Reported loss per share of $0.51; earnings per
share of $0.30 excluding special items
Carpenter Technology Corporation (NYSE:CRS) (the “Company”) today
announced financial results for the quarter ended March 31, 2016.
The Company reported a net loss of $23.9 million or $0.51 per
diluted share. Excluding special items, which were primarily
non-cash impairment charges related to certain oil and gas related
assets, earnings per diluted share were $0.30 in the quarter.
"Our solid operating results of $0.30 adjusted earnings per
share in the quarter reflect our focus on high-end premium alloys,
combined with our unwavering approach to cost management,” said
Tony Thene, Carpenter’s President and Chief Executive
Officer. “The ongoing execution of our new Carpenter
operating model which began less than one year ago resulted in
notable margin expansion at SAO and strong free cash flow in a
difficult market. We are aggressively managing our business and
leveraging our core strengths as we continue to position Carpenter
for long term growth.”
End-Use Market Dynamics
During the quarter, the Company experienced growth as expected
across the Aerospace & Defense, Medical and Industrial &
Consumer end-use markets on a sequential basis. The Energy end-use
market was also higher driven by strong performance in the Power
Generation sub-segment, while the Oil and Gas sub-segment was down
significantly on a sequential basis.
The low price of oil continues to have a significant impact on
drilling and exploration activity within the Energy end-use market.
The overall market remains volatile and the timing and extent of a
recovery in oil prices necessary to spark a sustainable increase in
activity from current levels remains unclear. As a result, the
Company recognized pre-tax, non-cash asset impairment charges of
$42.6 million in the third quarter, related to certain assets in
the Company’s oil and gas businesses.
Mr. Thene noted, “Despite challenging conditions, we continue to
believe the Energy end-use market is strategically important given
our strong customer relationships and the value our material
solutions bring to demanding applications that require high
strength and corrosion resistant products.”
Cost Reduction Initiatives
Carpenter continues to identify and execute on opportunities to
drive operating efficiencies and reduce costs. Among other actions,
during the quarter, the Company reduced its hourly workforce by
approximately 130 positions by offering early retirement
incentives.
Mr. Thene concluded, “Our new operating model is unlocking
manufacturing efficiencies and commercial opportunities, while also
driving further improvements in working capital efficiency and
capital spending discipline.”
Financial Highlights
($ in millions) |
Q3 |
|
Q3 |
|
Q2 |
|
FY2016 |
|
FY2015 |
|
FY2016 |
Net Sales |
$ |
|
456.3 |
|
|
|
$ |
|
570.6 |
|
|
|
$ |
443.8 |
|
Net Sales Excluding
Surcharge (a) |
$ |
|
402.4 |
|
|
|
$ |
|
462.9 |
|
|
|
$ |
379.4 |
|
Operating (Loss)
Income |
$ |
|
(24.3 |
) |
|
|
$ |
|
4.8 |
|
|
|
$ |
21.8 |
|
Operating Income
Excluding Pension EID and Special Items (a) |
$ |
|
35.2 |
|
|
|
$ |
|
35.1 |
|
|
|
$ |
29.2 |
|
Net (Loss) Income |
$ |
|
(23.9 |
) |
|
|
$ |
|
(1.4 |
) |
|
|
$ |
11.5 |
|
Free Cash Flow (a) |
$ |
|
46.8 |
|
|
|
$ |
|
86.7 |
|
|
|
$ |
1.8 |
|
|
|
|
|
|
|
(a)
non-GAAP financial measure explained in the attached tables |
Net sales for the third quarter of fiscal year 2016 were $456.3
million. Net sales excluding surcharge were $402.4 million, a
decrease of $60.5 million (or 13 percent) from the same quarter
last year, on 11 percent lower volume.
The operating loss was $24.3 million, a decrease of $29.1
million from the third quarter of the prior year. The operating
loss included $54.7 million in primarily non-cash impairment
charges related to certain assets in the Company’s oil and gas
businesses within the Performance Engineered Products (PEP) segment
as well as other special items. Operating income—excluding pension
earnings, interest and deferrals (EID) and special items—was $35.2
million, compared to $35.1 million in the prior year period.
