Strong Performance Driven by Improving Market
Conditions
Carpenter Technology Corporation (NYSE:CRS) (the “Company”) today
announced financial results for the quarter ended March 31, 2017.
The Company reported net income of $20.7 million or $0.44
earnings per share. Net sales for the third quarter of fiscal year
2017 were $473.6 million. Net sales excluding surcharge were $412.9
million for the third quarter of fiscal year 2017.
“Our solid third quarter results reflect revenue growth across
our diverse end-use market portfolio, strong commercial execution
and the benefits of our ongoing implementation of the Carpenter
Operating Model,” said Tony Thene, Carpenter’s President & CEO.
“Conditions across most of our markets have continued to improve,
including in Aerospace where we are seeing increasing demand and
are benefiting from our broad aerospace participation. While the
recovery in oil and gas remains in the early stages, we are
encouraged by the increase in North American rig counts and believe
we are well positioned to drive growth and gain market share as
activity levels increase further. These factors helped contribute
to our Specialty Alloys Operations segment’s strongest operating
margin percentage in almost three years.”
“Our Performance Engineered Products segment generated positive
operating income for the second consecutive quarter, with improved
performance across all of our businesses due to increasing demand
for our titanium products coupled with further improvements in our
oil and gas businesses.”
“The integration of our titanium powder acquisition is on track
and our new titanium powder capabilities and applications are
generating customer pull across many of our end-use markets. Moving
forward, we remain focused on continuing to improve our operating
execution and building on the momentum of improving demand across
our end-use markets coupled with increasing interest in the
additive manufacturing space. Our backlog continues to grow
as our commercial team leverages our solutions-driven approach to
expand our customer and market opportunities. As we
accelerate our revenue growth, we remain well positioned to deliver
enhanced profitability.”
Financial Highlights
($ in
millions) |
|
Q3 |
|
Q3 |
|
Q2 |
|
|
FY2017 |
|
FY2016 |
|
FY2017 |
Net
Sales |
$ |
473.6 |
|
$ |
456.3 |
|
|
|
$ |
427.4 |
|
|
Net Sales
Excluding Surcharge (a) |
$ |
412.9 |
|
$ |
402.4 |
|
|
|
$ |
366.7 |
|
|
Operating
Income (Loss) |
$ |
35.8 |
|
$ |
(24.3 |
) |
|
|
$ |
15.4 |
|
|
Operating
Income Excluding Pension EID and Special Items (a) |
$ |
41.4 |
|
$ |
35.2 |
|
|
|
$ |
21.0 |
|
|
Net Income
(Loss) |
$ |
20.7 |
|
$ |
(23.9 |
) |
|
|
$ |
7.0 |
|
|
Cash
Provided From (Used For) Operating Activities |
$ |
61.3 |
|
$ |
65.5 |
|
|
|
$ |
(29.7 |
) |
|
Free Cash
Flow (a) |
$ |
5.7 |
|
$ |
46.8 |
|
|
|
$ |
(56.7 |
) |
|
(a) Non-GAAP financial measure explained in the attached
schedules |
|
Net sales for the third quarter of fiscal year 2017 were $473.6
million compared with $456.3 million in the third quarter of fiscal
year 2016, an increase of $17.3 million (or 3.8 percent), on 3
percent higher volume. Net sales excluding surcharge were
$412.9 million, an increase of $10.5 million (or 2.6 percent) from
the same period a year ago.
Operating income was $35.8 million compared to an operating loss
of $24.3 million in the prior year period. Operating
income—excluding pension earnings, interest and deferrals (EID) and
special items—was $41.4 million, compared to $35.2 million in the
prior year period. These results primarily reflect higher
sales and volume compared to the same quarter a year ago as well as
the continued positive impact of the Carpenter Operating Model.
