Carpenter Technology Announces Additional Actions to Enhance Long-Term Success
June 04 2020 - 8:30AM
Carpenter Technology Corporation (NYSE: CRS) (the “Company”) today
announced a set of company-wide actions to strengthen
performance. The plan builds upon targeted initiatives
previously announced by the Company in conjunction with its fiscal
third quarter 2020 results.
“The COVID-19 pandemic has created challenges that
we have met head on,” said Tony R. Thene, President and CEO. “Our
business remains firmly on the foundation that has been built over
130 years as a recognized leader in high performance specialty
alloy-based materials and process solutions for critical
applications. The actions we are announcing today as well as those
already deployed are expected to make us even stronger.”
The plan includes reducing approximately 20% of the
Company’s total global salaried positions. This action is
expected to generate approximately $30 to $35 million of annual
cost savings. The Company expects to record a pre-tax charge of
approximately $10 million in the fourth quarter of fiscal year 2020
as a result of implementing the position eliminations.
In addition to the restructuring announced today,
the Company has taken other significant actions to position itself
to manage through the market disruption caused by COVID-19 and
strengthen its foundation for sustainable long-term growth and
value creation. These measures include:
- Reviewing and prioritizing capital investments to target
existing and future growth markets. We expect this action
will improve our cash flow by $50 million in fiscal year 2021.
- Implementing a global hiring freeze and deferring annual merit
increases for most salaried employees.
- Effecting temporary furloughs for certain production,
maintenance and salaried employees.
- Executing targeted portfolio actions including the decision to
exit the Amega West oil and gas business and the idling of powder
facilities in Rhode Island and West Virginia.
Collectively, the actions are expected to generate
$60 to $70 million of annual cost savings in addition to the
significant cash benefits expected to be realized.
“Although difficult, we have taken thoughtful and
aggressive actions to combat the uncertainty in the near-term
environment,” said Tony R. Thene, President and CEO. “Our actions
are focused on the future and are expected to have a significant
impact on profitability and free cash flow in fiscal year 2021 and
beyond. We have an impressive manufacturing footprint that
includes unique assets capable of producing products that only a
few in the world can match. Our facilities have been continuously
operating during the crisis, as our safety culture provided a solid
foundation for quickly adapting to the current challenges.
The long-term outlook for our key end-use markets remains solid and
we have significantly bolstered our position during these uncertain
times by demonstrating our resilience in support of our customers’
needs.”
In addition, the Company is withdrawing its
previously provided segment operating income outlook for the
current quarter. In the near-term, visibility is limited as
the Company’s customers and related supply chains adjust to the
economic disruption caused by the COVID-19 pandemic. Customer
demand patterns also continue to be impacted by uncertainty in the
Aerospace supply chain as a result of changing expectations for
airplane build rates. In addition to the near-term uncertainty in
demand patterns, the rigorous protocols implemented to ensure the
safety of all our employees are impacting production output. The
Company’s current focus remains on protecting employees and
maintaining strong liquidity in the near term. With that
focus, the Company expects to generate a meaningful amount of cash
flow in the fourth quarter of fiscal year 2020 to bolster an
already healthy liquidity position.
As of March 31, 2020, the Company had $317 million
of total liquidity including $93.0 million of cash and $224.1
million of available borrowings under the Company’s credit
facility.
Mr. Thene further stated, “Carpenter Technology has
a long and proud history that has included successfully responding
to and navigating many challenges. We have taken decisive
action to address the impact of COVID-19 and will continue to
actively manage our business to drive long-term value
creation. We believe the actions we announced today, together
with the actions we have initiated over the last several months,
will further strengthen the Company’s foundation for future
growth.”
About Carpenter Technology
Carpenter Technology Corporation is a recognized
leader in high-performance specialty alloy-based materials and
process solutions for critical applications in the aerospace,
defense, transportation, energy, industrial, medical, and consumer
electronics markets. Founded in 1889, Carpenter Technology has
evolved to become a pioneer in premium specialty alloys, including
titanium, nickel, and cobalt, as well as alloys specifically
engineered for additive manufacturing (AM) processes and soft
magnetics applications. Carpenter Technology has expanded its AM
capabilities to provide a complete “end-to-end” solution to
accelerate materials innovation and streamline parts production.
More information about Carpenter Technology can be found at
www.carpentertechnology.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 Technology’s filings
with the Securities and Exchange Commission, including its report
on Form 10-K for the year ended June 30, 2019, Form 10-Q for the
quarters ended September 30, 2019, December 31, 2019 and March 31,
2020 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, medical, transportation, energy, industrial and
consumer, or other influences on Carpenter Technology’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 Technology 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 effect of government trade
actions; (7) the valuation of the assets and liabilities in
Carpenter Technology’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 Technology, 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 Technology’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) uncertainty regarding the return to service of the Boeing 737
MAX aircraft and the related supply chain disruption; (17)
potential impacts of the COVID-19 pandemic on our operations,
financial results and financial position; and (18) our ability to
successfully carry out restructuring and business exit activities
on the expected terms and timelines. Any of these factors could
have an adverse and/or fluctuating effect on Carpenter Technology’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 Technology undertakes no
obligation to update or revise any forward-looking statements.
Media
Inquiries: |
Investor
Inquiries: |
Heather Beardsley |
The Plunkett Group |
+1 610-208-2278 |
Brad Edwards |
hbeardsley@cartech.com |
+1 212-739-6740 |
|
brad@theplunkettgroup.com |
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