These results primarily reflect lower volume, offset by an improved
product mix and lower operating costs compared to the same period
one year ago.
Free cash flow in the third quarter of fiscal year 2016 was $47
million, compared to $87 million in the same quarter last year.
Capital expenditures in the third quarter of fiscal year 2016 were
$16.6 million, compared to $24.8 million in the prior year’s third
quarter.
The Company continues to execute on its share repurchase
program. During the third quarter, the Company repurchased
approximately $28 million, or 1.0 million shares, of its common
stock.
For the full year, Carpenter continues to expect inventory to
decline in the fourth quarter and finish largely in-line with
year-end fiscal 2015 levels. The Company now expects capital
expenditures to be approximately $85 million to $95 million for
fiscal year 2016, versus prior guidance of $100 million.
Total liquidity, including cash and available revolver balance,
was $491 million at the end of the third quarter. This consisted of
$23 million of cash and $468 million of available borrowing under
the Company’s credit facility.
Special Items
Fiscal third quarter 2016 results include approximately $54.7
million in pre-tax charges or $0.81 per share. The majority of
these charges are non-cash impairment charges related to certain
assets in the Company’s oil and gas businesses within the PEP
segment, and consist of:
- Goodwill impairment charges totaling $12.5 million or $0.20 per
share
- Impairment of intangible assets and property and equipment
charges totaling $7.6 million or $0.12 per share
- Excess inventory write-down charges of approximately
$22.5 million or $0.31 per share
In addition, the Company reported certain other special charges
in the fiscal third quarter as follows:
- $9.4 million or $0.13 per share in charges associated with an
early retirement incentive offered to certain employees that will
be funded by the Company’s pension plan
- $2.1 million or $0.03 per share associated with
consulting costs
- $0.6 million or $0.01 per share in other severance
charges associated with certain position eliminations
- An income tax charge of $0.8 million or $0.01 per share
associated with the completion of the sale of an equity method
investment in India
Conference Call and Webcast Presentation
Carpenter will host a conference call and webcast presentation
today, April 26th at 10:00 a.m. ET, to discuss the financial
results and operations for the fiscal third quarter. Please call
(610) 208-2222 for details. Access to the live webcast will be
available at Carpenter’s website (http://www.cartech.com), and a
replay will soon be made available at http://www.cartech.com.
Presentation materials used during this conference call will be
available for viewing and download at http://www.cartech.com.
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 non-GAAP measures are
important, are included in the attached schedules.
About Carpenter Technology
Carpenter produces and distributes premium alloys, including
specialty alloys, titanium alloys and powder metals, as well as
stainless steels, alloy steels and tool steels. Information about
Carpenter can be found at http://www.cartech.com.
Forward-Looking Statements
This presentation 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, 2015, Forms 10-Q for the quarters ended
