Carpenter Technology Corporation (NYSE: CRS) (the “Company”) today
announced financial results for the fiscal fourth quarter and year
ended June 30, 2020. For the quarter, the Company reported a net
loss of $118.4 million, or $2.46 loss per diluted share. Excluding
special items, adjusted loss per diluted share was $0.31 in the
quarter.
“We generated strong free cash flow in the quarter which further
strengthened our already healthy liquidity position via a
significant reduction in inventory,” said Tony R. Thene, President
and CEO of Carpenter Technology. “The strategic decision to
accelerate our inventory reduction plan to drive cash flow
negatively impacted our operating results in the quarter. We also
continue to deal with the incremental operating costs and reduced
productivity associated with COVID-19 and its impact on our
operations. With that said, our focus is clearly on protecting our
near-term liquidity as we actively manage our business through the
current uncertainty caused by the global pandemic. In addition, we
have executed targeted cost reductions and portfolio restructurings
expected to deliver annual cost savings in the range of $60 to $70
million. Also, we further increased our liquidity with the $400
million bond offering that we completed in July.”
“Our facilities remain open which speaks to the dedication of
our employees and the benefit of our core safety values. Demand
patterns have been broadly impacted by COVID-19 and we are working
closely with customers across our end-use markets as supply chains
continue to adjust. While COVID-19 has created headwinds for
our industry, we have successfully enriched and extended supply
agreements with key Aerospace, Medical and semiconductor customers
who recognize the benefits of our advanced material solutions and
our demonstrated resilience in being able to safely operate our
facilities.”
“Moving forward, we will be in constant dialogue with our
customers and align our production schedules to match their
evolving material needs. While we currently expect demand patterns
to remain subdued during the first half of fiscal year 2021, the
long-term outlook for our key end-use markets remains strong and
our supply chain position remains resilient. We have ample
liquidity to navigate the current challenging environment and will
continue to actively manage our business and take additional
actions if necessary. We believe we will emerge from this crisis
with even stronger connections with our customers, as well as
increased market share across key Aerospace and Defense and Medical
platforms and applications. Our established core business and
leadership in critical emerging technologies including soft
magnetics and additive manufacturing continue to support long-term
sustainable growth and value creation for our
stakeholders.”
Financial Highlights
($ in
millions) |
|
Q4 |
|
Q4 |
|
Q3 |
|
YTD |
|
YTD |
|
|
FY2020 |
|
FY2019 |
|
FY2020 |
|
FY2020 |
|
FY2019 |
Net
Sales |
$ |
437.3 |
|
|
$ |
641.4 |
|
|
$ |
585.4 |
|
|
$ |
2,181.1 |
|
$ |
2,380.2 |
|
Net Sales
Excluding Surcharge (a) |
$ |
375.9 |
|
|
$ |
533.3 |
|
|
$ |
495.0 |
|
|
$ |
1,828.7 |
|
$ |
1,942.1 |
|
Operating (Loss)
Income |
$ |
(148.2 |
) |
|
$ |
67.9 |
|
|
$ |
58.7 |
|
|
$ |
25.3 |
|
$ |
241.4 |
|
Adjusted Operating
(Loss) Income Excluding Special Items (a) |
$ |
(18.1 |
) |
|
$ |
67.9 |
|
|
$ |
58.7 |
|
|
$ |
157.7 |
|
$ |
242.6 |
|
Net (Loss)
Income |
$ |
(118.4 |
) |
|
$ |
48.9 |
|
|
$ |
39.9 |
|
|
$ |
1.5 |
|
$ |
167.0 |
|
Cash Provided from
Operating Activities |
$ |
136.9 |
|
|
$ |
175.1 |
|
|
$ |
72.3 |
|
|
$ |
231.8 |
|
$ |
232.4 |
|
Free Cash Flow
(a) |
$ |
99.8 |
|
|
$ |
115.8 |
|
|
$ |
13.0 |
|
|
$ |
21.8 |
|
$ |
(53.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) non-GAAP financial measures explained in the attached
tables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales for the fourth quarter of fiscal year 2020 were $437.3
million compared with $641.4 million in the fourth quarter of
fiscal year 2019, a decrease of $204.1 million (32 percent), on 32
percent lower volume. Net sales excluding surcharge were $375.9
million, a decrease of $157.4 million (30 percent) from the same
period a year ago.
