Media Inquiries: |
|
Investor Inquiries: |
William J. Rudolph, Jr. |
|
Michael A. Hajost |
(610) 208 -3892 |
|
(610) 208-3476 |
wrudolph@cartech.com |
|
mhajost@cartech.com |
CARPENTER
TECHNOLOGY REPORTS THIRD QUARTER RESULTS
-
Reported earnings per share of $0.62, or $0.69 per
share excluding special items.
-
Third quarter net sales of $581.4 million.
Net sales excluding raw material surcharge up 12% from prior
year and up 9% sequentially.
-
Latrobe contributed $12.9 million of operating
income in the third quarter, or $0.05 per share. Integration now
complete with earnings and synergies above plan.
WYOMISSING, Pa., April 25, 2013 - Carpenter
Technology Corporation (NYSE:CRS) today reported net income of
$32.9 million or $0.62 per diluted share for the quarter ended
March 31, 2013 compared to $33.0 million or $0.69 per share in the
prior year third quarter. Excluding special items of $0.07 per
share, earnings were $0.69 per share in the current quarter.
Last year's quarter included $0.15 per share of Latrobe
acquisition related costs resulting in $0.84 per share on an
adjusted basis.
Earnings and
Revenue
Operating income excluding pension earnings,
interest and deferrals (EID) was $61.0 million in the third quarter
compared to $59.5 million in the prior year period. Earnings
growth due to the acquisition of Latrobe was offset by lower SAO
earnings as a result of in-quarter mix degradation, increased
deferrals and related loss of manufacturing overhead cost
absorption. Third quarter net sales excluding raw material
surcharges grew by $52.2 million or 12 percent over the third
quarter of fiscal 2012 due to the inclusion of Latrobe.
Excluding surcharge revenue and pension EID, operating margin
in the third quarter was 12.9 percent compared to 14.2 percent in
the third quarter of fiscal year 2012.
"Our third quarter had gains and challenges," said
William A. Wulfsohn, President and Chief Executive Officer.
"We achieved solid growth in our aerospace and energy
markets. However, increased customer deferrals during the
quarter, combined with low sales to distribution customers and a
weak defense related mix, resulted in lower sales and operating
income. While the recent pattern of these deferrals has
slowed and order intake has increased, we now expect our full year
earnings to be lower than previously forecasted. We are
still targeting low double-digit growth in full year operating
income, on an adjusted basis versus prior year. However, if
Q4 has similar in-quarter mix and deferrals as we experienced in
Q3, we may have difficulty achieving this target.
"At the same time, we completed the successful
integration of Latrobe, realizing above plan synergies. In
addition, with our recent capital investments and operations
improvement initiatives, we now have the available capacity to
realize near term growth as demand recovers. This added
volume should help to improve our operating margins as we benefit
from volume leverage over existing assets. Finally, starting
in the second half of fiscal year 2014, the Athens facility will
add critical hot working capacity for premium products, which is
currently a constraint, to enable longer term profitable
growth."
End Markets:
|
Q3 FY13
Revenues
Ex. Surcharge
$ Millions |
Prior Year
Change
Vs.
Q3 FY12 |
Sequential
Change
Vs.
Q2 FY13 |
Aerospace and Defense |
214.7 |
20% |
10% |
Energy |
71.0 |
24% |
3% |
Medical |
25.3 |
-26% |
5% |
Transportation |
28.4 |
0% |
17% |
Industrial and Consumer |
97.1 |
2% |
14% |
Aerospace and Defense
-
Latrobe's aerospace products contributed to
year-over-year growth.
-
Aircraft build rate increases drove demand growth
for engine related materials and titanium fasteners versus prior
year and prior quarter.
-
Demand and mix for Premium and Ultra-Premium
nickel and stainless fastener and structural materials was down
versus the prior year. The Company attributes these
reductions to distribution destocking and uncertainty related to
sequestration.
Energy
-
Sales of Ultra-Premium materials for oil & gas
completions grew in the quarter.
-
Amega West sales were down due to reduced rig
count activity and supply chain inventory destocking.
-
Demand for power generation materials was up
sequentially in the context of light build schedules.
Medical
Transportation
-
Demand is growing for Premium and Ultra-Premium
products used in fuel delivery systems supporting higher fuel
efficiency standards.
-
Reduced European OEM build rates negatively
impacted demand in the region.
Industrial and Consumer
-
The inclusion of Latrobe contributed to year over
year growth.
-
Infrastructure project activity and distribution
demand was down.
-
Higher value valves and fittings showing signs of
returning strength.
Special Items in the
Quarter
There were $0.07 per share of special items in the
current period including consulting fees for the inventory
reduction initiative, restructuring costs from certain
manufacturing footprint optimization activities, increased interest
from the recent debt offering and impacts on the tax provision
related to the discretionary pension contribution, partially offset
by benefits realized from the enactment of the American Taxpayer
Relief Act of 2012 (R&D tax credit extension).