September 30, 2015 and December 31, 2015 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, 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;
(2) the ability of Carpenter to achieve cash generation, growth,
earnings, profitability, cost savings and reductions, productivity
improvements or process changes; (3) the ability to recoup
increases in the cost of energy, raw materials, freight 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;
(10) the ability to successfully acquire and integrate
acquisitions; (11) the availability of credit facilities to
Carpenter, its customers or other members of the supply chain; (12)
the ability to obtain energy or raw materials, especially from
suppliers located in countries that may be subject to unstable
political or economic conditions; (13) Carpenter’s manufacturing
processes are dependent upon highly specialized equipment located
primarily in facilities in Reading and Latrobe, Pennsylvania and
Athens, Alabama for which there may be limited alternatives if
there are significant equipment failures or a catastrophic event;
(14) the ability to hire and retain key personnel, including
members of the executive management team, management, metallurgists
and other skilled personnel; (15) fluctuations in oil and gas
prices and production; (16) the success of restructuring actions;
and (17) share repurchases are at Carpenter’s discretion and could
be affected by changes in Carpenter’s share price, operating
results, capital spending, cash flows, inventory, acquisitions,
investments, tax laws and general market conditions. 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
OPERATIONS |
(in millions, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
March 31, |
|
March 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
NET SALES |
|
$ |
456.3 |
|
|
$ |
570.6 |
|
|
$ |
1,355.7 |
|
|
$ |
1,668.8 |
|
Cost of sales |
|
386.3 |
|
|
494.8 |
|
|
1,150.8 |
|
|
1,438.9 |
|
Cost of sales - excess
inventory write-down |
|
22.5 |
|
|
— |
|
|
22.5 |
|
|
— |
|
Gross profit |
|
47.5 |
|
|
75.8 |
|
|
182.4 |
|
|
229.9 |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
41.7 |
|
|
45.7 |
|
|
129.5 |
|
|
132.7 |
|
Restructuring and asset
impairment charges |
|
17.6 |
|
|
25.3 |
|
|
18.0 |
|
|
25.3 |
|
Goodwill
impairment |
|
12.5 |
|
|
— |
|
|
12.5 |
|
|
— |
|
Operating (loss)
income |
|
(24.3 |
) |
|
4.8 |
|
|
22.4 |
|
|
71.9 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(7.2 |
) |
|
(7.1 |
) |
|
(20.8 |
) |
|
(20.9 |
) |
Other (expense) income,
net |
|
(1.5 |
) |
|
— |
|
|
(3.4 |
) |
|
4.8 |
|
|
|
|
|
|
|
|
|
|
(Loss) income before
income taxes |
|
(33.0 |
) |
|
(2.3 |
) |
|
(1.8 |
) |
|
55.8 |
|
Income tax (benefit)
expense |
|
(9.1 |
) |
|
(0.9 |
) |
|
1.8 |
|
|
19.6 |
|
|
|
|
|
|
|
|
|
|
NET (LOSS) INCOME |
|
$ |
(23.9 |
) |
|
$ |
(1.4 |
) |
|
$ |
(3.6 |
) |
|
$ |
36.2 |
|
|
|
|
|
|
|
|
|
|
(LOSS) EARNINGS PER
COMMON SHARE: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.51 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.08 |
) |
|
$ |
0.68 |
|
Diluted |
|
$ |
(0.51 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.08 |
) |
|
$ |
0.68 |
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING: |
|
|
|
|
|
|
|
|
Basic |
|
47.1 |
|
|
52.6 |
|
|
48.5 |
|
|
53.2 |
|
Diluted |
|
47.1 |
|
|
52.6 |