Cash provided from operating activities in the third quarter of
fiscal year 2017 was $61.3 million, compared to $65.5 million in
the same quarter last year. The decrease in operating cash
flow was primarily related to investments in working capital,
principally inventory, to capitalize on improving market
conditions. Free cash flow in the third quarter of fiscal
year 2017 was $5.7 million, compared to free cash flow of $46.8
million in the same quarter last year. Free cash flow results for
the current quarter were positive despite $35.3 million that was
used to fund the titanium powder acquisition. Capital expenditures
were $18.0 million in the third quarter of fiscal year 2017
compared to $16.6 million in the same quarter last year.
Total liquidity, including cash and available revolver balance,
was $396.6 million at the end of the third quarter of fiscal 2017.
This consisted of $16.6 million of cash and $380.0 million of
available borrowings under the Company’s credit facility. As
previously announced, on March 31, 2017 the Company entered into a
$400 million, five-year syndicated credit facility to replace the
existing credit facility that was set to expire in June 2018.
Conference Call and Webcast Presentation
Carpenter will host a conference call and webcast presentation
today, April 27th at 10:00 a.m. ET, to discuss the financial
results and operations for the third quarter of fiscal year 2017.
Please dial +1 412-317-9259 for access to the live conference
call. 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. An audio replay of
the conference call can be accessed by dialing +1 412-317-0088 and
using passcode 10104937. The audio replay will be available for one
week.
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 Technology Corporation is a leading producer and
distributor of premium specialty alloys, including titanium alloys,
powder metals, stainless steels, alloy steels and tool steels.
Carpenter’s high-performance materials and advanced process
solutions are an integral part of critical applications used within
the aerospace, transportation, medical and energy markets, among
other markets. Building on its history of innovation,
Carpenter’s superalloy powder technologies support a range of
next-generation products and manufacturing techniques, including
additive manufacturing or 3D Printing. Information about
Carpenter can be found at 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 report on Form 10-K for the year
ended June 30, 2016, Form 10-Q for the quarters ended September 30,
2016 and December 31, 2016 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, operating income, cost savings and reductions,
qualifications, 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; and (16) the
success of actions taken to reduce costs associated with retirement
and pension plans. 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 (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended.