Operating loss was $148.2 million in the recent fourth quarter
compared to operating income of $67.9 million in the same period
last year. Adjusted operating loss, excluding the impact of
restructuring and impairment charges, was $18.1 million in the
recent fourth quarter.
Cash provided from operating activities in the fourth quarter of
fiscal year 2020 was $136.9 million, compared to $175.1 million in
the same quarter last year. Free cash flow in the fourth quarter of
fiscal year 2020 was $99.8 million, compared to $115.8
million in the same quarter last year. The decreases in
operating cash flow and free cash flow primarily reflect the impact
of lower earnings in the current quarter offset by significant
inventory reduction in the current quarter relative to the same
quarter a year ago. In addition, capital expenditures were $27.4
million in the fourth quarter of fiscal year 2020 compared to $49.7
million in the same quarter last year.
Total liquidity, including cash and available credit facility
borrowings, was $417.1 million at the end of the fourth quarter of
fiscal year 2020. This consisted of $193.1 million of cash and
$224.0 million of available borrowings under the Company’s credit
facility. In July 2020, the Company executed an offering of $400.0
million aggregate principal amount of 6.375% senior unsecured notes
due 2028 in an underwritten public offering. The Company intends to
use the net proceeds from the offering to repay in full its $250
million 5.20% senior notes due in July 2021. Excess net proceeds
will be used for general corporate purposes.
Conference Call and Webcast Presentation
Carpenter Technology will host a conference call and webcast
presentation today, July 30th at 10:00 a.m. ET, to discuss the
financial results of operations for the fourth quarter and full
fiscal year 2020 and selected fiscal year 2021 guidance. Please
dial +1 412-317-9259 for access to the live conference call. Access
to the live webcast will be available at Carpenter Technology’s
website (http://www.carpentertechnology.com), and a replay will
soon be made available at http://www.carpentertechnology.com.
Presentation materials used during this conference call will be
available for viewing and download
at http://www.carpentertechnology.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 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 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 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; (18) our efforts and
efforts by governmental authorities to mitigate the COVID-19
pandemic, such as travel bans, shelter in place orders and business
closures, and the related impact on resource allocations and
manufacturing and supply chains; (19) our status as a “critical”,
“essential” or “life-sustaining” business in light of COVID-19
business closure laws, orders and guidance being challenged by a
