Carpenter Technology Corporation (NYSE:CRS) today reported record
first quarter sales and net income. Results were led by solid
demand across several key end-use markets, increased sales of
higher value products, and the company�s continued focus on cost
through lean and variation reduction. Net sales for the first
quarter ended September 30, 2006 were $404.5 million, compared with
$346.0 million for the same quarter a year ago. Net income in the
first quarter was $51.2 million, or $1.94 per diluted share,
compared to net income of $40.1 million, or $1.54 per diluted
share, a year ago. Free cash flow in the first quarter was $50.8
million, compared with $0.7 million in the quarter a year ago.
First Quarter � Operating Summary �Our focus on the sale of higher
value materials, continued efforts in lean and variation reduction,
and favorable market conditions helped us to achieve record first
quarter results,� said Robert J. Torcolini, chairman, president and
chief executive officer. �We are especially pleased to report
record performance despite the significant rise in the cost of raw
materials during the quarter. �Demand from the aerospace market
remained robust during the quarter, resulting in record first
quarter shipments of titanium materials and solid growth in our
specialty alloys and ceramic materials.� For the first quarter,
Carpenter�s sales increased 17 percent compared to a year ago.
Sales benefited from higher surcharges, base price increases, and
increased sales of higher value materials. Adjusted for surcharges,
sales increased 10 percent from the first quarter a year ago. Sales
to the aerospace market increased 34 percent from the first quarter
a year ago to $158 million, a first quarter record. Demand for
titanium materials used in the manufacture of fasteners for
commercial and military aircraft was particularly strong during the
quarter and resulted in record shipments. Additionally, Carpenter
experienced solid demand for its specialty alloys and ceramic
materials used in the manufacture of aircraft engines, turbine
blades, and airframe structural components. Automotive and truck
market sales grew 23 percent from the first quarter a year ago to
$52 million. Increased sales of high temperature materials used in
engine components were the primary reason for the growth. Also,
higher sales of materials used in automotive safety devices
contributed to the increase. Sales to the industrial market
increased 13 percent to $88 million. The industrial market excludes
sales of materials used in oil and gas exploration applications,
which are now included in a new category titled �energy.� Sales to
the industrial market primarily benefited from increased sales of
materials used in the manufacture of capital equipment and higher
value products sold to independent distributors. Consumer market
sales increased 2 percent to $48 million. Increased sales of higher
value strip products used in thermostats and consumer electronic
applications were partially offset by reduced sales to the sporting
goods market. Sales to the energy market, which includes oil and
gas and power generation, were $29 million or flat with a year ago.
Sales to the oil and gas sector increased 67 percent from the same
quarter a year ago. Sales benefited from profitable market share
gains as well as growth with key customers. Offsetting the growth
was lower sales to the power generation sector due to the timing of
shipments to customers. Medical market sales decreased 7 percent to
$30 million. The decline in sales reflected inventory adjustments
taking place within that supply chain. Geographically, sales
outside the United States increased 20 percent from the same
quarter a year ago to $123 million, a first quarter record.
