Reported Earnings Per Share of $1.92;
Excluding Special Items, Adjusted Earnings Per Share
of $0.55
Carpenter Technology Corporation (NYSE:CRS) (the “Company”) today
announced financial results for the fiscal second quarter ended
December 31, 2017. The Company reported net income of $92.1
million, or $1.92 earnings per share, for the second quarter of
fiscal year 2018. Excluding special items, adjusted earnings per
diluted share was $0.55 in the quarter.
“We delivered a solid first half to fiscal year 2018 including
driving consistent backlog growth, gaining market share through
expanded and new customer relationships, and enhancing our
manufacturing discipline through the Carpenter Operating Model,”
said Tony Thene, Carpenter’s President and CEO. “Our SAO
segment recorded its best second quarter and best first half since
fiscal year 2014, while results at our PEP segment finished well
ahead of our expectations. In addition, we submitted the
majority of our Aerospace Vendor Approved Processes (VAP)
qualifications for our Athens facility, representing a major
milestone. We are now actively working with our major customers to
secure necessary approvals.”
“Conditions across our end-use markets continue to improve and
we are generating increased customer demand for our solutions and
growing our backlog. In the Aerospace and Defense end-use market,
new engine platform demand is increasing and we are further
benefiting from our strong position across a range of attractive
sub-markets. In addition, demand for our solutions portfolio
in the Medical end-use market remains high while the recovery in
the oil & gas sub-market is strengthening.”
“Moving forward, we will continue to strategically invest in our
core long-term growth capabilities. In addition, given the recent
tax legislation, we plan to accelerate our investment into key
areas including additive manufacturing and soft magnetics, which is
consistent with our commitment to being a leading solutions
provider for our customers. By combining our solutions-focused
commercial approach with high-end specialty alloys, we have a real
opportunity to raise our performance for both customers and
investors to sustain a healthy, dynamic and growing enterprise that
will reward our shareholders for years to come.”
Financial Highlights
($ in
millions) |
|
Q2 |
|
Q2 |
|
Q1 |
|
|
|
FY2018 |
|
FY2017 |
|
FY2018 |
|
Net
Sales |
$ |
487.8 |
|
|
$ |
427.4 |
|
|
|
$ |
479.8 |
|
|
|
Net Sales
Excluding Surcharge (a) |
$ |
415.5 |
|
|
$ |
366.7 |
|
|
|
$ |
409.8 |
|
|
|
Operating
Income |
$ |
40.8 |
|
|
$ |
15.4 |
|
|
|
$ |
41.7 |
|
|
|
Operating
Income Excluding Pension EID (a) |
$ |
41.3 |
|
|
$ |
21.0 |
|
|
|
$ |
42.2 |
|
|
|
Net
Income |
$ |
92.1 |
|
|
$ |
7.0 |
|
|
|
$ |
23.4 |
|
|
|
Cash
Provided from (Used for) Operating Activities |
$ |
24.7 |
|
|
$ |
(29.5 |
) |
|
|
$ |
(7.4 |
) |
|
|
Free Cash
Flow (a) |
$ |
(10.7 |
) |
|
$ |
(56.5 |
) |
|
|
$ |
(44.9 |
) |
|
|
(a) Non-GAAP financial measure explained in attached
schedules |
|
|
|
|
|
Net sales for the second quarter of fiscal year 2018 were $487.8
million compared with $427.4 million in the second quarter of
fiscal year 2017, an increase of $60.4 million (or 14.1 percent),
on 13.1 percent higher volume. Net sales excluding surcharge
were $415.5 million, an increase of $48.8 million (or 13.3 percent)
from the same period a year ago.
Operating income was $40.8 million compared to $15.4 million in
the prior year period. Operating income—excluding pension earnings,
interest and deferrals (EID)—was $41.3 million, compared to $21.0
million in the prior year period. These results primarily
reflect stronger market conditions driving higher product demand
compared to the same quarter a year ago.