governmental body or other applicable authority; (20) our ability
to execute our business continuity, operational, budget and fiscal
plans in light of the COVID-19 outbreak; and (21) 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.
PRELIMINARYCONSOLIDATED
STATEMENTS OF OPERATIONS(in millions, except per share
data)(Unaudited)
|
|
Three Months Ended |
|
Year Ended |
|
|
June 30, |
|
June 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
NET SALES |
|
$ |
437.3 |
|
|
$ |
641.4 |
|
|
$ |
2,181.1 |
|
|
$ |
2,380.2 |
|
Cost of sales |
|
413.4 |
|
|
518.5 |
|
|
1,822.4 |
|
|
1,935.4 |
|
Gross profit |
|
23.9 |
|
|
122.9 |
|
|
358.7 |
|
|
444.8 |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
42.0 |
|
|
55.0 |
|
|
201.0 |
|
|
203.4 |
|
Goodwill impairment |
|
34.6 |
|
|
— |
|
|
34.6 |
|
|
— |
|
Restructuring and asset
impairment charges |
|
95.5 |
|
|
— |
|
|
97.8 |
|
|
— |
|
Operating (loss) income |
|
(148.2 |
) |
|
67.9 |
|
|
25.3 |
|
|
241.4 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(4.2 |
) |
|
(5.7 |
) |
|
(19.8 |
) |
|
(26.0 |
) |
Other income, net |
|
4.0 |
|
|
0.4 |
|
|
0.6 |
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
(Loss) income before income
taxes |
|
(148.4 |
) |
|
62.6 |
|
|
6.1 |
|
|
216.0 |
|
Income tax (benefit)
expense |
|
(30.0 |
) |
|
13.7 |
|
|
4.6 |
|
|
49.0 |
|
|
|
|
|
|
|
|
|
|
NET (LOSS) INCOME |
|
$ |
(118.4 |
) |
|
$ |
48.9 |
|
|
$ |
1.5 |
|
|
$ |
167.0 |
|
|
|
|
|
|
|
|
|
|
(LOSS) EARNINGS PER COMMON
SHARE: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(2.46 |
) |
|
$ |
1.01 |
|
|
$ |
0.02 |
|
|
$ |
3.46 |
|
Diluted |
|
$ |
(2.46 |
) |
|
$ |
1.00 |
|
|
$ |
0.02 |
|
|
$ |
3.43 |
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING: |
|
|
|
|
|
|
|
|
Basic |
|
48.1 |
|
|
47.7 |
|
|
48.1 |
|
|
47.7 |
|
Diluted |
|
48.1 |
|
|
48.1 |
|
|
48.2 |
|
|
48.1 |
|
|
|
|
|
|
|
|
|
|
Cash dividends per common
share |
|
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.80 |
|
|
$ |
0.80 |
|
PRELIMINARYCONSOLIDATED
STATEMENTS OF CASH FLOWS(in millions)(Unaudited)
|
|
Year Ended |
|
|
June 30, |
|
|
2020 |
|
2019 |
OPERATING ACTIVITIES: |
|
|
|
|
Net income |
|
$ |
1.5 |
|
|
$ |
167.0 |
|
Adjustments to reconcile net
income to net cash provided from operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
123.9 |
|
|
121.5 |
|
Goodwill impairment charge |
|
|
34.6 |
|
|
— |
|
Non-cash restructuring and asset impairment charges |
|
|
85.7 |
|
|
— |
|
Deferred income taxes |
|
(0.4 |
) |
|
16.5 |
|
Net pension expense |
|
|
15.3 |
|
|
11.6 |
|
Share-based compensation expense |
|
|
10.9 |
|
|
17.6 |
|
Net loss on disposals of property, plant and equipment and assets
held for sale |
|
0.2 |
|
|
1.2 |
|
Gain on insurance recovery |
|
— |
|
|
(11.4 |
) |
Changes in working capital and
other: |
|
|
|
|
|
|
Accounts receivable |
|
90.3 |
|
|
(5.3 |
) |
Inventories |
|
31.3 |
|
|
(94.0 |