International sales, which represented 30 percent of total sales,
reflected strong demand for higher value materials, particularly
from the aerospace market. Carpenter�s first quarter gross profit
increased 13 percent to $103.9 million, or 25.7 percent of sales,
from $91.7 million, or 26.5 percent of sales, in the same quarter a
year ago. The decline in gross margin as a percent of sales
resulted from the steep rise in the cost of nickel, a primary raw
material for the company. During the quarter, average nickel prices
on the London Metal Exchange were 100 percent higher than the
quarter a year ago. Cost of sales in the first quarter of fiscal
2006 included a charge of $26.2 million to value inventories using
the last-in, first-out (LIFO) method of accounting, due primarily
to rising nickel costs. In the first quarter a year ago, cost of
sales included a $3.7 million credit to value inventories using
LIFO. Carpenter�s surcharge mechanism is structured to recover high
raw material costs, although with a lag effect. Additionally, gross
margin as a percent of sales was negatively impacted by a 68
percent increase in the amount of surcharge collected during the
recent first quarter versus a year ago. While the surcharge
protects the absolute gross profit dollars, it does have a dilutive
effect on gross margin as a percent of sales. In the recent first
quarter, the dilutive effect on gross margin was approximately 120
basis points. Partially offsetting the impact of higher raw
material costs on margins were increased base prices, higher
volumes and ongoing cost reductions generated by lean and variation
reduction initiatives. Carpenter generated a 15 percent increase in
operating income to a first quarter record of $73.1 million, or
18.1 percent of sales from $63.7 million, or 18.4 percent of sales,
generated a year ago. Operating income in the recent first quarter
reflected $1.6 million of due diligence expenses associated with
the review of an acquisition target. Outlook �The strength in
aerospace and other key markets should continue to drive our
performance through the balance of this fiscal year,� said
Torcolini. �We are continuing with our relentless focus on lean and
variation reduction to create additional operating leverage as we
capitalize on these strong market conditions. �We remain committed
to refining our business operating model so that we will continue
to generate returns in excess of our cost of capital through all
phases of a business cycle.� Torcolini concluded, �Based on current
market conditions and expectations for steady growth, we anticipate
another record year of sales and net income in fiscal 2007.
Additionally, we expect free cash flow to exceed $200 million.�
Segment Results � First Quarter Specialty Metals Net sales for the
quarter ended September 30, 2006 for the Specialty Metals segment,
which includes Specialty Alloys Operations, Dynamet, and Carpenter
Powder Products business units, were $377.2 million, compared to
$321.3 million in the same quarter a year ago. Sales of specialty
alloys, stainless steels and titanium experienced strong growth in
the quarter. Sales of specialty alloys increased 20 percent to $172
million in the first quarter from a year ago. Solid demand from the
aerospace and oil and gas markets were the primary contributors to
the increase. Stainless steel sales were $144 million or 13 percent
higher than a year ago. Higher sales to the automotive and
industrial markets contributed to the increase. Sales of titanium
increased 33 percent to $48 million. Robust demand from the
aerospace market for wire products used in the manufacture of
aerospace structural fasteners was the primary contributor to the
growth. Partially offsetting the increase was reduced sales to the
medical market. Operating income for the Specialty Metals segment
was $71.9 million in the recent first quarter, compared to $61.0
million in the same quarter a year ago. The change in operating
income reflected increased sales of higher value materials, higher
base prices, and a continued focus on operational improvements.
Engineered Products Segment Net sales for this segment, which
includes sales of ceramic components and fabricated metal,
increased 12 percent to $28.0 million from $25.1 million a year
ago. Increased sales of ceramic cores used in the casting of jet
engine turbine blades primarily drove the improvement. In the first
quarter, operating income for the Engineered Products segment was
$5.4 million compared to $5.2 million in the same quarter a year
ago. The increase was attributable to higher sales and better
operating efficiencies. Other Items In the first quarter of fiscal
2007, selling and administrative expenses were $30.8 million, or
7.6 percent of sales, compared to $28.0 million, or 8.1 percent of
sales, in the same quarter a year ago. The increase was primarily
related to $1.6 million of due diligence expenses associated with
the review of an acquisition target and $0.8 million from executive
recruitment fees. Interest expense for the quarter was $5.8
million, compared with $6.0 million in the first quarter a year
ago. Other income in the quarter was $5.9 million, compared with
$3.0 million in last year�s first quarter. The change in other
income is primarily due to increased interest income from higher
balances of invested cash. Carpenter�s income tax provision in the
recent first quarter was $22.0 million, or 30.1 percent of pre-tax
income, versus $20.6 million, or 33.9 percent, in the same quarter
a year ago. The tax provision in the recent first quarter was
favorably impacted by the reversal of certain deferred tax
valuation allowances due to changes in specific state tax laws and
an improved outlook regarding the ability to use those benefits.