|
|
48.5 |
|
|
53.3 |
|
|
|
|
|
|
|
|
|
|
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, |
|
|
2016 |
|
2015 |
OPERATING
ACTIVITIES: |
|
|
|
|
Net (loss) income |
|
$ |
(3.6 |
) |
|
$ |
36.2 |
|
Adjustments to
reconcile net (loss) income to net cash provided from operating
activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
90.0 |
|
|
91.2 |
|
Goodwill impairment charge |
|
12.5 |
|
|
— |
|
Non-cash excess inventory
write-down |
|
22.5 |
|
|
— |
|
Non-cash restructuring and asset
impairment charges |
|
7.6 |
|
|
6.3 |
|
Deferred income taxes |
|
(6.6 |
) |
|
68.4 |
|
Net pension expense |
|
40.3 |
|
|
34.6 |
|
Payments from qualified pension
plan associated with restructuring |
|
9.4 |
|
|
7.6 |
|
Stock-based compensation
expense |
|
6.8 |
|
|
6.8 |
|
Net loss on disposals of property
and equipment |
|
0.2 |
|
|
0.8 |
|
Changes in working
capital and other: |
|
|
|
|
Accounts receivable |
|
32.6 |
|
|
6.6 |
|
Inventories |
|
(18.0 |
) |
|
(18.4 |
) |
Other current assets |
|
(13.0 |
) |
|
(12.0 |
) |
Accounts payable |
|
(6.6 |
) |
|
(42.3 |
) |
Accrued liabilities |
|
(22.3 |
) |
|
(22.7 |
) |
Pension plan contributions |
|
— |
|
|
(5.5 |
) |
Other postretirement plan
contributions |
|
(9.5 |
) |
|
(10.2 |
) |
Cash paid as collateral under
derivative agreements |
|
(8.0 |
) |
|
— |
|
Other, net |
|
2.9 |
|
|
1.0 |
|
Net cash provided from operating
activities |
|
137.2 |
|
|
148.4 |
|
|
|
|
|
|
INVESTING
ACTIVITIES: |
|
|
|
|
Purchases of property,
equipment and software |
|
(66.1 |
) |
|
(152.3 |
) |
Proceeds from disposals
of property and equipment |
|
0.3 |
|
|
0.2 |
|
Proceeds from the sale
of equity method investment |
|
6.3 |
|
|
— |
|
Other |
|
4.0 |
|
|
— |
|
Net cash used for investing
activities |
|
(55.5 |
) |
|
(152.1 |
) |
|
|
|
|
|
FINANCING
ACTIVITIES: |
|
|
|
|
Net change in
short-term debt |
|
25.0 |
|
|
— |
|
Dividends paid |
|
(26.3 |
) |
|
(28.8 |
) |
Purchases of treasury
stock |
|
(123.9 |
) |
|
(60.3 |
) |
Payments on seller
financed debt related to purchase of software |
|
(3.7 |
) |
|
— |
|
Tax benefits on
share-based compensation |
|
— |
|
|
0.6 |
|
Proceeds from stock
options exercised |
|
0.3 |
|
|
2.3 |
|
Net cash used for financing
activities |
|
(128.6 |
) |
|
(86.2 |
) |
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
0.3 |
|
|
(0.7 |
) |
|
|
|
|
|
DECREASE IN CASH AND
CASH EQUIVALENTS |
|
(46.6 |
) |
|
(90.6 |
) |
Cash and cash
equivalents at beginning of period |
|
70.0 |
|
|
120.0 |
|
|
|
|
|
|
Cash and cash
equivalents at end of period |
|
$ |
23.4 |
|
|
$ |
29.4 |
|
PRELIMINARY |
CONSOLIDATED BALANCE SHEETS |
(in millions) |
(Unaudited) |
|
|
|
|
|
|
|
March 31, |
|
June 30, |
|
|
2016 |
|
2015 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
23.4 |
|
|
$ |
70.0 |
|
Accounts receivable, net |
|
271.0 |
|
|
304.1 |
|
Inventories |
|
649.4 |
|
|
655.8 |
|
Deferred income taxes |
|
7.5 |
|
|
3.3 |
|
Other current assets |
|
64.8 |
|
|
37.2 |
|
Total current assets |
|
1,016.1 |
|
|
1,070.4 |
|
Property, plant and
equipment, net |
|
1,347.7 |
|
|
1,397.0 |
|
Goodwill |
|
244.8 |
|
|
257.4 |
|
Other intangibles,
net |
|
64.9 |
|
|
71.6 |
|
Other assets |
|
113.0 |
|
|
109.5 |
|
Total assets |
|
$ |
2,786.5 |
|
|
$ |
2,905.9 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Current
liabilities: |
|
|
|
|
Short-term debt |