(in millions, except per share amounts) |
Expense
before
Income
Taxes |
Income
Tax
Expense
(Benefit) |
Net
Expense |
Impact
Per
Diluted
Share |
|
|
|
|
|
Inventory reduction initiative costs |
$ 0.9 |
$ (0.3) |
$ 0.6 |
$ 0.01 |
Restructuring costs from
footprint optimization activities |
2.0 |
(0.7) |
1.3 |
0.02 |
Additonal interest expense |
1.1 |
(0.4) |
0.7 |
0.01 |
Income tax impact of
discretionary pension contribution |
- |
2.9 |
2.9 |
0.06 |
Income tax impact of
R&D tax credit extension |
- |
(1.7) |
(1.7) |
(0.03) |
|
|
|
|
|
Total impact of special items |
$ 4.0 |
$ (0.2) |
$ 3.8 |
$ 0.07 |
Cash Flow and
Pension
Excluding a $75 million discretionary pension
contribution, cash flow from operations in the current quarter was
$104.5 million which was used to finance $86.6 million of capital
spending, largely related to the Athens facility construction.
Including the discretionary pension contribution, free cash
flow was negative $66.4 million in the current quarter. Total
liquidity, including cash and available revolver balance, was
approximately $638 million at the end of the third quarter.
Liquidity in the quarter was augmented by the issuance of a
$300 million 10-year borrowing.
During the third quarter, the Company recorded
expense associated with its pension and other post-retirement
benefit plans of $17.4 million or $0.21 per diluted share.
Pension expense in the prior year third quarter was $10.6
million or $0.14 per diluted share. The Company made cash
contributions of $85.4 million during the third quarter of fiscal
year 2013, and expects to make additional cash contributions of up
to $90 million in the fourth quarter of fiscal year 2013.
"Our financing actions significantly increased our liquidity
and improved our pension funding status. We now have more
financial flexibility to pursue near term business development
opportunities," said Wulfsohn.
Non-GAAP Financial Measures
This press release includes discussions of
financial measures that have not been determined in accordance with
U.S. generally accepted accounting principles ("GAAP"). A
reconciliation of the non-GAAP financial measures to their most
directly comparable financial measures prepared in accordance with
GAAP, accompanied by reasons why the Company believes the measures
are important, are included in the attached schedules.
Conference Call and Webcast Presentation
Carpenter will host a conference call and webcast
presentation today, April 25, at 9:00 a.m., ET, to discuss
financial results and operations for the fiscal third quarter.
Please call 610-208-2097 for details of the conference call. Access
to the call and presentation will also be made available at
Carpenter's web site (http://www.cartech.com) and through CCBN
(http://www.ccbn.com). A replay of the call will be made available
at http://www.cartech.com or at http://www.ccbn.com. The
presentation materials used during this conference call will be
available for viewing and download at 8:30 a.m. today at
http://www.cartech.com.
About Carpenter Technology
Carpenter produces and distributes premium alloys,
including special alloys, titanium alloys and powder metals, as
well as stainless steels, and alloy and tool steels. Information
about Carpenter can be found on the Internet at
http://www.cartech.com.
Forward-Looking Statements
This press release contains
forward-looking statements within the meaning of the Private
Securities Litigation Act of 1995. These forward-looking statements
are subject to risks and uncertainties that could cause actual
results to differ from those projected, anticipated or implied. The
most significant of these uncertainties are described in
Carpenter's filings with the Securities and Exchange Commission
including its annual report on Form 10-K for the year ended June
30, 2012, the 10Q for the quarters ending September 30, 2012 and
December 31, 2012 and the exhibits attached to those filings. They
include but are not limited to: (1) expectations with respect to
the synergies, costs and other anticipated financial impacts of the
Latrobe acquisition transaction could differ from actual synergies
realized, costs incurred and financial impacts experienced as a
result of the transaction; (2) the cyclical nature of the specialty
materials business and certain end-use markets, including
aerospace, defense, industrial, transportation, consumer, medical,
and energy, or other influences on Carpenter's business such as new
competitors, the consolidation of competitors, customers, and
suppliers or the transfer of manufacturing capacity from the United
States to foreign countries; (3) the ability of Carpenter to
achieve cost savings, productivity improvements or process changes;
(4) the ability to recoup increases in the cost of energy, raw
materials, freight or other factors; (5) domestic and foreign
excess manufacturing capacity for certain metals; (6) fluctuations
in currency exchange rates; (7) the degree of success of government
trade actions; (8) the valuation of the assets and liabilities in
Carpenter's pension trusts and the accounting for pension plans;
(9) possible labor disputes or work stoppages; (10) the potential
that our customers may substitute alternate materials or adopt
different manufacturing practices that replace or limit the
suitability of our products; (11) the ability to successfully
acquire and integrate acquisitions, including the Latrobe
acquisition; (12) the availability of credit facilities to
Carpenter, its customers or other members of the supply chain; (13)
the ability to obtain energy or raw materials, especially from
suppliers located in countries that may be subject to unstable
political or economic conditions; (14) Carpenter's manufacturing
processes are dependent upon highly specialized equipment located
primarily in facilities in Reading and Latrobe, Pennsylvania for
which there may be limited alternatives if there are significant
equipment failures or catastrophic event; and (15) Carpenter's
future success depends on the continued service and availability of
key personnel, including members of our executive management team,
management, metallurgists and other skilled personnel and the loss
of these key personnel could affect our ability to perform until suitable replacements are found. Any of these
factors could have an adverse and/or fluctuating effect on
Carpenter's results of operations. The forward-looking statements
in this document are intended to be subject to the safe harbor
protection provided by Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Carpenter undertakes no obligation to update or revise
any forward-looking statements.