The company expects that its full year tax rate will be in the
range of 33 to 35 percent. Cash Flow and Liquidity Carpenter has
maintained the ability to provide cash to meet its needs through
cash flow from operations, management of working capital, and the
flexibility to use outside sources of financing to supplement
internally generated funds. Free cash flow in the recent first
quarter was $50.8 million, compared with free cash flow of $0.7
million in the quarter a year ago. Conference Call Carpenter will
host a conference call and webcast today, October 26, at 10:00 AM,
Eastern Time, to discuss the results of operations for the first
quarter of fiscal 2007. Please call 610-208-2800 for details of the
conference call. Access to the call will also be made available at
Carpenter�s web site (www.cartech.com) and through CCBN
(www.ccbn.com). A replay of the call will be made available at
www.cartech.com or at www.ccbn.com. Carpenter produces and
distributes specialty alloys, including stainless steels, titanium
alloys, and superalloys, and various engineered products.
Information about Carpenter can be found on the Internet at
www.cartech.com. Except for historical information, all other
information in this news release consists of 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, 2006, and the exhibits
attached to those filings. They include but are not limited to: 1)
the cyclical nature of the specialty materials business and certain
end-use markets, including aerospace, industrial, automotive,
consumer, medical, and energy including power generation, or other
influences on Carpenter�s business such as new competitors, the
consolidation of customers, and suppliers or the transfer of
manufacturing capacity from the United States to foreign countries;
2) the ability of Carpenter to achieve cost savings, productivity
improvements or process changes; 3)�the ability to recoup increases
in the cost of energy and raw materials or other factors;
4)�domestic and foreign excess manufacturing capacity for certain
metals; 5)�fluctuations in currency exchange rates; 6) the degree
of success of government trade actions; 7)�the valuation of the
assets and liabilities in Carpenter�s pension trusts and the
accounting for pension plans; 8)�possible labor disputes or work
stoppages; 9) the potential that our customers may substitute
alternate materials or adopt different manufacturing practices that
replace or limit the suitability of our products; and 10) the
ability to successfully acquire and integrate acquisitions. 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 STATEMENT
OF INCOME (in millions, except per share data) � � Three Months
Ended September 30 � 2006� 2005� � NET SALES $404.5� $346.0� � Cost
of sales 300.6� 254.3� Gross profit 103.9� 91.7� � Selling and
administrative expenses 30.8� 28.0� Operating income 73.1� 63.7� �
Interest expense 5.8� 6.0� Other income, net (5.9) (3.0) � Income
before income taxes 73.2� 60.7� Income taxes 22.0� 20.6� NET INCOME
$51.2� $40.1� � EARNINGS PER COMMON SHARE: Basic $1.99� $1.59�
Diluted $1.94� $1.54� � � WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING: Basic 25.5� 25.0� Diluted 26.3� 25.9� � Cash dividends
per common share 0.225� $0.15� PRELIMINARY CONSOLIDATED STATEMENT
OF CASH FLOWS (in millions) � Three Months Ended September 30 �
2006� 2005� � OPERATING ACTIVITIES: Net income $51.2� $40.1�
Adjustments to reconcile net income to net cash provided from
operations: Depreciation 11.5� 11.0� Amortization 0.4� 0.6�
Deferred income taxes (6.1) 0.3� Net pension expense 1.2� 2.7� Net
loss on asset disposals 0.1� 0.2� Changes in working capital and
other: Receivables 5.1� 4.3� Inventories (8.6) (25.6) Other current
assets (8.0) 0.5� Accounts payable 25.4� (12.4) Accrued current
liabilities (3.5) (10.1) Other, net (4.7) (1.3) Net cash provided
from operating activities 64.0� 10.3� � INVESTING ACTIVITIES:
Purchases of plant, equipment and software (7.3) (5.7) Proceeds
from disposals of plant and equipment 0.2� 0.2� Purchases of