Carpenter undertakes no obligation to update or revise any
forward-looking statements.
PRELIMINARYCONSOLIDATED
STATEMENTS OF INCOME(in millions, except per share
data)(Unaudited) |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
March 31, |
|
March 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
NET SALES |
|
$ |
473.6 |
|
|
$ |
456.3 |
|
|
$ |
1,289.9 |
|
|
$ |
1,355.7 |
|
Cost of sales |
|
390.5 |
|
|
386.3 |
|
|
1,098.3 |
|
|
1,150.8 |
|
Cost of sales - excess
inventory write-down |
|
— |
|
|
22.5 |
|
|
— |
|
|
22.5 |
|
Gross profit |
|
83.1 |
|
|
47.5 |
|
|
191.6 |
|
|
182.4 |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
47.3 |
|
|
41.7 |
|
|
139.0 |
|
|
129.5 |
|
Restructuring and asset
impairment charges |
|
— |
|
|
17.6 |
|
|
— |
|
|
18.0 |
|
Goodwill
impairment |
|
— |
|
|
12.5 |
|
|
— |
|
|
12.5 |
|
Operating income
(loss) |
|
35.8 |
|
|
(24.3 |
) |
|
52.6 |
|
|
22.4 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(7.7 |
) |
|
(7.2 |
) |
|
(22.5 |
) |
|
(20.8 |
) |
Other income (expense),
net |
|
1.0 |
|
|
(1.5 |
) |
|
2.0 |
|
|
(3.4 |
) |
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
29.1 |
|
|
(33.0 |
) |
|
32.1 |
|
|
(1.8 |
) |
Income tax expense
(benefit) |
|
8.4 |
|
|
(9.1 |
) |
|
10.6 |
|
|
1.8 |
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) |
|
$ |
20.7 |
|
|
$ |
(23.9 |
) |
|
$ |
21.5 |
|
|
$ |
(3.6 |
) |
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER
COMMON SHARE: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.44 |
|
|
$ |
(0.51 |
) |
|
$ |
0.45 |
|
|
$ |
(0.08 |
) |
Diluted |
|
$ |
0.44 |
|
|
$ |
(0.51 |
) |
|
$ |
0.45 |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING: |
|
|
|
|
|
|
|
|
Basic |
|
47.0 |
|
|
47.1 |
|
|
47.0 |
|
|
48.5 |
|
Diluted |
|
47.1 |
|
|
47.1 |
|
|
47.1 |
|
|
48.5 |
|
|
|
|
|
|
|
|
|
|
Cash dividends per
common share |
|
$ |
0.18 |
|
|
$ |
0.18 |
|
|
$ |
0.54 |
|
|
$ |
0.54 |
|
PRELIMINARYCONSOLIDATED
STATEMENTS OF CASH FLOWS(in millions)(Unaudited) |
|
|
|
Nine Months Ended |
|
|
March 31, |
|
|
2017 |
|
2016 |
OPERATING
ACTIVITIES: |
|
|
|
|
Net income (loss) |
|
$ |
21.5 |
|
|
|
$ |
(3.6 |
) |
Adjustments to
reconcile net income (loss) to net cash provided from operating
activities: |
|
|
|
|
Depreciation and amortization |
|
88.8 |
|
|
|
90.0 |
|
Goodwill
impairment charge |
|
— |
|
|
|
12.5 |
|
Non-cash
excess inventory write-down |
|
— |
|
|
|
22.5 |
|
Non-cash
restructuring and asset impairment charges |
|
— |
|
|
|
7.6 |
|
Deferred
income taxes |
|
37.4 |
|
|
|
(6.6 |
) |
Net
pension expense |
|
39.7 |
|
|
|
40.3 |
|
Payments
from qualified pension plan associated with restructuring |
|
— |
|
|
|
9.4 |
|
Share-based compensation expense |
|
10.0 |
|
|
|
6.8 |
|
Net loss
on disposals of property and equipment |
|
2.2 |
|
|
|
0.2 |
|
Changes in working
capital and other, net of acquisition: |
|
|
|
|
Accounts