) |
Other current assets |
|
(20.5 |
) |
|
6.8 |
|
Accounts payable |
|
(109.9 |
) |
|
20.1 |
|
Accrued liabilities |
|
(18.1 |
) |
|
(4.9 |
) |
Pension plan contributions |
|
(6.5 |
) |
|
(5.5 |
) |
Other postretirement plan contributions |
|
(3.5 |
) |
|
(3.1 |
) |
Other, net |
|
(3.0 |
) |
|
(5.7 |
) |
Net cash provided from operating activities |
|
231.8 |
|
|
232.4 |
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
Purchases of property, plant,
equipment and software |
|
(171.4 |
) |
|
(180.3 |
) |
Acquisition of business, net
of cash acquired |
|
— |
|
|
(79.0 |
) |
Proceeds from disposals of
property, plant and equipment and assets held for sale |
|
0.2 |
|
|
0.4 |
|
Proceeds from insurance
recovery |
|
— |
|
|
11.4 |
|
Proceeds from sales and
maturities of marketable securities |
|
— |
|
|
2.9 |
|
Net cash used for investing activities |
|
(171.2 |
) |
|
(244.6 |
) |
|
|
|
|
|
|
|
FINANCING ACTIVITIES: |
|
|
|
|
|
|
Credit agreement
borrowings |
|
351.1 |
|
|
163.9 |
|
Credit agreement
repayments |
|
(181.1 |
) |
|
(163.9 |
) |
Net change in short-term
credit agreement borrowings |
|
(19.7 |
) |
|
19.7 |
|
Dividends paid |
|
(38.8 |
) |
|
(38.6 |
) |
Proceeds from stock options
exercised |
|
4.3 |
|
|
3.9 |
|
Withholding tax payments on
share-based compensation awards |
|
(8.0 |
) |
|
(4.4 |
) |
Net cash provided from (used for) financing activities |
|
107.8 |
|
|
(19.4 |
) |
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
(2.3 |
) |
|
2.4 |
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS |
|
166.1 |
|
|
(29.2 |
) |
Cash and cash equivalents at
beginning of period |
|
27.0 |
|
|
56.2 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at
end of period |
|
$ |
193.1 |
|
|
$ |
27.0 |
|
PRELIMINARYCONSOLIDATED
BALANCE SHEETS(in millions)(Unaudited)
|
|
June 30, |
|
|
2020 |
|
2019 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
193.1 |
|
|
$ |
27.0 |
|
Accounts receivable, net |
|
292.3 |
|
|
384.1 |
|
Inventories |
|
724.3 |
|
|
787.7 |
|
Other current assets |
|
56.6 |
|
|
37.4 |
|
Total current assets |
|
1,266.3 |
|
|
1,236.2 |
|
Property, plant and equipment,
net |
|
1,351.1 |
|
|
1,366.2 |
|
Goodwill |
|
290.4 |
|
|
326.4 |
|
Other intangibles, net |
|
52.1 |
|
|
67.2 |
|
Deferred income taxes |
|
4.9 |
|
|
4.2 |
|
Other assets |
|
262.4 |
|
|
187.6 |
|
Total assets |
|
$ |
3,227.2 |
|
|
$ |
3,187.8 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Current liabilities: |
|
|
|
|
Short-term credit agreement borrowings |
|
$ |
170.0 |
|
|
$ |
19.7 |
|
Accounts payable |
|
124.2 |
|
|
238.7 |
|
Accrued liabilities |
|
157.9 |
|
|
157.6 |
|
Total current liabilities |
|
452.1 |
|
|
416.0 |
|
|
|
|
|
|
Long-term debt |
|
551.8 |
|
|
550.6 |
|
Accrued pension liabilities |
|
399.5 |
|
|
371.2 |
|
Accrued postretirement
benefits |
|
137.4 |
|
|
122.1 |
|
Deferred income taxes |
|
130.2 |
|
|
142.7 |
|