marketable securities (309.2) (73.9) Sales of marketable securities
100.4� 72.3� Net cash used for investing activities (215.9) (7.1) �
FINANCING ACTIVITIES: Payments on long-term debt (0.1) --�
Dividends paid (6.1) (4.1) Tax benefits on share-based compensation
0.1� --� Proceeds from common stock options exercised 0.1� 3.1� Net
cash used for financing activities (6.0) (1.0) � Effect of exchange
rate changes on cash and cash equivalents (1.0) 0.2� � (DECREASE)
INCREASE IN CASH AND CASH EQUIVALENTS (158.9) 2.4� Cash and cash
equivalents at beginning of period 413.4� 163.8� Cash and cash
equivalents at end of period $254.5� $166.2� PRELIMINARY
CONSOLIDATED BALANCE SHEET (in millions) � September 30 June 30
2006� 2006� � ASSETS Current assets: Cash and cash equivalents
$254.5� $413.4� Marketable securities 290.0� 81.2� Accounts
receivable, net 229.8� 234.7� Inventories 233.7� 224.3� Deferred
income taxes 15.5� 13.7� Other current assets 40.6� 32.0� Total
current assets 1,064.1� 999.3� � Property, plant and equipment, net
536.4� 541.1� Prepaid pension cost 247.0� 247.1� Goodwill 46.4�
46.4� Trademarks and trade names, net 19.9� 20.1� Other assets
33.9� 33.9� Total assets $1,947.7� $1,887.9� � LIABILITIES Current
liabilities: Accounts payable $162.9� $137.4� Accrued liabilities
130.7� 133.8� Current portion of long-term debt 0.2� 0.2� Total
current liabilities 293.8� 271.4� � Long-term debt, net of current
portion 332.9� 333.1� Accrued postretirement benefits 99.4� 102.2�
Deferred income taxes 183.2� 189.0� Other liabilities 47.3� 45.9�
Total liabilities 956.6� 941.6� � STOCKHOLDERS' EQUITY Convertible
preferred stock 17.8� 18.0� Common stock 132.6� 132.5� Capital in
excess of par value - common stock 294.8� 294.2� Reinvested
earnings 594.9� 549.8� Common stock in treasury, at cost (36.7)
(37.3) Deferred compensation (1.5) (1.5) Accumulated other
comprehensive loss (10.8) (9.4) Total stockholders' equity 991.1�
946.3� � Total liabilities and stockholders' equity $1,947.7�
$1,887.9� PRELIMINARY SEGMENT FINANCIAL DATA (in millions) � �
Three Months Ended September 30 � 2006� 2005� � Net sales:
Specialty Metals $377.2� $321.3� Engineered Products 28.0� 25.1�
Intersegment (0.7) (0.4) � Consolidated net sales $404.5� $346.0� �
Operating income: Specialty Metals $71.9� $61.0� Engineered
Products 5.4� 5.2� Corporate costs (7.9) (5.1) Pension earnings,
interest & deferrals 3.6� 2.6� Intersegment 0.1� --� �
Consolidated operating income $73.1� $63.7� � � � Carpenter
operates in two business segments, Specialty Metals and Engineered
Products. Specialty Metals includes our Specialty Alloys, Dynamet
and Carpenter Powder Products business operations. These operations
have been aggregated into one reportable segment because of the
similarities in products, processes, customers, distribution
methods and economic characteristics. � 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, which 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." PRELIMINARY SELECTED
FINANCIAL MEASURES (in millions, except per share data) � � Three
Months Ended September 30 FREE CASH FLOW 2006� 2005� � Net cash
provided from operations $64.0� $10.3� Purchases of plant,
equipment and software (7.3) (5.7) Proceeds from disposals of plant
and equipment 0.2� 0.2� Dividends paid (6.1) (4.1) Free cash flow
$50.8� $0.7� � Free cash flow is a measure of cash generated which
management evaluates for alternative uses. Carpenter Technology
Corporation (NYSE:CRS) today reported record first quarter sales
and net income. Results were led by solid demand across several key
end-use markets, increased sales of higher value products, and the
company's continued focus on cost through lean and variation
reduction. Net sales for the first quarter ended September 30, 2006
were $404.5 million, compared with $346.0 million for the same
quarter a year ago. Net income in the first quarter was $51.2
million, or $1.94 per diluted share, compared to net income of