|
$ |
25.0 |
|
|
$ |
— |
|
Accounts payable |
|
152.9 |
|
|
169.5 |
|
Accrued liabilities |
|
137.2 |
|
|
152.6 |
|
Total current liabilities |
|
315.1 |
|
|
322.1 |
|
Long-term debt |
|
612.9 |
|
|
607.1 |
|
Accrued pension
liabilities |
|
358.4 |
|
|
334.1 |
|
Accrued postretirement
benefits |
|
106.7 |
|
|
111.2 |
|
Deferred income
taxes |
|
147.6 |
|
|
146.5 |
|
Other liabilities |
|
58.8 |
|
|
59.0 |
|
Total liabilities |
|
1,599.5 |
|
|
1,580.0 |
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY |
|
|
|
|
Common stock |
|
276.2 |
|
|
276.2 |
|
Capital in excess of
par value |
|
272.9 |
|
|
266.6 |
|
Reinvested
earnings |
|
1,302.5 |
|
|
1,332.4 |
|
Common stock in
treasury, at cost |
|
(344.2 |
) |
|
(221.1 |
) |
Accumulated other
comprehensive loss |
|
(320.4 |
) |
|
(328.2 |
) |
Total stockholders' equity |
|
1,187.0 |
|
|
1,325.9 |
|
Total liabilities and stockholders'
equity |
|
$ |
2,786.5 |
|
|
$ |
2,905.9 |
|
PRELIMINARY |
SEGMENT FINANCIAL DATA |
(in millions, except pounds sold) |
(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
March 31, |
|
March 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Pounds sold (000): |
|
|
|
|
|
|
|
Specialty Alloys Operations |
59,082 |
|
|
67,232 |
|
|
170,690 |
|
|
202,952 |
|
Performance Engineered
Products |
2,774 |
|
|
3,806 |
|
|
8,530 |
|
|
11,064 |
|
Intersegment |
(518 |
) |
|
(1,986 |
) |
|
(2,530 |
) |
|
(5,506 |
) |
Consolidated pounds sold |
61,338 |
|
|
69,052 |
|
|
176,690 |
|
|
208,510 |
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
Specialty Alloys Operations |
|
|
|
|
|
|
|
Net sales excluding surcharge |
$ |
316.5 |
|
|
$ |
360.0 |
|
|
$ |
917.2 |
|
|
$ |
1,016.4 |
|
Surcharge |
54.0 |
|
|
109.8 |
|
|
189.5 |
|
|
327.6 |
|
Specialty Alloys Operations net
sales |
370.5 |
|
|
469.8 |
|
|
1,106.7 |
|
|
1,344.0 |
|
|
|
|
|
|
|
|
|
Performance Engineered
Products |
|
|
|
|
|
|
|
Net sales excluding surcharge |
91.2 |
|
|
120.1 |
|
|
267.8 |
|
|
383.1 |
|
Surcharge |
0.2 |
|
|
0.3 |
|
|
0.5 |
|
|
1.0 |
|
Performance Engineered Products net
sales |
91.4 |
|
|
120.4 |
|
|
268.3 |
|
|
384.1 |
|
|
|
|
|
|
|
|
|
Intersegment |
|
|
|
|
|
|
|
Net sales excluding surcharge |
(5.3 |
) |
|
(17.2 |
) |
|
(18.0 |
) |
|
(50.8 |
) |
Surcharge |
(0.3 |
) |
|
(2.4 |
) |
|
(1.3 |
) |
|
(8.5 |
) |
Intersegment net sales |
(5.6 |
) |
|
(19.6 |
) |
|
(19.3 |
) |
|
(59.3 |
) |
|
|
|
|
|
|
|
|
Consolidated net sales |
$ |
456.3 |
|
|
$ |
570.6 |
|
|
$ |
1,355.7 |
|
|
$ |
1,668.8 |
|
|
|
|
|
|
|
|
|
Operating (loss)
income: |
|
|
|
|
|
|
|
Specialty Alloys Operations |
$ |
45.6 |
|
|
$ |
37.9 |
|
|
$ |
128.3 |
|
|
$ |
106.0 |
|
Performance Engineered
Products |
(0.9 |
) |
|
8.5 |
|
|
(4.2 |
) |
|
30.8 |
|
Corporate costs (including
restructuring and impairment charges) |
(64.5 |
) |
|
(38.6 |
) |
|
(89.3 |
) |
|
(55.9 |
) |
Pension earnings, interest and
deferrals |
(4.8 |
) |
|
(2.4 |
) |
|
(14.4 |
) |
|
(7.1 |
) |
Intersegment |
0.3 |
|
|
(0.6 |
) |
|
2.0 |
|
|
(1.9 |
) |
Consolidated operating (loss)
income |
$ |
(24.3 |
) |
|
$ |
4.8 |
|
|
$ |
22.4 |
|
|
$ |
71.9 |
|
The Company has two reportable segments, Specialty Alloys
Operations (“SAO”) and Performance Engineered Products (“PEP”).
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 and Latrobe and
surrounding areas in Pennsylvania, South Carolina and Alabama.