# # #
PRELIMINARY |
CONSOLIDATED STATEMENTS OF
INCOME |
(in millions, except per share
data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
|
March 31, |
|
March 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
NET SALES |
|
|
$ 581.4 |
|
$ 539.9 |
|
$1,659.9 |
|
$1,385.1 |
Cost of sales |
|
|
480.4 |
|
434.8 |
|
1.346.9 |
|
1.114.5 |
Gross profit |
|
|
101.0 |
|
105.1 |
|
313.0 |
|
270.6 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
48.0 |
|
41.5 |
|
145.7 |
|
115.3 |
Acquisition-related costs |
|
- |
|
7.9 |
|
- |
|
11.7 |
Operating income |
|
|
53.0 |
|
55.7 |
|
167.3 |
|
143.6 |
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(5.0) |
|
(5.6) |
|
(14.7) |
|
(18.4) |
Other income, net |
|
|
1.2 |
|
1.7 |
|
5.2 |
|
1.4 |
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
49.2 |
|
51.8 |
|
157.8 |
|
126.6 |
Income tax expense |
|
|
16.3 |
|
18.8 |
|
52.2 |
|
46.0 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
32.9 |
|
33.0 |
|
105.6 |
|
80.6 |
|
|
|
|
|
|
|
|
|
|
|
Less: Net income attributable
to noncontrolling interest |
- |
|
- |
|
0.5 |
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO
CARPENTER |
$ 32.9 |
|
$ 33.0 |
|
$ 105.1 |
|
$ 80.3 |
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE: |
|
|
|
|
|
|
|
|
Basic |
|
|
|
$ 0.62 |
|
$ 0.69 |
|
$ 1.98 |
|
$ 1.76 |
Diluted |
|
|
|
$ 0.62 |
|
$ 0.69 |
|
$ 1.97 |
|
$ 1.75 |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES |
|
|
|
|
|
|
|
OUTSTANDING: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
52.9 |
|
47.2 |
|
52.9 |
|
45.3 |
Diluted |
|
|
|
53.5 |
|
47.9 |
|
53.4 |
|
46.0 |
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per common
share |
$ 0.18 |
|
$ 0.18 |
|
$ 0.54 |
|
$ 0.54 |
PRELIMINARY |
CONSOLIDATED STATEMENTS OF
CASH FLOWS |
(in millions) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net income |
|
|
|
|
$ 105.6 |
|
$ 80.6 |
Adjustments to
reconcile net income to net cash |
|
|
|
|
provided from
operating activities: |
|
|
|
|
|
Depreciation and
amortization |
|
|
77.1 |
|
58.5 |
Deferred income
taxes |
|
|
|
37.3 |
|
18.2 |
Net pension
expense |
|
|
|
51.7 |
|
30.3 |
Net loss on
disposal of property and equipment |
|
1.0 |
|
1.0 |
Changes in working
capital and other: |
|
|
|
|
|
Accounts
receivable |
|
|
|
0.7 |
|
(3.3) |
Inventories |
|
|
|
|
(41.7) |
|
(110.6) |
Other current
assets |
|
|
|
(32.6) |
|
(3.4) |
Accounts
payable |
|
|
|
|
(10.5) |
|
(3.8) |
Accrued
liabilities |
|
|
|
|
(8.5) |
|
20.2 |
Pension plan
contributions |
|
|
|
(143.3) |
|
(19.3) |
Boarhead Farms
settlement |
|
|
|
- |
|
(21.8) |
Other, net |
|
|
|
|
(5.1) |
|
1.3 |
Net cash provided from
operating activities |
|
31.7 |
|
47.9 |
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
Purchases of property,
equipment and software |
|
(223.5) |
|
(107.3) |
Proceeds from disposals
of property and equipment |
|
0.4 |
|
0.6 |
Acquisition of
business, net of cash acquired |
|
- |
|
(12.9) |
Proceeds from sale of
equity method investment |
|
7.9 |
|
- |
Proceeds from sales and
maturities of marketable securities |
- |
|
30.4 |
Net cash used for investing
activities |
|
|
(215.2) |
|
(89.2) |
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES: |
|
|
|
|
|
|
Proceeds from issuance
of long-term debt, net of offering costs |
297.0 |
|
- |
Payments on long-term
debt assumed in connection with acquisition of business |
- |
|
(153.7) |