receivable |
|
(15.0 |
) |
|
|
32.6 |
|
Inventories |
|
(89.0 |
) |
|
|
(18.0 |
) |
Other
current assets |
|
3.6 |
|
|
|
(13.0 |
) |
Accounts
payable |
|
40.6 |
|
|
|
(6.6 |
) |
Accrued
liabilities |
|
4.1 |
|
|
|
(22.3 |
) |
Pension
plan contributions |
|
(100.0 |
) |
|
|
— |
|
Other
postretirement plan contributions |
|
(2.4 |
) |
|
|
(9.5 |
) |
Cash paid
as collateral under derivative agreement |
|
— |
|
|
|
(8.0 |
) |
Other,
net |
|
(6.0 |
) |
|
|
2.9 |
|
Net cash
provided from operating activities |
|
35.5 |
|
|
|
137.2 |
|
INVESTING
ACTIVITIES: |
|
|
|
|
Purchases of property,
equipment and software |
|
(63.1 |
) |
|
|
(66.1 |
) |
Proceeds from disposals
of property and equipment |
|
— |
|
|
|
0.3 |
|
Acquisition of
business |
|
(35.3 |
) |
|
|
— |
|
Proceeds from the sale
of equity method investment |
|
— |
|
|
|
6.3 |
|
Proceeds from note
receivable from the sale of equity method investment |
|
6.3 |
|
|
|
— |
|
Other |
|
— |
|
|
|
4.0 |
|
Net cash
used for investing activities |
|
(92.1 |
) |
|
|
(55.5 |
) |
FINANCING
ACTIVITIES: |
|
|
|
|
Change in short-term
debt |
|
14.2 |
|
|
|
25.0 |
|
Dividends paid |
|
(25.6 |
) |
|
|
(26.3 |
) |
Payments of debt issue
costs |
|
(1.4 |
) |
|
|
— |
|
Purchases of treasury
stock |
|
— |
|
|
|
(123.9 |
) |
Payments on seller
financed debt related to purchase of software |
|
— |
|
|
|
(3.7 |
) |
Tax benefits on
share-based compensation |
|
0.4 |
|
|
|
— |
|
Proceeds from stock
options exercised |
|
2.2 |
|
|
|
0.3 |
|
Net cash
used for financing activities |
|
(10.2 |
) |
|
|
(128.6 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
1.4 |
|
|
|
0.3 |
|
DECREASE IN CASH AND
CASH EQUIVALENTS |
|
(65.4 |
) |
|
|
(46.6 |
) |
Cash and cash
equivalents at beginning of period |
|
82.0 |
|
|
|
70.0 |
|
Cash and cash
equivalents at end of period |
|
$ |
16.6 |
|
|
|
$ |
23.4 |
|
PRELIMINARYCONSOLIDATED
BALANCE SHEETS(in millions)(Unaudited) |
|
|
|
March 31, |
|
June 30, |
|
|
2017 |
|
2016 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
16.6 |
|
|
$ |
82.0 |
|
Accounts
receivable, net |
|
267.2 |
|
|
253.6 |
|
Inventories |
|
718.3 |
|
|
628.7 |
|
Other
current assets |
|
49.3 |
|
|
46.4 |
|
Total
current assets |
|
1,051.4 |
|
|
1,010.7 |
|
Property, plant and
equipment, net |
|
1,312.1 |
|
|
1,351.4 |
|
Goodwill |
|
270.9 |
|
|
244.8 |
|
Other intangibles,
net |
|
58.2 |
|
|
63.2 |
|
Deferred income
taxes |
|
7.5 |
|
|
8.2 |
|
Other assets |
|
122.3 |
|
|
116.0 |
|
Total
assets |
|
$ |
2,822.4 |
|
|
$ |
2,794.3 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Current
liabilities: |
|
|
|
|
Short-term debt |
|
$ |
14.2 |
|
|
$ |
— |
|
Accounts
payable |
|
191.3 |
|
|
159.6 |
|
Accrued
liabilities |
|
116.7 |
|
|
139.2 |
|
Total
current liabilities |
|
322.2 |
|
|
298.8 |
|
Long-term debt |
|
604.1 |
|
|
611.3 |
|
Accrued pension
liabilities |
|
402.9 |
|
|
509.3 |
|
Accrued postretirement
benefits |
|
118.6 |
|
|