In December 2017, “An Act to Provide for Reconciliation Pursuant
to Titles II and V of the Concurrent Resolution on the Budget for
Fiscal Year 2018” (the “Act”) was enacted. The Act includes
provisions that reduce the federal corporate income tax rate,
create a territorial tax system with a one-time mandatory tax on
previously deferred foreign earnings (transition tax), and change
certain business deductions including allowing for immediate
expensing of certain qualified capital expenditures. The
permanent reduction to the U.S. federal corporate income tax rate
from 35% to 21% was effective January 1, 2018. Based on the
provisions of the Act, during the quarter ended December 31, 2017,
the Company’s estimated annual effective tax rate was adjusted to
incorporate the lower federal tax rate that will be phased in for
fiscal year 2018. During the quarter ended December 31, 2017,
the Company recorded a discrete income tax net benefit of $66.0
million. Provisional amounts related to the Act include a
$73.3 million income tax benefit to reflect the re-measurement of
deferred tax assets and liabilities at the reduced federal tax rate
and a $5.1 million income tax charge for the liability associated
with the transition tax. Also included in the net discrete income
tax benefit is a charge of $2.2 million related to increases in
certain state valuation allowances resulting from a state law
change that will limit the Company’s ability to utilize certain
state net operating loss carryforwards in future periods.
Cash provided from operating activities in the second quarter of
fiscal year 2018 was $24.7 million, compared to cash used from
operating activities of $29.5 million in the same quarter last
year. The increase in operating cash flow was primarily
related to the $100 million voluntary pension contribution made in
October 2016.
Free cash flow in the second quarter of fiscal year 2018 was
negative $10.7 million, compared to negative free cash flow of
$56.5 million in the same quarter last year. Capital expenditures
were $26.8 million in the second quarter of fiscal year 2018
compared to $18.5 million in the same quarter last year.
Total liquidity, including cash and available revolver balance,
was $405.4 million at the end of the second quarter of fiscal year
2018. This consisted of $20.7 million of cash and $384.7
million of available borrowings under the Company’s credit
facility.
Conference Call and Webcast Presentation
Carpenter will host a conference call and webcast presentation
today, February 1st at 10:00 a.m. ET, to discuss the financial
results of operations for the second quarter of fiscal year 2018.
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.
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,
nickel and cobalt based superalloys, 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 powder technology capabilities support a
range of next-generation products and manufacturing techniques,
including additive manufacturing and 3D Printing. Information about
Carpenter can be found at 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 report on Form 10-K for the year
ended June 30, 2017, Form 10-Q for the quarter ended September 30,
2017, 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; and (15) fluctuations in oil and gas
prices and production. 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.
|
PRELIMINARY |
CONSOLIDATED STATEMENTS OF
INCOME |
(in millions, except per share data) |
(Unaudited) |
|
|
Three Months Ended |
|
Six Months Ended |
|
|
December 31, |
|
December 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
NET SALES |
|
$ |
487.8 |
|
|
$ |
427.4 |
|
|
$ |
967.5 |