Payments on long-term
debt |
|
|
|
- |
|
(100.0) |
Dividends paid |
|
|
|
|
(28.7) |
|
(24.2) |
Purchase of subsidiary
shares from noncontrolling interest |
(8.4) |
|
- |
Tax benefits on
share-based compensation |
|
3.7 |
|
1.3 |
Proceeds from stock
options exercised |
|
|
2.3 |
|
1.6 |
Net cash provided from (used
for) financing activities |
265.9 |
|
(275.0) |
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
1.3 |
|
(1.1) |
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS |
83.7 |
|
(317.4) |
Cash and cash equivalents at
beginning of period |
|
211.0 |
|
492.5 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at
end of period |
|
|
$ 294.7 |
|
$ 175.1 |
PRELIMINARY |
CONSOLIDATED BALANCE
SHEETS |
(in millions) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
June 30, |
|
|
|
|
|
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
|
$ 294.7 |
|
$ 211.0 |
Accounts receivable,
net |
|
|
|
353.8 |
|
354.2 |
Inventories |
|
|
|
|
686.9 |
|
642,0 |
Deferred income
taxes |
|
|
|
- |
|
10.6 |
Other current
assets |
|
|
|
65.5 |
|
31.9 |
Total
current assets |
|
|
|
1,400.9 |
|
1,249.7 |
|
|
|
|
|
|
|
|
|
Property, plant and equipment,
net |
|
|
1,080.6 |
|
924.6 |
Goodwill |
|
|
|
|
|
256.7 |
|
260.5 |
Other intangibles, net |
|
|
|
98.5 |
|
109.9 |
Other assets |
|
|
|
|
79.6 |
|
83.1 |
Total assets |
|
|
|
|
$ 2,916.3 |
|
$ 2,627.8 |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
|
|
|
|
$ 226.0 |
|
$ 236.1 |
Accrued
liabilities |
|
|
|
|
230.3 |
|
217.1 |
Current portion of
long-term debt |
|
|
101.0 |
|
101.0 |
Total
current liabilities |
|
|
|
557.3 |
|
554.2 |
|
|
|
|
|
|
|
|
|
Long-term debt, net of current
portion |
|
|
604.4 |
|
305.9 |
Accrued pension
liabilities |
|
|
|
231.2 |
|
377.3 |
Accrued postretirement
benefits |
|
|
177.8 |
|
179.8 |
Deferred income taxes |
|
|
|
61.4 |
|
31.4 |
Other liabilities |
|
|
|
|
66.2 |
|
66.1 |
Total liabilities |
|
|
|
|
1,698.3 |
|
1,514.7 |
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
Carpenter stockholders'
equity: |
|
|
|
|
|
|
Common stock |
|
|
|
|
274.6 |
|
274.0 |
Capital in excess of
par value |
|
|
|
255.1 |
|
252.7 |
Reinvested
earnings |
|
|
|
1,186.0 |
|
1,109.6 |
Common stock in
treasury, at cost |
|
|
(110.3) |
|
(120.0) |
Accumulated other
comprehensive loss |
|
|
(387,4) |
|
(412.5) |
Total
Carpenter stockholders' equity |
|
|
1,218.0 |
|
1,103.8 |
Noncontrolling interest |
|
|
|
- |
|
9.3 |
Total equity |
|
|
|
|
1,218.0 |
|
1,113.1 |
Total liabilities and
equity |
|
|
|
$ 2,916.3 |
|
$ 2,627.8 |
|
|
|
|
|
|
|
|
|
PRELIMINARY |
SEGMENT FINANCIAL DATA |
(in millions, except pounds
sold) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
|
March 31, |
|
March 31, |
|
|
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
Pounds sold* (000): |
|
|
|
|
|
|
|
Specialty Alloys
Operations |
53,202 |
|
55,552 |
|
147,986 |
|
146,840 |
Latrobe |
|
17,946 |
|
5,994 |
|
48,518 |
|
5,994 |
Performance Engineered
Products |
3,338 |
|
3,470 |
|
9,950 |
|
10,342 |
Intersegment |
|
(2,718) |
|
(1,580) |
|
(8,090) |
|
(3,672) |
|
|
|
|
|
|
|
|
|
|
|
Consolidated pounds
sold |
71,768 |
|
63,436 |
|
198,364 |
|
159,504 |
|
|
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
|
Specialty Alloys
Operations |
|
|
|
|
|
|
|
|
Net sales excluding
surcharge |
$ 297.6 |
|
$ 309.7 |
|
$ 847.6 |
|
$ 802.3 |
|
Surcharge |
|
95.2 |
|
116.3 |
|
275.2 |
|
319.9 |
|
|