The PEP segment is comprised of the Company’s differentiated
operations. This segment includes the Dynamet titanium business,
the Carpenter Powder Products (CPP) business, the Amega West
business, the Specialty Steel Supply business, and the Latrobe and
Mexico distribution businesses. The businesses in the PEP segment
are managed with an entrepreneurial structure to promote
flexibility and agility to quickly respond to market
dynamics. It is our belief this model will ultimately drive
overall revenue and profit growth. The pounds sold data above
for the PEP segment includes only the Dynamet and CPP
businesses.
The corporate costs are comprised of general corporate costs,
which include executive and director compensation, and other
corporate facilities and administrative expenses not allocated to
the segments. Also included are items that management considers not
representative of ongoing operations, such as restructuring and
asset impairment charges, goodwill impairment and other
specifically-identified income or expense items.
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 earnings, 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 and is
included under the heading "Pension earnings, interest and
deferrals".
PRELIMINARY |
NON-GAAP FINANCIAL MEASURES |
(in millions, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
OPERATING MARGIN
EXCLUDING SURCHARGE, |
|
|
|
|
|
|
|
|
PENSION EARNINGS, INTEREST AND
DEFERRALS, |
|
Three Months Ended |
|
Nine Months Ended |
AND SPECIAL ITEMS |
|
March 31, |
|
March 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
456.3 |
|
|
$ |
570.6 |
|
|
$ |
1,355.7 |
|
|
$ |
1,668.8 |
|
Less: surcharge
revenue |
|
53.9 |
|
|
107.7 |
|
|
188.7 |
|
|
320.1 |
|
Consolidated net sales
excluding surcharge |
|
$ |
402.4 |
|
|
$ |
462.9 |
|
|
$ |
1,167.0 |
|
|
$ |
1,348.7 |
|
|
|
|
|
|
|
|
|
|
Operating (loss)
income |
|
(24.3 |
) |
|
4.8 |
|
|
22.4 |
|
|
71.9 |
|
Pension earnings,
interest and deferrals |
|
4.8 |
|
|
2.4 |
|
|
14.4 |
|
|
7.1 |
|
Operating (loss) income
excluding pension earnings, interest and deferrals |
|
(19.5 |
) |
|
7.2 |
|
|
36.8 |
|
|
79.0 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Excess inventory write-down |
|
22.5 |
|
|
— |
|
|
22.5 |
|
|
— |
|
Restructuring and asset impairment
charges |
|
17.6 |
|
|
25.3 |
|
|
18.0 |
|
|
25.3 |
|
Goodwill impairment |
|
12.5 |
|
|
— |
|
|
12.5 |
|
|
— |
|
Consulting costs |
|
2.1 |
|
|
2.6 |
|
|
7.2 |
|
|
2.6 |
|
Operating income
excluding pension earnings, interest and deferrals, and special
items |
|
$ |
35.2 |
|
|
$ |
35.1 |
|
|
$ |
97.0 |
|
|
$ |
106.9 |
|
|
|
|
|
|
|
|
|
|
Operating margin |
|
(5.3 |
)% |
|
0.8 |
% |
|
1.7 |
% |
|
4.3 |
% |
|
|
|
|
|
|
|
|
|
Operating margin
excluding surcharge, pension earnings, interest and deferrals, and
special items |
|
8.7 |
% |
|
7.6 |
% |
|
8.3 |
% |
|
7.9 |
% |
Management believes that removing the impacts of raw material
surcharge 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. Management also believes that
removing the impact of restructuring and asset impairment charges,
goodwill impairment, excess inventory write-down and other special
items is helpful in analyzing the operating performance of the
Company, as these costs are not indicative of ongoing operating
performance.