$40.1 million, or $1.54 per diluted share, a year ago. Free cash
flow in the first quarter was $50.8 million, compared with $0.7
million in the quarter a year ago. First Quarter - Operating
Summary "Our focus on the sale of higher value materials, continued
efforts in lean and variation reduction, and favorable market
conditions helped us to achieve record first quarter results," said
Robert J. Torcolini, chairman, president and chief executive
officer. "We are especially pleased to report record performance
despite the significant rise in the cost of raw materials during
the quarter. "Demand from the aerospace market remained robust
during the quarter, resulting in record first quarter shipments of
titanium materials and solid growth in our specialty alloys and
ceramic materials." For the first quarter, Carpenter's sales
increased 17 percent compared to a year ago. Sales benefited from
higher surcharges, base price increases, and increased sales of
higher value materials. Adjusted for surcharges, sales increased 10
percent from the first quarter a year ago. Sales to the aerospace
market increased 34 percent from the first quarter a year ago to
$158 million, a first quarter record. Demand for titanium materials
used in the manufacture of fasteners for commercial and military
aircraft was particularly strong during the quarter and resulted in
record shipments. Additionally, Carpenter experienced solid demand
for its specialty alloys and ceramic materials used in the
manufacture of aircraft engines, turbine blades, and airframe
structural components. Automotive and truck market sales grew 23
percent from the first quarter a year ago to $52 million. Increased
sales of high temperature materials used in engine components were
the primary reason for the growth. Also, higher sales of materials
used in automotive safety devices contributed to the increase.
Sales to the industrial market increased 13 percent to $88 million.
The industrial market excludes sales of materials used in oil and
gas exploration applications, which are now included in a new
category titled "energy." Sales to the industrial market primarily
benefited from increased sales of materials used in the manufacture
of capital equipment and higher value products sold to independent
distributors. Consumer market sales increased 2 percent to $48
million. Increased sales of higher value strip products used in
thermostats and consumer electronic applications were partially
offset by reduced sales to the sporting goods market. Sales to the
energy market, which includes oil and gas and power generation,
were $29 million or flat with a year ago. Sales to the oil and gas
sector increased 67 percent from the same quarter a year ago. Sales
benefited from profitable market share gains as well as growth with
key customers. Offsetting the growth was lower sales to the power
generation sector due to the timing of shipments to customers.
Medical market sales decreased 7 percent to $30 million. The
decline in sales reflected inventory adjustments taking place
within that supply chain. Geographically, sales outside the United
States increased 20 percent from the same quarter a year ago to
$123 million, a first quarter record. International sales, which
represented 30 percent of total sales, reflected strong demand for
higher value materials, particularly from the aerospace market.
Carpenter's first quarter gross profit increased 13 percent to
$103.9 million, or 25.7 percent of sales, from $91.7 million, or
26.5 percent of sales, in the same quarter a year ago. The decline
in gross margin as a percent of sales resulted from the steep rise
in the cost of nickel, a primary raw material for the company.
During the quarter, average nickel prices on the London Metal
Exchange were 100 percent higher than the quarter a year ago. Cost
of sales in the first quarter of fiscal 2006 included a charge of
$26.2 million to value inventories using the last-in, first-out
(LIFO) method of accounting, due primarily to rising nickel costs.