Other liabilities |
|
110.5 |
|
|
65.1 |
|
Total liabilities |
|
1,781.5 |
|
|
1,667.7 |
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
Common stock |
|
280.1 |
|
|
279.0 |
|
Capital in excess of par
value |
|
321.4 |
|
|
320.4 |
|
Reinvested earnings |
|
1,568.0 |
|
|
1,605.3 |
|
Common stock in treasury, at
cost |
|
(325.8 |
) |
|
(332.8 |
) |
Accumulated other
comprehensive loss |
|
(398.0 |
) |
|
(351.8 |
) |
Total stockholders' equity |
|
1,445.7 |
|
|
1,520.1 |
|
Total liabilities and stockholders' equity |
|
$ |
3,227.2 |
|
|
$ |
3,187.8 |
|
PRELIMINARYSEGMENT
FINANCIAL DATA(in millions, except pounds
sold)(Unaudited)
|
Three Months Ended |
|
Year Ended |
|
June 30, |
|
June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Pounds sold (000): |
|
|
|
|
|
|
|
Specialty Alloys Operations |
46,124 |
|
|
66,682 |
|
|
221,784 |
|
|
256,360 |
|
Performance Engineered Products |
2,384 |
|
|
4,180 |
|
|
12,260 |
|
|
13,752 |
|
Intersegment |
(506 |
) |
|
(778 |
) |
|
(2,308 |
) |
|
(2,576 |
) |
Consolidated pounds sold |
48,002 |
|
|
70,084 |
|
|
231,736 |
|
|
267,536 |
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
Specialty Alloys Operations |
|
|
|
|
|
|
|
Net sales excluding surcharge |
$ |
308.6 |
|
|
$ |
425.6 |
|
|
$ |
1,483.0 |
|
|
$ |
1,536.6 |
|
Surcharge |
60.8 |
|
|
106.4 |
|
|
348.6 |
|
|
430.7 |
|
Specialty Alloys Operations net sales |
369.4 |
|
|
532.0 |
|
|
1,831.6 |
|
|
1,967.3 |
|
|
|
|
|
|
|
|
|
Performance Engineered Products |
|
|
|
|
|
|
|
Net sales excluding surcharge |
76.0 |
|
|
123.7 |
|
|
395.2 |
|
|
467.0 |
|
Surcharge |
1.1 |
|
|
2.7 |
|
|
5.9 |
|
|
12.8 |
|
Performance Engineered Products net sales |
77.1 |
|
|
126.4 |
|
|
401.1 |
|
|
479.8 |
|
|
|
|
|
|
|
|
|
Intersegment |
|
|
|
|
|
|
|
Net sales excluding surcharge |
(8.7 |
) |
|
(16.0 |
) |
|
(49.5 |
) |
|
(61.5 |
) |
Surcharge |
(0.5 |
) |
|
(1.0 |
) |
|
(2.1 |
) |
|
(5.4 |
) |
Intersegment net sales |
(9.2 |
) |
|
(17.0 |
) |
|
(51.6 |
) |
|
(66.9 |
) |
|
|
|
|
|
|
|
|
Consolidated net sales |
$ |
437.3 |
|
|
$ |
641.4 |
|
|
$ |
2,181.1 |
|
|
$ |
2,380.2 |
|
|
|
|
|
|
|
|
|
Operating (Loss) Income: |
|
|
|
|
|
|
|
Specialty Alloys Operations |
$ |
5.3 |
|
|
$ |
86.9 |
|
|
$ |
239.0 |
|
|
$ |
282.2 |
|
Performance Engineered Products |
(8.4 |
) |
|
1.7 |
|
|
(10.4 |
) |
|
30.0 |
|
Corporate (including restructuring and asset impairment
charges) |
(146.2 |
) |
|
(21.1 |
) |
|
(205.0 |
) |
|
(72.7 |
) |
Intersegment |
1.1 |
|
|
0.4 |
|
|
1.7 |
|
|
1.9 |
|
Consolidated operating (loss) income: |
$ |
(148.2 |
) |
|
$ |
67.9 |
|
|
$ |
25.3 |
|
|
$ |
241.4 |
|
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 Carpenter Additive (Additive) 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, CPP and Additive
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 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 in other income (expense), net.