|
|
$ |
816.3 |
|
Cost of sales |
|
402.1 |
|
|
364.9 |
|
|
796.2 |
|
|
707.8 |
|
Gross profit |
|
85.7 |
|
|
62.5 |
|
|
171.3 |
|
|
108.5 |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
44.9 |
|
|
47.1 |
|
|
88.8 |
|
|
91.7 |
|
Operating income |
|
40.8 |
|
|
15.4 |
|
|
82.5 |
|
|
16.8 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(7.3 |
) |
|
(7.4 |
) |
|
(14.5 |
) |
|
(14.8 |
) |
Other income, net |
|
0.2 |
|
|
0.3 |
|
|
0.9 |
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
33.7 |
|
|
8.3 |
|
|
68.9 |
|
|
3.0 |
|
Income tax (benefit)
expense |
|
(58.4 |
) |
|
1.3 |
|
|
(46.6 |
) |
|
2.2 |
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
92.1 |
|
|
$ |
7.0 |
|
|
$ |
115.5 |
|
|
$ |
0.8 |
|
|
|
|
|
|
|
|
|
|
EARNINGS PER COMMON
SHARE: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.93 |
|
|
$ |
0.15 |
|
|
$ |
2.43 |
|
|
$ |
0.01 |
|
Diluted |
|
$ |
1.92 |
|
|
$ |
0.15 |
|
|
$ |
2.41 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING: |
|
|
|
|
|
|
|
|
Basic |
|
47.2 |
|
|
47.0 |
|
|
47.1 |
|
|
47.0 |
|
Diluted |
|
47.6 |
|
|
47.1 |
|
|
47.5 |
|
|
47.1 |
|
|
|
|
|
|
|
|
|
|
Cash dividends per
common share |
|
$ |
0.18 |
|
|
$ |
0.18 |
|
|
$ |
0.36 |
|
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRELIMINARY |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(in millions) |
(Unaudited) |
|
|
Six Months Ended |
|
|
December 31, |
|
|
2017 |
|
2016 |
OPERATING
ACTIVITIES: |
|
|
|
|
Net income |
|
$ |
115.5 |
|
|
$ |
0.8 |
|
Adjustments to
reconcile net income to net cash provided from (used for) operating
activities: |
|
|
|
|
Depreciation and amortization |
|
58.0 |
|
|
58.7 |
|
Deferred
income taxes |
|
(66.2 |
) |
|
39.1 |
|
Net
pension expense |
|
7.1 |
|
|
31.0 |
|
Share-based compensation expense |
|
8.1 |
|
|
6.5 |
|
Loss on
disposals of property and equipment |
|
0.4 |
|
|
0.3 |
|
Changes in working
capital and other: |
|
|
|
|
Accounts
receivable |
|
(3.8 |
) |
|
0.8 |
|
Inventories |
|
(81.5 |
) |
|
(74.2 |
) |
Other
current assets |
|
(17.6 |
) |
|
(5.6 |
) |
Accounts
payable |
|
11.8 |
|
|
17.2 |
|
Accrued
liabilities |
|
(6.2 |
) |
|
4.0 |
|
Pension
plan contributions |
|
(4.9 |
) |
|
(100.0 |
) |
Other
postretirement plan contributions |
|
(1.8 |
) |
|
(1.8 |
) |
Other,
net |
|
(1.6 |
) |
|
(2.2 |
) |
Net cash
provided from (used for) operating activities |
|
17.3 |
|
|
(25.4 |
) |
INVESTING
ACTIVITIES: |
|
|
|
|
Purchases of property,
equipment and software |
|
(55.7 |
) |
|
(45.1 |
) |
Net cash
used for investing activities |
|
(55.7 |
) |
|
(45.1 |
) |
FINANCING
ACTIVITIES: |
|
|
|
|
Credit agreement
borrowings |
|
— |
|
|
80.0 |
|
Credit agreement
repayments |
|
— |
|
|
(55.0 |
) |
Net change in
short-term credit agreement borrowings |
|
9.3 |
|
|
— |
|
Dividends paid |
|
(17.2 |
) |
|
(17.0 |
) |
Tax benefits on
share-based compensation |
|
— |
|
|
0.3 |
|
Proceeds from stock
options exercised |
|
3.5 |
|
|
1.8 |
|
Withholding tax
payments on share-based compensation awards |
|
(0.6 |
) |
|
(0.4 |
) |
Net cash
(used for) provided from financing activities |
|
(5.0 |
) |
|
9.7 |
|
Effect of exchange rate
changes on cash and cash equivalents |
|
(2.2 |
) |
|
1.3 |
|
DECREASE IN CASH AND
CASH EQUIVALENTS |
|
(45.6 |
) |
|
(59.5 |
) |
Cash and cash
equivalents at beginning of period |
|
66.3 |
|
|
82.0 |
|
Cash and cash
equivalents at end of period |
|
$ |
20.7 |
|
|
$ |
22.5 |
|
|
|
|
|
|
|
|
|
|
|
PRELIMINARY |
CONSOLIDATED BALANCE SHEETS |
(in millions) |
(Unaudited) |
|
|
December 31, |
|
June 30, |
|
|
2017 |
|
2017 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
20.7 |
|
|
$ |
66.3 |
|
Accounts
receivable, net |
|
297.2 |
|
|
290.4 |
|