ADJUSTED (LOSS)
EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS |
|
(Loss) Income Before Income Taxes |
|
Income Tax Benefit (Expense) |
|
Net (Loss) Income |
|
(Loss) Earnings Per Diluted Share** |
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2016, as reported |
|
$ |
(33.0 |
) |
|
$ |
9.1 |
|
|
$ |
(23.9 |
) |
|
$ |
(0.51 |
) |
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Excess inventory write-down |
|
22.5 |
|
|
(7.8 |
) |
|
14.7 |
|
|
0.31 |
|
Restructuring and asset impairment
charges |
|
17.6 |
|
|
(5.6 |
) |
|
12.0 |
|
|
0.26 |
|
Goodwill impairment |
|
12.5 |
|
|
(3.2 |
) |
|
9.3 |
|
|
0.20 |
|
Consulting costs |
|
2.1 |
|
|
(0.7 |
) |
|
1.4 |
|
|
0.03 |
|
Income tax item |
|
— |
|
|
0.8 |
|
|
0.8 |
|
|
0.01 |
|
Total impact of special
items |
|
54.7 |
|
|
(16.5 |
) |
|
38.2 |
|
|
0.81 |
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2016, as adjusted |
|
$ |
21.7 |
|
|
$ |
(7.4 |
) |
|
$ |
14.3 |
|
|
$ |
0.30 |
|
|
|
|
|
|
|
|
|
|
** Impact
per diluted share calculated using weighted average common shares
outstanding of 47.1 million for the three months ended March 31,
2016. |
ADJUSTED (LOSS)
EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS |
|
(Loss) Income Before Income Taxes |
|
Income Tax Benefit (Expense) |
|
Net (Loss) Income |
|
(Loss) Earnings Per Diluted Share** |
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2015, as reported |
|
$ |
(2.3 |
) |
|
$ |
0.9 |
|
|
$ |
(1.4 |
) |
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Restructuring charges |
|
25.3 |
|
|
(8.7 |
) |
|
16.6 |
|
|
0.32 |
|
Consulting costs |
|
2.6 |
|
|
(0.9 |
) |
|
1.7 |
|
|
0.03 |
|
Total impact of special
items |
|
27.9 |
|
|
(9.6 |
) |
|
18.3 |
|
|
0.35 |
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2015, as adjusted |
|
$ |
25.6 |
|
|
$ |
(8.7 |
) |
|
$ |
16.9 |
|
|
$ |
0.32 |
|
|
|
|
|
|
|
|
|
|
** Impact
per diluted share calculated using weighted average common shares
outstanding of 52.6 million for the three months ended March 31,
2015. |
ADJUSTED (LOSS)
EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS |
|
(Loss) Income Before Income Taxes |
|
Income Tax Benefit (Expense) |
|
Net (Loss) Income |
|
(Loss) Earnings Per Diluted Share** |
|
|
|
|
|
|
|
|
|
Nine months ended March
31, 2016, as reported |
|
$ |
(1.8 |
) |
|
$ |
(1.8 |
) |
|
$ |
(3.6 |
) |
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Excess inventory write-down |
|
22.5 |
|
|
(7.8 |
) |
|
14.7 |
|
|
0.30 |
|
Restructuring and asset impairment
charges |
|
18.0 |
|
|
(5.7 |
) |
|
12.3 |
|
|
0.25 |
|
Goodwill impairment |
|
12.5 |
|
|
(3.2 |
) |
|
9.3 |
|
|
0.19 |
|
Consulting costs |
|
7.2 |
|
|
(2.5 |
) |
|
4.7 |
|
|
0.10 |
|
Income tax item |
|
— |
|
|
2.8 |
|
|
2.8 |
|
|
0.06 |
|
Impact of tax law change |
|
— |
|
|
(0.8 |
) |
|
(0.8 |
) |
|
(0.01 |
) |
Total impact of special
items |
|
60.2 |
|
|
(17.2 |
) |
|
43.0 |
|
|
0.89 |
|
|
|
|
|
|
|
|
|
|
Nine months ended March
31, 2016, as adjusted |
|
$ |
58.4 |
|
|
$ |
(19.0 |
) |
|
$ |
39.4 |
|
|
$ |
0.81 |
|
|
|
|
|
|
|
|
|
|
** Impact
per diluted share calculated using weighted average common shares
outstanding of 48.5 million for the nine months ended March 31,
2016. |
ADJUSTED (LOSS)
EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS |
|
Income Before Income Taxes |
|
Income Tax (Expense) |
|
Net Income |
|
Earnings Per Diluted Share** |
|
|
|
|
|
|
|
|
|
Nine months ended March
31, 2015, as reported |
|
$ |
55.8 |
|
|
$ |
(19.6 |
) |
|
$ |
36.2 |
|
|
$ |
0.68 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Restructuring charges |
|
25.3 |
|
|
(8.7 |
) |
|
16.6 |
|
|
0.32 |
|
Consulting costs |
|
2.6 |
|
|
(0.9 |
) |
|
1.7 |
|
|
0.03 |
|
Total impact of special
items |
|
27.9 |
|
|
(9.6 |
) |
|
18.3 |
|
|
0.35 |
|
|
|
|
|
|
|
|
|
|
Nine months ended March
31, 2015, as adjusted |
|
$ |
83.7 |
|
|
$ |
(29.2 |
) |
|
$ |
54.5 |
|
|
$ |
1.03 |
|
|
|
|
|
|
|
|
|
|
** Impact
per diluted share calculated using weighted average common shares
outstanding of 53.3 million for the nine months ended March 31,
2015. |
Management believes that earnings per share adjusted to exclude
the impact of restructuring and asset impairment charges, goodwill
impairment, excess inventory write-down and other special items is
helpful in analyzing the operating performance of the Company, as
these costs are not indicative of ongoing operating
performance.