PRELIMINARYNON-GAAP
FINANCIAL MEASURES(in millions, except per share
data)(Unaudited)
ADJUSTED OPERATING MARGIN
EXCLUDING |
|
|
|
|
|
|
|
|
SURCHARGE REVENUE AND SPECIAL
ITEMS |
|
Three Months Ended |
|
Year Ended |
|
|
June 30, |
|
June 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
437.3 |
|
|
$ |
641.4 |
|
|
$ |
2,181.1 |
|
|
$ |
2,380.2 |
|
Less: surcharge revenue |
|
61.4 |
|
|
108.1 |
|
|
352.4 |
|
|
438.1 |
|
Net sales excluding surcharge
revenue |
|
$ |
375.9 |
|
|
$ |
533.3 |
|
|
$ |
1,828.7 |
|
|
$ |
1,942.1 |
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
$ |
(148.2 |
) |
|
$ |
67.9 |
|
|
$ |
25.3 |
|
|
$ |
241.4 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Acquisition-related costs |
|
— |
|
|
— |
|
|
— |
|
|
1.2 |
|
Goodwill impairment |
|
34.6 |
|
|
— |
|
|
34.6 |
|
|
— |
|
Restructuring and asset impairment charges |
|
95.5 |
|
|
— |
|
|
97.8 |
|
|
— |
|
Operating (loss) income
excluding special items |
|
$ |
(18.1 |
) |
|
$ |
67.9 |
|
|
$ |
157.7 |
|
|
$ |
242.6 |
|
|
|
|
|
|
|
|
|
|
Operating margin |
|
(33.9 |
)% |
|
10.6 |
% |
|
1.2 |
% |
|
10.1 |
% |
|
|
|
|
|
|
|
|
|
Adjusted operating margin
excluding surcharge revenue and special items |
|
(4.8 |
)% |
|
12.7 |
% |
|
8.6 |
% |
|
12.5 |
% |
Management believes that removing the impact 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 special
items from operating margin is helpful in analyzing the operating
performance of the Company, as these items 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 (LOSS) PER SHAREEXCLUDING SPECIAL ITEMS |
|
Loss BeforeIncomeTaxes |
|
Income TaxBenefit |
|
Net Loss |
|
Loss PerDilutedShare* |
|
|
|
|
|
|
|
|
|
Three months ended June 30,
2020, as reported |
|
$ |
(148.4 |
) |
|
$ |
30.0 |
|
|
$ |
(118.4 |
) |
|
$ |
(2.46 |
) |
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Goodwill
impairment |
|
34.6 |
|
|
(7.1 |
) |
|
27.5 |
|
|
0.57 |
|
Restructuring and asset
impairment charges |
|
95.5 |
|
|
(19.5 |
) |
|
76.0 |
|
|
1.58 |
|
Total impact of special
items |
|
130.1 |
|
|
(26.6 |
) |
|
103.5 |
|
|
2.15 |
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
2020, as adjusted |
|
$ |
(18.3 |
) |
|
$ |
3.4 |
|
|
$ |
(14.9 |
) |
|
$ |
(0.31 |
) |
|
|
|
|
|
|
|
|
|
* Impact per
diluted share calculated using weighted average common shares
outstanding of 48.1 million for the three months ended June 30,
2020. |
ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS |
|
IncomeBeforeIncomeTaxes |
|
Income TaxExpense |
|
Net Income |
|
Earnings PerDilutedShare* |
|
|
|
|
|
|
|
|
|
Three months ended June 30,
2019, as reported |
|
$ |
62.6 |
|
|
$ |
(13.7 |
) |
|
$ |
48.9 |
|
|
$ |
1.00 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
None-reported |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
2019, as adjusted |
|
$ |
62.6 |
|
|
$ |
(13.7 |
) |
|
$ |
48.9 |
|
|
$ |
1.00 |
|
|
|
|
|
|
|
|
|
|
* Impact per
diluted share calculated using weighted average common shares
outstanding of 48.1 million for the three months ended June 30,
2019. |
ADJUSTED EARNINGS PER SHARE EXCLUDINGSPECIAL ITEMS |
|
IncomeBeforeIncomeTaxes |
|
Income TaxExpense |
|
Net Income |
|
Earnings PerDilutedShare* |
|
|
|
|
|
|
|
|
|
Year ended June 30, 2020, as
reported |
|
$ |
6.1 |
|
|
$ |
(4.6 |
) |
|
$ |
1.5 |
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Goodwill
