
these customers.
We need to get on approval lists elsewhere, but believe we can win at GE, Spirit,
Safran and Rolls-Royce
We believe there is also an opportunity to supply the hard metal machining suppliers
to the Tier 1 suppliers highlighted above.
16. 16
We have 3000 dies in our CDF warehouse that could be
used to capture existing forgings on existing programs.
Example Dies in Inventory
We need to review our 3000 dies to determine which are still
active.
We have 175 dies for Boeing alone (737, 747, 777, F-22, F-
15, F-18, C-17, Apache AH-64, CH-47). We may be able to
capture content with these dies (particularly 737, 777).
17. 17
This the market for forgings by press type
Press type in the Aerospace Forging Market
HBD plays in the $380M Drop Hammer market. This process creates high fracture
toughness.
PMP has an opportunity in the screw press market for engines (no sales today).
We believe that mechanical presses would be a beneficial complement to our drop
hammer competency. Faster cycle time, lower cost.
18. 18
Our sales break down into drop hammer
presses and hydraulic presses
California Drop Forge Sales by Press Type
2013 = $30M
2/3 of our business is in Drop Hammer presses.
We developed hydraulic press capabilities in the past 4-5 years because our customer
asked us to for more dimensionally precise requirements
PMP has no commercial aerospace sales today, but has capability that we can exploit
for smaller parts that are utilized on engines and APUs (rotating components)
19. 19
The previous slides have shown you that…
• We have grown slower than the Aerospace market in recent
years
• We have thwarted our own growth by not having front end
resources or by restrictive policies
• We are quoting a lot of business, but not yielding adequate
sales
• We are not positioned adequately on new aero programs
• We play in a large market where we believe we can win and
grow substantially
• We believe we can grow fast with existing customers and their
machining suppliers where we are approved and have dies.
• We believe we can be successful at gaining approvals and
share at a short list of Tier 1 and Tier 2 customers where we
do not have a position today.
Our Problem Statements and Hypotheses
address the items above.
21. 21
Problem Statement 1
In the Aerospace market, we face challenges due to a lack of
sales and marketing, as well as prohibitive sales policies.
We have not seen consistent growth because we have failed
to market the company, and potential customers do not know
who we are. Additionally, we have had customer unfriendly
policies that have caused us to lose business.
22. 22
Hypothesis 1: In Aerospace, there a few major OEMs where we could get significant (10s of millions
of dollars) new business. In some OEMs we already have approvals and dies and have a quick path
to growth (Boeing, UTC, Honeywell). In other OEMs we need to get on approval lists, but can gain
significant new business relatively easily (GE, Spirit, Safran-Microturbo, Rolls).
0
2
4
6
8
10
12
Boeing Spirit Bell
Helicopter
Airbus Rolls
Royce
GE UTC
Opportunities in Millions of Dollars
Current CDF Market Share
$15M target
opportunity Opportunity at Aerospace OEMs
23. 23
Hypothesis 2: An expedited path to Aerospace major OEMs (where we
are already approved) is through hard metal machining suppliers.
0
2
4
6
8
10
12
Opportunities in Millions of Dollars
Current CDF Market Share
$20M target
opportunity Opportunity at Hard Metal Machining Suppliers
24. 24
Hypothesis 3: We can identify $10M in new business on upcoming new
aircraft (777x, 737 Max, A320NEO,Bombardier C Series Embraer E2).
C Series
$10M Target
Opportunity
25. 25
Hypothesis 5: We can exploit PMP’s capabilities for smaller sized parts that are
integrated into larger structures in the Aerospace market (primarily in engine OEMs
once we gain penetration at Pratt, Rolls-Royce, GE).
PMP has the ability and equipment to forge intricate parts that may require
the use of specific forging equipment. (hydraulic, screw, mechanical and
high velocity presses)
Aerospace quality accreditation (AS 9100)
Compliment CDF capabilities with smaller size forgings. (less than 80 LB)
Blades, vanes and nozzles are components within PMP’s capabilities.
$30M to $40M
Opportunity