Inventories |
|
771.8 |
|
|
690.4 |
|
Other
current assets |
|
69.8 |
|
|
46.5 |
|
Total
current assets |
|
1,159.5 |
|
|
1,093.6 |
|
Property, plant and
equipment, net |
|
1,298.7 |
|
|
1,316.8 |
|
Goodwill |
|
263.4 |
|
|
263.4 |
|
Other intangibles,
net |
|
61.6 |
|
|
64.9 |
|
Deferred income
taxes |
|
4.1 |
|
|
7.6 |
|
Other assets |
|
156.8 |
|
|
131.8 |
|
Total
assets |
|
$ |
2,944.1 |
|
|
$ |
2,878.1 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Current
liabilities: |
|
|
|
|
Short-term credit agreement borrowings |
|
$ |
9.3 |
|
|
$ |
— |
|
Current
portion of long-term debt |
|
55.0 |
|
|
55.0 |
|
Accounts
payable |
|
205.1 |
|
|
201.1 |
|
Accrued
liabilities |
|
118.4 |
|
|
139.9 |
|
Total
current liabilities |
|
387.8 |
|
|
396.0 |
|
Long-term debt, net of
current portion |
|
548.3 |
|
|
550.0 |
|
Accrued pension
liabilities |
|
369.7 |
|
|
378.3 |
|
Accrued postretirement
benefits |
|
123.4 |
|
|
122.6 |
|
Deferred income
taxes |
|
128.1 |
|
|
184.8 |
|
Other liabilities |
|
50.0 |
|
|
47.8 |
|
Total
liabilities |
|
1,607.3 |
|
|
1,679.5 |
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY |
|
|
|
|
Common stock |
|
277.3 |
|
|
276.7 |
|
Capital in excess of
par value |
|
294.4 |
|
|
284.8 |
|
Reinvested
earnings |
|
1,420.1 |
|
|
1,321.8 |
|
Common stock in
treasury, at cost |
|
(339.9 |
) |
|
(341.6 |
) |
Accumulated other
comprehensive loss |
|
(315.1 |
) |
|
(343.1 |
) |
Total
stockholders' equity |
|
1,336.8 |
|
|
1,198.6 |
|
Total
liabilities and stockholders' equity |
|
$ |
2,944.1 |
|
|
$ |
2,878.1 |
|
|
|
|
|
|
|
|
|
|
|
PRELIMINARY |
SEGMENT FINANCIAL DATA |
(in millions, except pounds sold) |
(Unaudited) |
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Pounds sold (000): |
|
|
|
|
|
|
|
Specialty
Alloys Operations |
60,080 |
|
|
51,314 |
|
|
121,270 |
|
|
103,674 |
|
Performance Engineered Products |
3,282 |
|
|
2,350 |
|
|
6,808 |
|
|
4,764 |
|
Intersegment |
(3,098 |
) |
|
(378 |
) |
|
(4,468 |
) |
|
(972 |
) |
Consolidated pounds sold |
60,264 |
|
|
53,286 |
|
|
123,610 |
|
|
107,466 |
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
Specialty
Alloys Operations |
|
|
|
|
|
|
|
Net sales
excluding surcharge |
$ |
331.8 |
|
|
$ |
288.1 |
|
|
$ |
657.4 |
|
|
$ |
554.0 |
|
Surcharge |
74.5 |
|
|
60.5 |
|
|
145.7 |
|
|
109.7 |
|
Specialty
Alloys Operations net sales |
406.3 |
|
|
348.6 |
|
|
803.1 |
|
|
663.7 |
|
|
|
|
|
|
|
|
|
Performance Engineered Products |
|
|
|
|
|
|
|
Net sales
excluding surcharge |
104.6 |
|
|
83.0 |
|
|
205.1 |
|
|
161.3 |
|
Surcharge |
0.2 |
|
|
0.2 |
|
|
0.4 |
|
|
0.4 |
|
Performance Engineered Products net sales |
104.8 |
|
|
83.2 |
|
|
205.5 |
|
|
161.7 |
|
|
|
|
|
|
|
|
|
Intersegment |
|
|
|
|
|
|
|
Net sales
excluding surcharge |
(20.9 |
) |
|
(4.4 |
) |
|
(37.2 |
) |
|
(8.7 |
) |
Surcharge |
(2.4 |
) |
|
— |
|
|
(3.9 |
) |
|
(0.4 |
) |
Intersegment net sales |
(23.3 |
) |
|
(4.4 |
) |
|
(41.1 |
) |
|
(9.1 |
) |
|
|
|
|
|
|
|
|
Consolidated net sales |
$ |
487.8 |
|
|
$ |
427.4 |
|
|
$ |
967.5 |
|
|
$ |
816.3 |
|
|
|
|
|
|
|
|
|
Operating income: |
|
|
|
|
|
|
|
Specialty
Alloys Operations |
$ |
49.8 |
|
|
$ |
35.6 |
|
|
$ |
100.3 |
|
|
$ |
60.6 |
|
Performance Engineered Products |
7.5 |
|
|
0.8 |
|
|
12.8 |
|
|
(2.0 |
) |
Corporate
costs |
(13.9 |
) |
|
(16.0 |
) |
|
(26.9 |
) |
|
(29.8 |
) |
Pension
earnings, interest and deferrals |
(0.5 |
) |
|
(5.6 |
) |
|
(1.1 |
) |
|
(12.7 |
) |
Intersegment |
(2.1 |
) |
|
0.6 |
|
|
(2.6 |
) |
|
0.7 |
|
Consolidated operating income |
$ |
40.8 |
|
|
$ |
15.4 |
|
|
$ |
82.5 |
|
|
$ |
16.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 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.