|
|
|
|
|
|
|
|
|
Specialty Alloys
Operations net sales |
392.8 |
|
426.0 |
|
1,122.8 |
|
1,122.2 |
|
|
|
|
|
|
|
|
|
|
|
Latrobe |
|
|
|
|
|
|
|
|
|
Net sales excluding
surcharge |
114.1 |
|
45.3 |
|
321.7 |
|
65.0 |
|
Surcharge |
|
15.4 |
|
6.2 |
|
43.6 |
|
6.1 |
|
|
|
|
|
|
|
|
|
|
|
Latrobe net sales |
129.5 |
|
51.5 |
|
365.3 |
|
71.1 |
|
|
|
|
|
|
|
|
|
|
|
Performance Engineered
Products |
|
|
|
|
|
|
|
|
Net sales excluding
surcharge |
89.2 |
|
89.6 |
|
278.6 |
|
253.8 |
|
Surcharge |
|
1.2 |
|
1.2 |
|
3.4 |
|
3.6 |
|
|
|
|
|
|
|
|
|
|
|
Performance Engineered
Products net sales |
90.4 |
|
90.8 |
|
282.0 |
|
257.4 |
|
|
|
|
|
|
|
|
|
|
|
Intersegment |
|
|
|
|
|
|
|
|
|
Net sales excluding
surcharge |
(29.7) |
|
(25.6) |
|
(105.3) |
|
(58.2) |
|
Surcharge |
|
(1.6) |
|
(2.8) |
|
(4.9) |
|
(7.4) |
Intersegment net
sales |
(31.3) |
|
(28.4) |
|
(110.2) |
|
(65.6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net
sales |
$ 581.4 |
|
$ 539.9 |
|
$ 1,659.9 |
|
$1,385.1 |
|
|
|
|
|
|
|
|
|
|
|
Operating income: |
|
|
|
|
|
|
|
Specialty Alloys
Operations |
$ 48.8 |
|
$ 66.7 |
|
$ 152.9 |
|
$ 163.9 |
Latrobe |
|
12.3 |
|
2.1 |
|
41.2 |
|
3,4 |
Performance Engineered
Products |
10.0 |
|
10.6 |
|
30.4 |
|
32.8 |
Corporate costs
(including acquisition-related costs) |
(10.3) |
|
(18.5) |
|
(31.3) |
|
(41.3) |
Pension earnings,
interest & deferrals |
(8.0) |
|
(3.8) |
|
(23.9) |
|
(11.1) |
Intersegment |
|
0.2 |
|
(1.4) |
|
(2.0) |
|
(4.1) |
|
|
|
|
|
|
|
|
|
|
|
Consolidated
operating income |
$ 53.0 |
|
$ 55.7 |
|
$ 1 67.3 |
|
$ 143.6 |
The Company has three reportable segments,
Specialty Alloys Operations ("SAO"), Latrobe, and Performance
Engineered Products ("PEP"). During the first quarter of fiscal
year 2013, the Company moved the Speciatly Steel Supply business
acquired in connection with the Latrobe Acquisition from the
Latrobe segment to the Performance Engineered Products segment.
The SAO segment is comprised of Carpenter's major
premium alloy and stainless steel manufacturing operations.
This includes operations performed at mills primarily in
Reading, Pennsylvania and the surrounding area, South Carolina, and
the new premium products manufacturing facility being built in
Limestone County, Alabama.
The Latrobe segment is comprised of the operations
of the Latrobe business acquired effective February 29, 2012 (the
"Latrobe Acquisition"). The Latrobe segment provides management
with the focus and visibility into the business performance of
these newly acquired operations. The Latrobe segment also
includes the results of Carpenter's distribution business in
Mexico, which is being managed together with the Latrobe's
distribution business. As the Latrobe business becomes
integrated with Carpenter, its results will likely be reported
within the SAO business segment sometime in the future.
The PEP segment is comprised of Carpenter's
differentiated operations. This includes Dynamet titanium
business, the Carpenter Powder Products (CPP) business, the Amega
West business and the Specialty Steel Supply distribution business
that was acquired in connection with the Latrobe Acquisition. The
businesses in the PEP segment are managed with an entrepreneurial
structure to promote speed and flexibility and drive overall
revenue and profit growth. The pounds sold data above for the
PEP segment includes only the Dynamet and CPP businesses.