116.6 |
|
Deferred income
taxes |
|
169.4 |
|
|
102.4 |
|
Other liabilities |
|
43.6 |
|
|
51.0 |
|
Total
liabilities |
|
1,660.8 |
|
|
1,689.4 |
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY |
|
|
|
|
Common stock |
|
276.7 |
|
|
276.3 |
|
Capital in excess of
par value |
|
283.6 |
|
|
273.5 |
|
Reinvested
earnings |
|
1,304.8 |
|
|
1,308.9 |
|
Common stock in
treasury, at cost |
|
(342.1 |
) |
|
(343.9 |
) |
Accumulated other
comprehensive loss |
|
(361.4 |
) |
|
(409.9 |
) |
Total
stockholders' equity |
|
1,161.6 |
|
|
1,104.9 |
|
Total
liabilities and stockholders' equity |
|
$ |
2,822.4 |
|
|
$ |
2,794.3 |
|
PRELIMINARYSEGMENT FINANCIAL
DATA(in millions, except pounds sold)(Unaudited) |
|
|
Three Months Ended |
|
Nine Months Ended |
|
March 31, |
|
March 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Pounds sold (000): |
|
|
|
|
|
|
|
Specialty
Alloys Operations |
61,006 |
|
|
59,082 |
|
|
164,682 |
|
|
170,690 |
|
Performance Engineered Products |
2,840 |
|
|
2,774 |
|
|
7,604 |
|
|
8,530 |
|
Intersegment |
(576 |
) |
|
(518 |
) |
|
(1,550 |
) |
|
(2,530 |
) |
Consolidated pounds sold |
63,270 |
|
|
61,338 |
|
|
170,736 |
|
|
176,690 |
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
Specialty
Alloys Operations |
|
|
|
|
|
|
|
Net sales
excluding surcharge |
$ |
322.4 |
|
|
$ |
316.5 |
|
|
$ |
876.4 |
|
|
$ |
917.2 |
|
Surcharge |
60.9 |
|
|
54.0 |
|
|
170.6 |
|
|
189.5 |
|
Specialty
Alloys Operations net sales |
383.3 |
|
|
370.5 |
|
|
1,047.0 |
|
|
1,106.7 |
|
|
|
|
|
|
|
|
|
Performance Engineered Products |
|
|
|
|
|
|
|
Net sales
excluding surcharge |
98.5 |
|
|
91.2 |
|
|
259.7 |
|
|
267.8 |
|
Surcharge |
0.2 |
|
|
0.2 |
|
|
0.7 |
|
|
0.5 |
|
Performance Engineered Products net sales |
98.7 |
|
|
91.4 |
|
|
260.4 |
|
|
268.3 |
|
|
|
|
|
|
|
|
|
Intersegment |
|
|
|
|
|
|
|
Net sales
excluding surcharge |
(8.0 |
) |
|
(5.3 |
) |
|
(16.6 |
) |
|
(18.0 |
) |
Surcharge |
(0.4 |
) |
|
(0.3 |
) |
|
(0.9 |
) |
|
(1.3 |
) |
Intersegment net sales |
(8.4 |
) |
|
(5.6 |
) |
|
(17.5 |
) |
|
(19.3 |
) |
|
|
|
|
|
|
|
|
Consolidated net sales |
$ |
473.6 |
|
|
$ |
456.3 |
|
|
$ |
1,289.9 |
|
|
$ |
1,355.7 |
|
|
|
|
|
|
|
|
|
Operating income
(loss): |
|
|
|
|
|
|
|
Specialty
Alloys Operations |
$ |
51.9 |
|
|
$ |
45.6 |
|
|
$ |
112.6 |
|
|
$ |
128.3 |
|
Performance Engineered Products |
4.7 |
|
|
(0.9 |
) |
|
2.7 |
|
|
(4.2 |
) |
Corporate
costs |
(15.8 |
) |
|
(64.5 |
) |
|
(45.6 |
) |
|
(89.3 |
) |
Pension
earnings, interest and deferrals |
(5.6 |
) |
|
(4.8 |
) |
|
(18.2 |
) |
|
(14.4 |
) |
Intersegment |
0.6 |
|
|
0.3 |
|
|
1.1 |
|
|
2.0 |
|
Consolidated operating income (loss) |
$ |
35.8 |
|
|
$ |
(24.3 |
) |
|
$ |
52.6 |
|
|
$ |
22.4 |
|
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,
Pennsylvania and surrounding areas as well as 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 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".