In the first quarter a year ago, cost of sales included a $3.7
million credit to value inventories using LIFO. Carpenter's
surcharge mechanism is structured to recover high raw material
costs, although with a lag effect. Additionally, gross margin as a
percent of sales was negatively impacted by a 68 percent increase
in the amount of surcharge collected during the recent first
quarter versus a year ago. While the surcharge protects the
absolute gross profit dollars, it does have a dilutive effect on
gross margin as a percent of sales. In the recent first quarter,
the dilutive effect on gross margin was approximately 120 basis
points. Partially offsetting the impact of higher raw material
costs on margins were increased base prices, higher volumes and
ongoing cost reductions generated by lean and variation reduction
initiatives. Carpenter generated a 15 percent increase in operating
income to a first quarter record of $73.1 million, or 18.1 percent
of sales from $63.7 million, or 18.4 percent of sales, generated a
year ago. Operating income in the recent first quarter reflected
$1.6 million of due diligence expenses associated with the review
of an acquisition target. Outlook "The strength in aerospace and
other key markets should continue to drive our performance through
the balance of this fiscal year," said Torcolini. "We are
continuing with our relentless focus on lean and variation
reduction to create additional operating leverage as we capitalize
on these strong market conditions. "We remain committed to refining
our business operating model so that we will continue to generate
returns in excess of our cost of capital through all phases of a
business cycle." Torcolini concluded, "Based on current market
conditions and expectations for steady growth, we anticipate
another record year of sales and net income in fiscal 2007.
Additionally, we expect free cash flow to exceed $200 million."
Segment Results - First Quarter Specialty Metals Net sales for the
quarter ended September 30, 2006 for the Specialty Metals segment,
which includes Specialty Alloys Operations, Dynamet, and Carpenter
Powder Products business units, were $377.2 million, compared to
$321.3 million in the same quarter a year ago. Sales of specialty
alloys, stainless steels and titanium experienced strong growth in
the quarter. Sales of specialty alloys increased 20 percent to $172
million in the first quarter from a year ago. Solid demand from the
aerospace and oil and gas markets were the primary contributors to
the increase. Stainless steel sales were $144 million or 13 percent
higher than a year ago. Higher sales to the automotive and
industrial markets contributed to the increase. Sales of titanium
increased 33 percent to $48 million. Robust demand from the
aerospace market for wire products used in the manufacture of
aerospace structural fasteners was the primary contributor to the
growth. Partially offsetting the increase was reduced sales to the
medical market. Operating income for the Specialty Metals segment
was $71.9 million in the recent first quarter, compared to $61.0
million in the same quarter a year ago. The change in operating
income reflected increased sales of higher value materials, higher
base prices, and a continued focus on operational improvements.
Engineered Products Segment Net sales for this segment, which
includes sales of ceramic components and fabricated metal,
increased 12 percent to $28.0 million from $25.1 million a year
ago. Increased sales of ceramic cores used in the casting of jet
engine turbine blades primarily drove the improvement. In the first
quarter, operating income for the Engineered Products segment was
$5.4 million compared to $5.2 million in the same quarter a year
ago. The increase was attributable to higher sales and better
operating efficiencies. Other Items In the first quarter of fiscal
2007, selling and administrative expenses were $30.8 million, or
7.6 percent of sales, compared to $28.0 million, or 8.1 percent of
sales, in the same quarter a year ago. The increase was primarily
related to $1.6 million of due diligence expenses associated with
the review of an acquisition target and $0.8 million from executive
recruitment fees. Interest expense for the quarter was $5.8
million, compared with $6.0 million in the first quarter a year
ago. Other income in the quarter was $5.9 million, compared with
$3.0 million in last year's first quarter. The change in other
income is primarily due to increased interest income from higher
balances of invested cash. Carpenter's income tax provision in the
recent first quarter was $22.0 million, or 30.1 percent of pre-tax
income, versus $20.6 million, or 33.9 percent, in the same quarter
a year ago. The tax provision in the recent first quarter was
favorably impacted by the reversal of certain deferred tax
valuation allowances due to changes in specific state tax laws and
an improved outlook regarding the ability to use those benefits.