The service cost component of net pension expense,
which represents the estimated cost of future pension liabilities
earned associated with active employees, is included in the
operating results of the business segments. The residual net
pension expense, or pension earning, interest and deferrals
(pension EID), is comprised of the expected return on plan assets,
interest costs on the projected benefit obligations of the plans,
and amortization of actuarial gains and losses and prior service
costs, is included under the heading "Pension earnings, interest
& deferrals."
* Pounds sold excludes sales associated with the
distribution businesses.
PRELIMINARY |
NON-GAAP FINANCIAL
MEASURES |
(in millions, except per share
data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
|
March 31, |
|
March 31, |
FREE CASH FLOW |
|
2013 |
|
2012 |
|
2013 |
|
2012 |
Net cash provided from operating activities |
|
|
|
$ 29.5 |
|
$ 75.7 |
|
$ 31.7 |
|
$ 47.9 |
Purchases of property,
equipment and software |
(86.6) |
|
(47.0) |
|
(223.5) |
|
(107.3) |
Proceeds from disposals of
property and equipment |
0.3 |
|
0.4 |
|
0.4 |
|
0.6 |
Purchase of subsidiary shares
from noncontrolling interest |
- |
|
- |
|
(8.4) |
|
- |
Proceeds from sale of equity
method investment |
- |
|
- |
|
7.9 |
|
- |
Dividends paid |
|
|
(9.6) |
|
(8.0) |
|
(28.7) |
|
(24.2) |
Acquisition of business, net
of cash acquired |
- |
|
(11.5) |
|
- |
|
(12.9) |
|
|
|
|
|
|
|
|
|
|
|
Free cash flow |
|
|
$ (66.4) |
|
$ 9.6 |
|
$ (220.6) |
|
$ (95.9) |
|
|
|
|
|
|
|
|
|
|
|
Management believes that the free cash flow
measure provides useful information to investors regarding our
financial condition because it is a measure of cash generated which
management evaluates for alternative uses.
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
|
March 31, |
|
March 31, |
NET PENSION EXPENSE PER
DILUTED SHARE |
2013 |
|
2012 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
Pension plans expense |
|
$ 15.1 |
|
$ 9.7 |
|
$ 44.7 |
|
$ 28.4 |
Other postretirement benefits
expense |
2,3 |
|
0.9 |
|
7.0 |
|
1.9 |
Net pension expense |
|
|
17.4 |
|
10.6 |
|
51.7 |
|
30.3 |
Income tax benefit |
|
|
(6.1) |
|
(4.0) |
|
(18.1) |
|
(11.5) |
Net pension expense, net of
tax |
|
$ 11.3 |
|
$ 6.6 |
|
$ 33.6 |
|
$ 18.8 |
|
|
|
|
|
|
|
|
|
|
|
Net pension expense per
diluted share |
$ 0.21 |
|
$ 0.14 |
|
$ 0.63 |
|
$ 0.41 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted
common shares |
53.5 |
|
47.9 |
|
53.4 |
|
46.0 |
Management believes that net pension expense per
diluted share is helpful in analyzing the operating performance of
the Company, as net pension expense may be volatile due to changes
in the financial markets, which may result in significant
fluctuations in operating results from period to period.
OPERATING MARGIN EXCLUDING
SURCHARGE AND |
Three Months Ended |
|
Nine Months
Ended |
PENSION EARNINGS, INTEREST AND
DEFERRALS |
March 31, |
|
March 31, |
|
|
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
|
581.4 |
|
$ 539.9 |
|
$ 1,659.9 |
|
$ 1,385.1 |
Less: surcharge revenue |
|
110,2 |
|
120.9 |
|
317.3 |
|
322.2 |
Consolidated net sales
excluding surcharge |
$ 471,2 |
|
$ 419,0 |
|
$ 1.342.6 |
|
$ 1.062.9 |
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
$ 53.0 |
|
$ 55.7 |
|
$ 167.3 |
|
$ 143.6 |
Pension earnings, interest
& deferrals |
8,0 |
|
3.8 |
|
23.9 |
|
11.1 |
Operating income excluding
pension earnings, interest |
|
|
|
|
|
|
|
and
deferrals |
|
|
$ 61.0 |
|
$ 59.5 |
|
$ 191.2 |
|
$ 154.7 |
|
|
|
|
|
|
|
|
|
|
|
Operating margin excluding
surcharge and pension earnings, interest |
|
|
|
|
|
|
|
and
deferrals |
|
|
12.9% |
|
14.2% |
|
14.2% |
|
14.6% |
Management believes that removing the impacts of
raw material surcharges from operating margin provides a more
consistent basis for comparing results of operations from period to
period. In addition, management believes that excluding the impact
of pension earnings, interest and deferrals, which may be volatile
due to changes in the financial markets, is helpful in analyzing
the true operating performance of the Company.