PRELIMINARYNON-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, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
473.6 |
|
|
$ |
456.3 |
|
|
$ |
1,289.9 |
|
|
$ |
1,355.7 |
|
Less: surcharge |
|
60.7 |
|
|
53.9 |
|
|
170.4 |
|
|
188.7 |
|
Consolidated net sales
excluding surcharge |
|
$ |
412.9 |
|
|
$ |
402.4 |
|
|
$ |
1,119.5 |
|
|
$ |
1,167.0 |
|
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
$ |
35.8 |
|
|
$ |
(24.3 |
) |
|
$ |
52.6 |
|
|
$ |
22.4 |
|
Pension earnings,
interest and deferrals |
|
5.6 |
|
|
4.8 |
|
|
18.2 |
|
|
14.4 |
|
Operating income (loss)
excluding pension earnings, interest and deferrals |
|
41.4 |
|
|
(19.5 |
) |
|
70.8 |
|
|
36.8 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Excess
inventory write-down |
|
— |
|
|
22.5 |
|
|
— |
|
|
22.5 |
|
Pension
curtailment charge |
|
— |
|
|
— |
|
|
0.5 |
|
|
— |
|
Restructuring and asset impairment charges |
|
— |
|
|
17.6 |
|
|
— |
|
|
18.0 |
|
Goodwill
impairment |
|
— |
|
|
12.5 |
|
|
— |
|
|
12.5 |
|
Consulting costs |
|
— |
|
|
2.1 |
|
|
— |
|
|
7.2 |
|
Operating income
excluding pension earnings, interest and deferrals and special
items |
|
$ |
41.4 |
|
|
$ |
35.2 |
|
|
$ |
71.3 |
|
|
$ |
97.0 |
|
|
|
|
|
|
|
|
|
|
Operating margin |
|
7.6 |
% |
|
(5.3 |
)% |
|
4.1 |
% |
|
1.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
excluding surcharge, pension earnings, interest and deferrals and
special items |
|
10.0 |
% |
|
8.7 |
% |
|
6.4 |
% |
|
8.3 |
% |
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, thereby
permitting management to evaluate performance and investors to make
decisions based on the ongoing operations of the Company. 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 the special items is helpful in analyzing
the operating performance of the Company, as these costs are not
indicative of ongoing operating performance. Management uses its
results excluding these amounts to evaluate its operating
performance and to discuss its business with investment
institutions, the Company’s board of directors and others.
ADJUSTED EARNINGS PER
SHARE EXCLUDING SPECIAL ITEMS |
|
Income Before Income Taxes |
|
Income Tax Expense |
|
Net Income |
|
Earnings Per Diluted Share* |
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2017, as reported |
|
$ |
29.1 |
|
|
$ |
(8.4 |
) |
|
$ |
20.7 |
|
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
None
reported |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2017, as adjusted |
|
$ |
29.1 |
|
|
$ |
(8.4 |
) |
|
$ |
20.7 |
|
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
|
* Impact
per diluted share calculated using weighted average common shares
outstanding of 47.1 million for the three months ended March 31,
2017. |
ADJUSTED 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 |
|
Impact of
tax law change |
|
— |
|
|
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 EARNINGS PER
SHARE EXCLUDING SPECIAL ITEMS |
|
Income Before Income Taxes |
|
Income Tax (Expense) Benefit |
|
Net Income |
|
Earnings Per Diluted Share** |
|
|
|
|
|
|
|
|
|
Nine months ended March
31, 2017, as reported |
|
$ |
32.1 |
|
|
$ |
(10.6 |
) |
|
$ |
21.5 |
|
|
$ |
0.45 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Pension
curtailment |
|
0.5 |
|
|
(0.1 |
) |
|
0.4 |
|
|
0.01 |
|
Income tax
item* |
|
— |
|
|
2.1 |
|
|
2.1 |
|
|
0.04 |
|
Total impact of special
items |
|
0.5 |
|
|
2.0 |
|
|
2.5 |
|
|
0.05 |
|
|
|
|
|
|
|
|
|
|
Nine months ended March
31, 2017, as adjusted |
|
$ |
32.6 |
|
|
$ |
(8.6 |
) |
|
$ |
24.0 |
|
|
$ |
0.50 |
|
|
|
|
|
|
|
|
|
|
* Discrete
income tax charge recorded as a result of reduced tax benefits
claimed in prior years in connection with the Company’s decision to
make a $100 million voluntary pension contribution in October
2016. |
** Impact
per diluted share calculated using weighted average common shares
outstanding of 47.1 million for the nine months ended March 31,
2017. |
ADJUSTED EARNINGS PER
SHARE EXCLUDING SPECIAL ITEMS |
|
(Loss) Income Before Income Taxes |
|
Income Tax (Expense) Benefit |
|
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 |
|
|
|
|
|
|
|
|
|
|
* As a
result of a decision to sell our equity method investment in India,
we changed our intent with regard to the indefinite reinvestment of
the foreign earnings from one of our subsidiaries.