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
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 |
|
Six Months Ended |
AND SPECIAL ITEMS |
|
December 31, |
|
December 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
487.8 |
|
|
$ |
427.4 |
|
|
$ |
967.5 |
|
|
$ |
816.3 |
|
Less: surcharge |
|
72.3 |
|
|
60.7 |
|
|
142.2 |
|
|
109.7 |
|
Net sales excluding
surcharge |
|
$ |
415.5 |
|
|
$ |
366.7 |
|
|
$ |
825.3 |
|
|
$ |
706.6 |
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
40.8 |
|
|
$ |
15.4 |
|
|
$ |
82.5 |
|
|
$ |
16.8 |
|
Pension earnings,
interest and deferrals |
|
0.5 |
|
|
5.6 |
|
|
1.1 |
|
|
12.7 |
|
Operating income
excluding pension earnings, interest and deferrals |
|
41.3 |
|
|
21.0 |
|
|
83.6 |
|
|
29.5 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Pension curtailment
charge |
|
— |
|
|
— |
|
|
— |
|
|
0.5 |
|
Operating income
excluding pension earnings, interest and deferrals and special
items |
|
$ |
41.3 |
|
|
$ |
21.0 |
|
|
$ |
83.6 |
|
|
$ |
30.0 |
|
|
|
|
|
|
|
|
|
|
Operating margin |
|
8.4 |
% |
|
3.6 |
% |
|
8.5 |
% |
|
2.1 |
% |
|
|
|
|
|
|
|
|
|
Operating margin
excluding surcharge, pension earnings, interest and deferrals and
special items |
|
9.9 |
% |
|
5.7 |
% |
|
10.1 |
% |
|
4.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
IncomeBeforeIncomeTaxes |
|
IncomeTaxBenefit(Expense) |
|
NetIncome |
|
EarningsPerDilutedShare* |
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2017, as reported |
|
$ |
33.7 |
|
|
$ |
58.4 |
|
|
$ |
92.1 |
|
|
$ |
1.92 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Impact of
US tax reform and other legislative changes |
|
— |
|
|
(66.0 |
) |
|
(66.0 |
) |
|
(1.37 |
) |
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2017, as adjusted |
|
$ |
33.7 |
|
|
$ |
(7.6 |
) |
|
$ |
26.1 |
|
|
$ |
0.55 |
|
|
|
|
|
|
|
|
|
|
* Impact
per diluted share calculated using weighted average common shares
outstanding of 47.6 million for the three months ended December 31,
2017. |
|
|
|
|
|
|
|
|
|
ADJUSTED EARNINGS PER
SHARE EXCLUDING SPECIAL ITEMS |
|
IncomeBeforeIncomeTaxes |
|
IncomeTaxExpense |
|
NetIncome |
|
EarningsPerDilutedShare* |
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2016, as reported |
|
$ |
8.3 |
|
|
$ |
(1.3 |
) |
|
$ |
7.0 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
None
reported |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2016, as adjusted |
|
$ |
8.3 |
|
|
$ |
(1.3 |
) |
|
$ |
7.0 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
* Impact
per diluted share calculated using weighted average common shares
outstanding of 47.1 million for the three months ended December 31,
2016. |
|
|
|
|
|
|
|
|
|
ADJUSTED EARNINGS PER
SHARE EXCLUDING SPECIAL ITEMS |
|
IncomeBeforeIncomeTaxes |
|
IncomeTaxBenefit(Expense) |
|
NetIncome |
|
EarningsPerDilutedShare** |
|
|
|
|
|
|
|
|
|
Six months ended
December 31, 2017, as reported |
|
$ |
68.9 |
|
|
$ |
46.6 |
|
|
$ |
115.5 |
|
|
$ |
2.41 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Impact of US tax