The company expects that its full year tax rate will be in the
range of 33 to 35 percent. Cash Flow and Liquidity Carpenter has
maintained the ability to provide cash to meet its needs through
cash flow from operations, management of working capital, and the
flexibility to use outside sources of financing to supplement
internally generated funds. Free cash flow in the recent first
quarter was $50.8 million, compared with free cash flow of $0.7
million in the quarter a year ago. Conference Call Carpenter will
host a conference call and webcast today, October 26, at 10:00 AM,
Eastern Time, to discuss the results of operations for the first
quarter of fiscal 2007. Please call 610-208-2800 for details of the
conference call. Access to the call will also be made available at
Carpenter's web site (www.cartech.com) and through CCBN
(www.ccbn.com). A replay of the call will be made available at
www.cartech.com or at www.ccbn.com. Carpenter produces and
distributes specialty alloys, including stainless steels, titanium
alloys, and superalloys, and various engineered products.
Information about Carpenter can be found on the Internet at
www.cartech.com. Except for historical information, all other
information in this news release consists of 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, 2006, and the exhibits
attached to those filings. They include but are not limited to: 1)
the cyclical nature of the specialty materials business and certain
end-use markets, including aerospace, industrial, automotive,
consumer, medical, and energy including power generation, or other
influences on Carpenter's business such as new competitors, the
consolidation of customers, and suppliers or the transfer of
manufacturing capacity from the United States to foreign countries;
2) the ability of Carpenter to achieve cost savings, productivity
improvements or process changes; 3) the ability to recoup increases
in the cost of energy and raw materials or other factors; 4)
domestic and foreign excess manufacturing capacity for certain
metals; 5) fluctuations in currency exchange rates; 6) the degree
of success of government trade actions; 7) the valuation of the
assets and liabilities in Carpenter's pension trusts and the
accounting for pension plans; 8) possible labor disputes or work
stoppages; 9) the potential that our customers may substitute
alternate materials or adopt different manufacturing practices that
replace or limit the suitability of our products; and 10) the
ability to successfully acquire and integrate acquisitions. 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. -0- *T PRELIMINARY CONSOLIDATED
STATEMENT OF INCOME (in millions, except per share data) Three
Months Ended September 30 ------------------ 2006 2005 --------
------- NET SALES $404.5 $346.0 Cost of sales 300.6 254.3 --------
------- Gross profit 103.9 91.7 Selling and administrative expenses
30.8 28.0 -------- ------- Operating income 73.1 63.7 Interest
expense 5.8 6.0 Other income, net (5.9) (3.0) -------- -------
Income before income taxes 73.2 60.7 Income taxes 22.0 20.6
-------- ------- NET INCOME $51.2 $40.1 ======== ======= EARNINGS
PER COMMON SHARE: Basic $1.99 $1.59 ======== ======= Diluted $1.94
$1.54 ======== ======= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 25.5 25.0 ======== ======= Diluted 26.3 25.9 ======== =======
Cash dividends per common share 0.225 $0.15 ======== ======= *T -0-
*T PRELIMINARY CONSOLIDATED STATEMENT OF CASH FLOWS (in millions)
Three Months Ended September 30 ------------------ 2006 2005
--------- -------- OPERATING ACTIVITIES: Net income $51.2 $40.1
Adjustments to reconcile net income to net cash provided from
operations: Depreciation 11.5 11.0 Amortization 0.4 0.6 Deferred
income taxes (6.1) 0.3 Net pension expense 1.2 2.7 Net loss on
asset disposals 0.1 0.2 Changes in working capital and other:
Receivables 5.1 4.3 Inventories (8.6) (25.6) Other current assets
(8.0) 0.5 Accounts payable 25.4 (12.4) Accrued current liabilities
(3.5) (10.1) Other, net (4.7) (1.3) --------- -------- Net cash
provided from operating activities 64.0 10.3 --------- --------
INVESTING ACTIVITIES: Purchases of plant, equipment and software