Accordingly, we recorded a discrete income tax charge during the
nine months ended March 31, 2016. |
** Impact
per diluted share calculated using weighted average common shares
outstanding of 48.5 million for the nine months ended March 31,
2016. |
Management believes that earnings per share adjusted to exclude
the impact of the special items is helpful in analyzing the
operating performance of the Company, as these costs are not
indicative of ongoing operating performance. Management uses its
results excluding these amounts to evaluate its operating
performance and to discuss its business with investment
institutions, the Company’s board of directors and others.
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
March 31, |
|
March 31, |
FREE CASH FLOW |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
Net cash provided from
operating activities |
|
$ |
61.3 |
|
|
$ |
65.5 |
|
|
$ |
35.5 |
|
|
$ |
137.2 |
|
Purchases of property,
equipment and software |
|
(18.0 |
) |
|
(16.6 |
) |
|
(63.1 |
) |
|
(66.1 |
) |
Acquisition of
business |
|
(35.3 |
) |
|
— |
|
|
(35.3 |
) |
|
— |
|
Proceeds from disposals
of property and equipment |
|
— |
|
|
0.1 |
|
|
— |
|
|
0.3 |
|
Proceeds from the sale
of equity method investment |
|
— |
|
|
6.3 |
|
|
— |
|
|
6.3 |
|
Proceeds from note
receivable from the sale of equity method investment |
|
6.3 |
|
|
— |
|
|
6.3 |
|
|
— |
|
Other |
|
— |
|
|
— |
|
|
— |
|
|
4.0 |
|
Dividends paid |
|
(8.6 |
) |
|
(8.5 |
) |
|
(25.6 |
) |
|
(26.3 |
) |
|
|
|
|
|
|
|
|
|
Free cash flow |
|
$ |
5.7 |
|
|
$ |
46.8 |
|
|
$ |
(82.2 |
) |
|
$ |
55.4 |
|
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.
PRELIMINARYSUPPLEMENTAL
SCHEDULE(in millions)(Unaudited) |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
March 31, |
|
March 31, |
NET SALES BY END-USE
MARKET |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
End-Use Market
Excluding Surcharge: |
|
|
|
|
|
|
|
|
Aerospace
and Defense |
|
$ |
214.0 |
|
|
$ |
208.4 |
|
|
$ |
586.3 |
|
|
$ |
603.8 |
|
Energy |
|
36.6 |
|
|
33.3 |
|
|
89.5 |
|
|
91.7 |
|
Transportation |
|
31.3 |
|
|
34.7 |
|
|
90.5 |
|
|
103.7 |
|
Medical |
|
31.6 |
|
|
30.2 |
|
|
79.7 |
|
|
84.4 |
|
Industrial and Consumer |
|
66.7 |
|
|
65.0 |
|
|
185.2 |
|
|
194.6 |
|
Distribution |
|
32.7 |
|
|
30.8 |
|
|
88.3 |
|
|
88.8 |
|
|
|
|
|
|
|
|
|
|
Consolidated net sales
excluding surcharge |
|
412.9 |
|
|
402.4 |
|
|
1,119.5 |
|
|
1,167.0 |
|
|
|
|
|
|
|
|
|
|
Surcharge |
|
60.7 |
|
|
53.9 |
|
|
170.4 |
|
|
188.7 |
|
|
|
|
|
|
|
|
|
|
Consolidated net
sales |
|
$ |
473.6 |
|
|
$ |
456.3 |
|
|
$ |
1,289.9 |
|
|
$ |
1,355.7 |
|
In fiscal year 2016 in connection with our commercial
organization realignment, we changed the manner in which sales are
classified by end-use market so that we could better evaluate our
sales results from period to period. All prior period amounts have
been reclassified to conform to the current presentation.
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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