reform and other legislative changes |
|
— |
|
|
(66.0 |
) |
|
(66.0 |
) |
|
(1.38 |
) |
|
|
|
|
|
|
|
|
|
Six months ended
December 31, 2017, as adjusted |
|
$ |
68.9 |
|
|
$ |
(19.4 |
) |
|
$ |
49.5 |
|
|
$ |
1.03 |
|
|
|
|
|
|
|
|
|
|
** Impact
per diluted share calculated using weighted average common shares
outstanding of 47.5 million for the six months ended December 31,
2017. |
|
|
|
|
|
|
|
|
|
ADJUSTED EARNINGS PER
SHARE EXCLUDING SPECIAL ITEMS |
|
IncomeBeforeIncomeTaxes |
|
IncomeTax(Expense)Benefit |
|
NetIncome |
|
EarningsPerDilutedShare** |
|
|
|
|
|
|
|
|
|
Six months ended
December 31, 2016, as reported |
|
$ |
3.0 |
|
|
$ |
(2.2 |
) |
|
$ |
0.8 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Pension
curtailment charge |
|
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 |
|
|
|
|
|
|
|
|
|
|
Six months ended
December 31, 2016, as adjusted |
|
$ |
3.5 |
|
|
$ |
(0.2 |
) |
|
$ |
3.3 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
** Impact
per diluted share calculated using weighted average common shares
outstanding of 47.1 million for the six months ended December 31,
2016. |
*** 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.
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 |
|
Six Months Ended |
|
|
December 31, |
|
December 31, |
FREE CASH FLOW |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
Net cash provided from
(used for) operating activities |
|
$ |
24.7 |
|
|
$ |
(29.5 |
) |
|
$ |
17.3 |
|
|
$ |
(25.4 |
) |
Purchases of property,
equipment and software |
|
(26.8 |
) |
|
(18.5 |
) |
|
(55.7 |
) |
|
(45.1 |
) |
Dividends paid |
|
(8.6 |
) |
|
(8.5 |
) |
|
(17.2 |
) |
|
(17.0 |
) |
|
|
|
|
|
|
|
|
|
Free cash flow |
|
$ |
(10.7 |
) |
|
$ |
(56.5 |
) |
|
$ |
(55.6 |
) |
|
$ |
(87.5 |
) |
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 SCHEDULE |
(in millions) |
(Unaudited) |
|
|
Three Months Ended |
|
Six Months Ended |
|
|
December 31, |
|
December 31, |
NET SALES BY END-USE
MARKET |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
End-Use Market
Excluding Surcharge: |
|
|
|
|
|
|
|
|
Aerospace
and Defense |
|
$ |
220.3 |
|
|
$ |
199.0 |
|
|
$ |
435.8 |
|
|
$ |
372.5 |
|
Energy |
|
28.9 |
|
|
27.1 |
|
|
57.8 |
|
|
52.8 |
|
Transportation |
|
29.7 |
|
|
28.7 |
|
|
60.3 |
|
|
59.2 |
|
Medical |
|
37.2 |
|
|
25.1 |
|
|
70.6 |
|
|
48.1 |
|
Industrial and Consumer |
|
70.2 |
|
|
59.2 |
|
|
141.9 |
|
|
118.5 |
|
Distribution |
|
29.2 |
|
|
27.6 |
|
|
58.9 |
|
|
55.5 |
|
|
|
|
|
|
|
|
|
|
Total net sales
excluding surcharge |
|
415.5 |
|
|
366.7 |
|
|
825.3 |
|
|
706.6 |
|
|
|
|
|
|
|
|
|
|
Surcharge |
|
72.3 |
|
|
60.7 |
|
|
142.2 |
|
|
109.7 |
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
487.8 |
|
|
$ |
427.4 |
|
|
$ |
967.5 |
|
|
$ |
816.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media Inquiries:
William J. Rudolph, Jr.
+1 610-208-3892
wrudolph@cartech.com
Investor Inquiries:Brad EdwardsThe Plunkett Group+1
212-739-6740brad@theplunkettgroup.com
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