impairment |
|
34.6 |
|
|
(7.1 |
) |
|
27.5 |
|
|
0.57 |
|
Restructuring and asset
impairment charges |
|
97.8 |
|
|
(20.0 |
) |
|
77.8 |
|
|
1.62 |
|
Total impact of special
items |
|
132.4 |
|
|
(27.1 |
) |
|
105.3 |
|
|
|
2.19 |
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2020, as
adjusted |
|
$ |
138.5 |
|
|
$ |
(31.7 |
) |
|
$ |
106.8 |
|
|
$ |
2.21 |
|
|
|
|
|
|
|
|
|
|
* Impact per
diluted share calculated using weighted average common shares
outstanding of 48.2 million for the year ended June 30, 2020. |
ADJUSTED EARNINGS PER SHARE EXCLUDINGSPECIAL ITEMS |
|
IncomeBeforeIncomeTaxes |
|
Income TaxExpense |
|
Net Income |
|
Earnings PerDilutedShare* |
|
|
|
|
|
|
|
|
|
Year ended June 30, 2019, as
reported |
|
$ |
216.0 |
|
|
$ |
(49.0 |
) |
|
$ |
167.0 |
|
|
$ |
3.43 |
|
|
|
|
|
|
|
|
|
|
Special Items: |
|
|
|
|
|
|
|
|
Acquisition-related
costs |
|
1.2 |
|
|
— |
|
|
1.2 |
|
|
0.03 |
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2019, as
adjusted |
|
$ |
217.2 |
|
|
$ |
(49.0 |
) |
|
$ |
168.2 |
|
|
$ |
3.46 |
|
|
|
|
|
|
|
|
|
|
* Impact per diluted
share calculated using weighted average common shares outstanding
of 48.1 million for the year ended June 30, 2019. |
Management believes that earnings (loss) per share adjusted to
exclude the impact of special items is helpful in analyzing the
operating performance of the Company, as these items 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 |
|
Year Ended |
|
|
June 30, |
|
June 30, |
FREE CASH FLOW |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
Net cash provided from
operating activities |
|
$ |
136.9 |
|
|
$ |
175.1 |
|
|
$ |
231.8 |
|
|
$ |
232.4 |
|
Purchases of property, plant,
equipment and software |
|
(27.4 |
) |
|
(49.7 |
) |
|
(171.4 |
) |
|
(180.3 |
) |
Acquisition of business, net
of cash acquired |
|
— |
|
|
— |
|
|
— |
|
|
(79.0 |
) |
Proceeds from disposals of
property, plant and equipment and assets held for sale |
|
— |
|
|
0.1 |
|
|
0.2 |
|
|
0.4 |
|
Proceeds from insurance
recovery |
|
— |
|
|
— |
|
|
— |
|
|
11.4 |
|
Dividends paid |
|
(9.7 |
) |
|
(9.7 |
) |
|
(38.8 |
) |
|
(38.6 |
) |
|
|
|
|
|
|
|
|
|
Free cash flow |
|
$ |
99.8 |
|
|
$ |
115.8 |
|
|
$ |
21.8 |
|
|
$ |
(53.7 |
) |
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
SCHEDULES(in millions)(Unaudited)
|
Three Months Ended |
|
Year Ended |
|
June 30, |
|
June 30, |
NET SALES BY END-USE
MARKET |
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
End-Use Market Excluding
Surcharge Revenue: |
|
|
|
|
|
|
|
Aerospace and Defense |
$ |
213.8 |
|
|
$ |
303.9 |
|
|
$ |
1,072.1 |
|
|
$ |
1,051.5 |
|
Medical |
42.0 |
|
|
51.2 |
|
|
177.2 |
|
|
176.3 |
|
Transportation |
17.3 |
|
|
32.3 |
|
|
108.7 |
|
|
126.6 |
|
Energy |
27.7 |
|
|
39.6 |
|
|
116.4 |
|
|
154.3 |
|
Industrial and Consumer |
56.2 |
|
|
74.5 |
|
|
248.1 |
|
|
298.5 |
|
Distribution |
18.9 |
|
|
31.8 |
|
|
106.2 |
|
|
134.9 |
|
|
|
|
|
|
|
|
|
Total net sales excluding
surcharge revenue |
375.9 |
|
|
533.3 |
|
|
1,828.7 |
|
|
1,942.1 |
|
|
|
|
|
|
|
|
|
Surcharge revenue |
61.4 |
|
|
108.1 |
|
|
352.4 |
|
|
438.1 |
|
|
|
|
|
|
|
|
|
Total net sales |
$ |
437.3 |
|
|
$ |
641.4 |
|
|
$ |
2,181.1 |
|
|
$ |
2,380.2 |
|
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 |
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