PRELIMINARY |
NON-GAAP FINANCIAL
MEASURES |
(in millions, except per share
data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
Nine Months Ended
March 31, |
ADJUSTED LATROBE OPERATING RESULTS |
|
2013 |
|
2012 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
Latrobe segment operating income |
|
$ 12.3 |
|
$ 2.1 |
|
$ 41.2 |
|
$ 3.4 |
Specialty Steel Supply
operating income included in Performance Engineered
Products segment results |
|
|
|
|
|
|
|
|
|
0.9 |
|
0.8 |
|
3.6 |
|
0.8 |
Inventory fair value cost adjustments included in Latrobe
segment operating
income |
|
- |
|
2.9 |
|
- |
|
2.9 |
Carpenter distribution
business operating (loss) income in Mexico included
in Latrobe segment results |
|
|
|
|
|
|
|
|
|
0.3 |
|
(0.5) |
|
(0.6) |
|
(1.8) |
Latrobe pension EID included in pension EID expense |
|
(0.6) |
|
(0.2) |
|
(1.8) |
|
(0.2) |
Adjusted Latrobe operating results before income
taxes |
|
12.9 |
|
5.1 |
|
42.4 |
|
5.1 |
Income taxes |
|
(4.5) |
|
(1.7) |
|
(14.8) |
|
(1.7) |
Adjusted Latrobe operating results |
|
$ 8.4 |
|
$ 3.4 |
|
$ 27.6 |
|
$ 3.4 |
|
|
|
|
|
|
|
|
|
Adjusted Latrobe operating results per diluted share |
|
$ 0.16 |
|
$ 0.07 |
|
$ 0.52 |
|
$ 0.07 |
Dilutive impact of shares issued in connection with
Latrobe acquisition* |
|
(0.11) |
|
(0.04) |
|
(0.35) |
|
(0.03) |
|
|
|
|
|
|
|
|
|
Net accretion from Latrobe's operating results |
|
$ 0.05 |
|
$ 0.03 |
|
$ 0.17 |
|
$ 0.04 |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
53.5 |
|
47.9 |
|
53.4 |
|
46.0 |
* In connection with the Latrobe
Acquisition, Carpenter issued shares of common stock to the former
owners which resulted in an additional 8.1 million, 2.7 million,
8.1 million, and 0.9 million weighted average shares during the
three months ended March 31, 2013 and 2012 and nine months ended
March 31, 2013 and 2012, respectively.
IMPACTS OF FACILITY START-UP,
RESTRUCTURING AND INVENTORY REDUCTION INITIATIVE COSTS |
|
Three Months Ended
March 31, |
|
Nine Months Ended
March 31, |
|
2013 |
|
2012 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
Facility start-up costs |
|
$ 1.4 |
|
$ - |
|
$ 3.7 |
|
$ - |
Restructuring costs fom manufacturing footprint
optimization activities |
|
2.0 |
|
- |
|
2.3 |
|
- |
Inventory reduction initiative costs |
|
0.9 |
|
- |
|
2.5 |
|
- |
Operating income impact |
|
$ 4.3 |
|
$ - |
|
$ 8.5 |
|
$ - |
|
|
|
|
|
|
|
|
|
Consolidated net sales excluding surcharges |
|
$ 471.2 |
|
$ 419.0 |
|
$ 1,342.6 |
|
$ 1,062.9 |
|
|
|
|
|
|
|
|
|
Impact of facility start-up, restructuring from
manufacturing footprint optimization activities and inventory
reduction initiative costs on operating margin excluding
surcharges |
|
0.9% |
|
0.0% |
|
0.6% |
|
0.0% |
|
|
|
|
|
|
|
|
|
Operating income impact |
|
$ 4.3 |
|
$ - |
|
$ 8.5 |
|
$ - |
Income tax benefit |
|
(1.5) |
|
- |
|
(3.0) |
|
- |
Net income impact |
|
$ 2.8 |
|
$ - |
|
$ 5.5 |
|
$ - |
|
|
|
|
|
|
|
|
|
Impact per diluted share |
|
$ 0.05 |
|
$ - |
|
$ 0.10 |
|
$ - |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
53.5 |
|
47.9 |
|
53.4 |
|
46.0 |
Management believes that removing the impacts of
costs associated with (i.) start-up of our Athens, AL facility,
(ii.) restructuring related to manufacturing footprint optimization
associated with evaluating and executing opportunities primarily as
a result of the Latrobe acquisition to optimize manufacturing
efficiencies, and (iii.) an inventory reduction initiative
aimed at identifying opportunities reduce inventory levels and
improve inventory turnover across the mill operations are helpful
in analyzing the operating performance of the Company, as these
costs are expected to be nonrecurring in nature and may result in
significant fluctuations in operating results from period to period
during fiscal years 2013 and 2014.