(7.3) (5.7) Proceeds from disposals of plant and equipment 0.2 0.2
Purchases of marketable securities (309.2) (73.9) Sales of
marketable securities 100.4 72.3 --------- -------- Net cash used
for investing activities (215.9) (7.1) --------- -------- FINANCING
ACTIVITIES: Payments on long-term debt (0.1) -- Dividends paid
(6.1) (4.1) Tax benefits on share-based compensation 0.1 --
Proceeds from common stock options exercised 0.1 3.1 ---------
-------- Net cash used for financing activities (6.0) (1.0)
--------- -------- Effect of exchange rate changes on cash and cash
equivalents (1.0) 0.2 --------- -------- (DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS (158.9) 2.4 Cash and cash equivalents at
beginning of period 413.4 163.8 --------- -------- Cash and cash
equivalents at end of period $254.5 $166.2 ========= ======== *T
-0- *T PRELIMINARY CONSOLIDATED BALANCE SHEET (in millions)
September 30 June 30 2006 2006 ------------ ----------- ASSETS
Current assets: Cash and cash equivalents $254.5 $413.4 Marketable
securities 290.0 81.2 Accounts receivable, net 229.8 234.7
Inventories 233.7 224.3 Deferred income taxes 15.5 13.7 Other
current assets 40.6 32.0 ------------ ----------- Total current
assets 1,064.1 999.3 Property, plant and equipment, net 536.4 541.1
Prepaid pension cost 247.0 247.1 Goodwill 46.4 46.4 Trademarks and
trade names, net 19.9 20.1 Other assets 33.9 33.9 ------------
----------- Total assets $1,947.7 $1,887.9 ============ ===========
LIABILITIES Current liabilities: Accounts payable $162.9 $137.4
Accrued liabilities 130.7 133.8 Current portion of long-term debt
0.2 0.2 ------------ ----------- Total current liabilities 293.8
271.4 Long-term debt, net of current portion 332.9 333.1 Accrued
postretirement benefits 99.4 102.2 Deferred income taxes 183.2
189.0 Other liabilities 47.3 45.9 ------------ ----------- Total
liabilities 956.6 941.6 ------------ ----------- STOCKHOLDERS'
EQUITY Convertible preferred stock 17.8 18.0 Common stock 132.6
132.5 Capital in excess of par value - common stock 294.8 294.2
Reinvested earnings 594.9 549.8 Common stock in treasury, at cost
(36.7) (37.3) Deferred compensation (1.5) (1.5) Accumulated other
comprehensive loss (10.8) (9.4) ------------ ----------- Total
stockholders' equity 991.1 946.3 ------------ ----------- Total
liabilities and stockholders' equity $1,947.7 $1,887.9 ============
=========== *T -0- *T PRELIMINARY SEGMENT FINANCIAL DATA (in
millions) Three Months Ended September 30 ------------------ 2006
2005 --------- -------- Net sales: Specialty Metals $377.2 $321.3
Engineered Products 28.0 25.1 Intersegment (0.7) (0.4) ---------
-------- Consolidated net sales $404.5 $346.0 ========= ========
Operating income: Specialty Metals $71.9 $61.0 Engineered Products
5.4 5.2 Corporate costs (7.9) (5.1) Pension earnings, interest
& deferrals 3.6 2.6 Intersegment 0.1 -- --------- --------
Consolidated operating income $73.1 $63.7 ========= ========
Carpenter operates in two business segments, Specialty Metals and
Engineered Products. Specialty Metals includes our Specialty
Alloys, Dynamet and Carpenter Powder Products business operations.
These operations have been aggregated into one reportable segment
because of the similarities in products, processes, customers,
distribution methods and economic characteristics. 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, which 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." *T -0- *T
PRELIMINARY SELECTED FINANCIAL MEASURES (in millions, except per
share data) Three Months Ended September 30 ------------------ FREE
CASH FLOW 2006 2005 --------- -------- Net cash provided from
operations $64.0 $10.3 Purchases of plant, equipment and software
(7.3) (5.7) Proceeds from disposals of plant and equipment 0.2 0.2
Dividends paid (6.1) (4.1) --------- -------- Free cash flow $50.8
$0.7 ========= ======== Free cash flow is a measure of cash
generated which management evaluates for alternative uses. *T
Carpenter Technology (NYSE:CRS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Carpenter Technology (NYSE:CRS)
Historical Stock Chart
From Jul 2023 to Jul 2024