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
March 31, |
|
March 31, |
FREE CASH FLOW |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Net cash provided from
operating activities |
|
$ |
65.5 |
|
|
$ |
120.9 |
|
|
$ |
137.2 |
|
|
$ |
148.4 |
|
Purchases of property,
equipment and software |
|
(16.6 |
) |
|
(24.8 |
) |
|
(66.1 |
) |
|
(152.3 |
) |
Proceeds from disposals
of property and equipment |
|
0.1 |
|
|
0.1 |
|
|
0.3 |
|
|
0.2 |
|
Proceeds from the sale
of equity method investment |
|
6.3 |
|
|
— |
|
|
6.3 |
|
|
— |
|
Dividends paid |
|
(8.5 |
) |
|
(9.5 |
) |
|
(26.3 |
) |
|
(28.8 |
) |
Other |
|
— |
|
|
— |
|
|
4.0 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Free cash flow |
|
$ |
46.8 |
|
|
$ |
86.7 |
|
|
$ |
55.4 |
|
|
$ |
(32.5 |
) |
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.
PRELIMINARY |
SUPPLEMENTAL SCHEDULES |
(in millions) |
(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
March 31, |
|
March 31, |
NET SALES BY END-USE
MARKET |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
End-Use Market
Excluding Surcharge: |
|
|
|
|
|
|
|
|
Aerospace and Defense |
|
$ |
200.9 |
|
|
$ |
213.9 |
|
|
$ |
583.5 |
|
|
$ |
583.7 |
|
Energy |
|
33.6 |
|
|
60.8 |
|
|
89.6 |
|
|
198.9 |
|
Transportation |
|
34.1 |
|
|
33.4 |
|
|
105.5 |
|
|
95.4 |
|
Medical |
|
28.9 |
|
|
29.0 |
|
|
79.7 |
|
|
81.4 |
|
Industrial and Consumer |
|
74.1 |
|
|
92.0 |
|
|
219.9 |
|
|
287.2 |
|
Distribution |
|
30.8 |
|
|
33.8 |
|
|
88.8 |
|
|
102.1 |
|
|
|
|
|
|
|
|
|
|
Consolidated net sales
excluding surcharge |
|
402.4 |
|
|
462.9 |
|
|
1,167.0 |
|
|
1,348.7 |
|
|
|
|
|
|
|
|
|
|
Surcharge revenue |
|
53.9 |
|
|
107.7 |
|
|
188.7 |
|
|
320.1 |
|
|
|
|
|
|
|
|
|
|
Consolidated net
sales |
|
$ |
456.3 |
|
|
$ |
570.6 |
|
|
$ |
1,355.7 |
|
|
$ |
1,668.8 |
|
Media Inquiries:
William J. Rudolph, Jr.
+1 610-208-3892
wrudolph@cartech.com
Investor Inquiries:
Brad Edwards
Brainerd Communicators
+1 212-986-6667
edwards@braincomm.com
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