PRELIMINARY |
NON-GAAP FINANCIAL
MEASURES |
(in millions, except per share
data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
Nine Months Ended
March 31, |
TOTAL ACQUISITION-RELATED COSTS |
|
2013 |
|
2012 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related costs (from transaction) |
|
$ - |
|
$ 7.9 |
|
$ - |
|
$ 11.7 |
Inventory fair value cost adjustments |
|
- |
|
2.9 |
|
- |
|
2.9 |
Total acquisition related-costs before income taxes |
|
- |
|
10.8 |
|
- |
|
14.6 |
Income taxes |
|
- |
|
(3.4) |
|
- |
|
(3.8) |
Total acquisition-related costs |
|
$ - |
|
$ 7.4 |
|
$ - |
|
$ 10.8 |
|
|
|
|
|
|
|
|
|
Total acquisition-related costs per diluted share |
|
$ - |
|
$ 0.15 |
|
$ - |
|
$ 0.23 |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
53.5 |
|
47.9 |
|
53.4 |
|
46.0 |
|
|
|
|
|
|
|
|
|
Management believes that removing the impacts of
the total acquisition related costs is useful when comparing
results of operations from period to period.
PRELIMINARY |
SUPPLEMENTAL SCHEDULES |
(in millions) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
|
March 31, |
|
March 31, |
NET SALES BY END USE
MARKET |
2013 |
|
2012 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
End Use Market Excluding
Surcharge: |
|
|
|
|
|
|
|
Aerospace and
defense |
|
$ 214.7 |
|
$ 178.3 |
|
$ 604.4 |
|
$ 449.4 |
Industrial and
consumer |
|
97.1 |
|
95.0 |
|
269.1 |
|
244.2 |
Energy |
|
|
|
71.0 |
|
57.2 |
|
209.4 |
|
159.3 |
Transportation |
|
|
28.4 |
|
28.5 |
|
78.8 |
|
73.0 |
Medical |
|
|
|
25.3 |
|
34.1 |
|
77.3 |
|
91.5 |
Distribution |
|
|
34.7 |
|
25.9 |
|
103.6 |
|
45.5 |
|
|
|
|
|
|
|
|
|
|
|
Consolidated net sales
excluding surcharge |
471.2 |
|
419.0 |
|
1,342.6 |
|
$1,062.9 |
|
|
|
|
|
|
|
|
|
|
|
Surcharge revenue |
|
|
110.2 |
|
120.9 |
|
317.3 |
|
322,2 |
|
|
|
|
|
|
|
|
|
|
|
Consolidated net sales |
|
$ 581.4 |
|
$ 539.9 |
|
$1,659.9 |
|
$1,385.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
|
March 31, |
|
March 31, |
NET SALES BY MAJOR PRODUCT
CLASS |
2013 |
|
2012 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Product Class
Excluding Surcharge: |
|
|
|
|
|
|
|
Special alloys |
|
|
$ 182.6 |
|
$ 173.9 |
|
$ 509.0 |
|
$ 438.2 |
Stainless steel |
|
|
139.6 |
|
133.1 |
|
399.8 |
|
365.4 |
Titanium products |
|
|
36.3 |
|
37.9 |
|
112.6 |
|
113.3 |
Powder metals |
|
|
14.4 |
|
14.2 |
|
41.4 |
|
43.1 |
Alloy and tool
steel |
|
|
55.6 |
|
23.5 |
|
155.7 |
|
32.8 |
Distribution and
other |
|
42.7 |
|
36.4 |
|
124.1 |
|
70.1 |
|
|
|
|
|
|
|
|
|
|
|
Consolidated net sales
excluding surcharge |
471.2 |
|
$ 419.0 |
|
1.342.6 |
|
$1,062.9 |
|
|
|
|
|
|
|
|
|
|
|
Surcharge revenue |
|
|
110.2 |
|
120.9 |
|
317.3 |
|
322.2 |
|
|
|
|
|
|
|
|
|
|
|
Consolidated net sales |
|
$ 581.4 |
|
$ 539.9 |
|
$1,659.9 |
|
$1,385.1 |
|
|
|
|
|
|
|
|
|
|
|
![](http://thomsonreuterscorporategroup.122.2o7.net/b/ss/trcgclientrs315/1/H.22.1--NS/0?pageName=CARPENTER%20TECHNOLOGY%20REPORTS%20THIRD%20QUARTER%20RESULTS&c1=1696119&c2=D=Referer)
This
announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: Carpenter Technology Corp. via Thomson Reuters
ONE
HUG#1696119
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