Carpenter Technology Corporation (NYSE: CRS) (the “Company”) today
announced financial results for the fiscal second quarter ended
December 31, 2020. For the quarter, the Company reported a net loss
of $84.9 million, or $1.76 loss per diluted share. Excluding
special items, adjusted loss per diluted share was $0.61 for the
quarter.
“Our second quarter results reflect our continued emphasis on
driving cash flow generation as we ended the second quarter with
$665 million in total liquidity including $271 million in cash,”
said Tony R. Thene, President and CEO of Carpenter Technology.
“Over the last nine months, we have generated $214 million in free
cash flow. We also moved quickly to implement targeted cost
reduction initiatives and portfolio realignments that are
delivering significant costs savings. We believe the combination of
these strategic actions gives us increased flexibility and places
us on solid ground to capitalize on demand patterns as market
conditions normalize.”
“During the pandemic, we continued to strengthen our customer
relationships. To that end, in the Aerospace and Defense end-use
market, we have recently secured multiple, beneficial long-term
contracts with key customers which further demonstrates the future
outlook is strong. We are also well positioned to benefit from a
recovery in the Medical end-use market as the supply chain gains
confidence to meet pent up demand for elective procedures. Overall,
we believe end-use market conditions will gradually improve during
the second half of fiscal year 2021 and are working hard to
capitalize on the recovery.”
“Our core business is built upon over 130 years of advanced
material development, production and expertise. We remain a
critical supply chain partner today and have made strategic
investments to build upon that position in the years to come. The
addition of our hot strip mill will significantly strengthen our
soft magnetic capabilities at a time when electrification is
helping to shape the long-term profile of many of our end-use
markets. We also have built an additive manufacturing platform
focused on powder lifecycle management. These investments are a
strategic extension of our core business and consistent with our
mandate to deliver increasing value to our customers and our
stakeholders.”
Financial Highlights
| ($ in millions) |
|
Q2 |
|
Q2 |
|
Q1 |
| |
|
FY2021 |
|
FY2020 |
|
FY2021 |
|
Net Sales |
|
$ |
348.8 |
|
|
$ |
573.0 |
|
|
$ |
353.3 |
|
| Net Sales Excluding Surcharge
Revenue (a) |
|
$ |
299.4 |
|
|
$ |
471.2 |
|
|
$ |
307.2 |
|
| Operating (Loss) Income |
|
$ |
(89.0 |
) |
|
$ |
55.0 |
|
|
$ |
(48.8 |
) |
| Adjusted Operating (Loss)
Income Excluding Special Items (a) |
|
$ |
(32.3 |
) |
|
$ |
57.3 |
|
|
$ |
(30.9 |
) |
| Net (Loss) Income |
|
$ |
(84.9 |
) |
|
$ |
38.8 |
|
|
$ |
(47.1 |
) |
| Cash Provided from Operating
Activities |
|
$ |
83.6 |
|
|
$ |
21.8 |
|
|
$ |
88.0 |
|
| Free Cash Flow (a) |
|
$ |
51.0 |
|
|
$ |
(34.5 |
) |
|
$ |
62.6 |
|
| |
|
|
|
|
|
|
|
|
(a) Non-GAAP financial measures explained in the attached
tables |
|
|
|
|
|
|
|
|
|
|
Net sales for the second quarter of fiscal year 2021 were $348.8
million compared with $573.0 million in the second quarter of
fiscal year 2020, a decrease of $224.2 million (negative 39
percent), on 33 percent lower volume. Net sales excluding surcharge
were $299.4 million, a decrease of $171.8 million (negative 36
percent) from the same period a year ago.
Operating loss was $89.0 million compared to operating income of
$55.0 million in the prior year period. Adjusted operating loss
excluding special items was $32.3 million in the recent second
quarter. Special items excluded from adjusted operating loss in the
current quarter include a goodwill impairment charge of $52.8
million associated with the Company’s Additive reporting unit that
is included in the Performance Engineered Products segment and $3.9
million of costs associated with COVID-19. These COVID-19 costs
principally consist of direct incremental operating costs including
outside services to execute enhanced cleaning protocols, additional
personal protective equipment, isolation pay for production
employees potentially exposed to COVID-19 and various operating
supplies necessary to maintain the operations while keeping
employees safe against possible exposure in the Company’s
facilities.
Cash provided from operating activities in the second quarter of
fiscal year 2021 was $83.6 million, compared to $21.8 million in
the same quarter last year. Free cash flow in the second quarter of
fiscal year 2021 was positive $51.0 million, compared to negative
$34.5 million in the same quarter last year. The increases in
operating cash flow and free cash flow primarily reflect the impact
of inventory reduction in the current quarter partially offset by
lower earnings relative to the same quarter a year ago. In
addition, capital expenditures were $26.6 million in the second
quarter of fiscal year 2021 compared to $46.7 million in the same
quarter last year.
Total liquidity, including cash and available credit facility
borrowings, was $665.4 million at the end of the second quarter of
fiscal year 2021. This consisted of $271.4 million of cash and
$394.0 million of available borrowings under the Company’s credit
facility.
Conference Call and Webcast Presentation
Carpenter Technology will host a conference call and webcast
presentation today, January 28th at 10:00 a.m. ET, to discuss the
financial results of operations for the second quarter of fiscal
year 2021. 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,
medical, transportation, energy, industrial 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, 2020, Form 10-Q for the quarter ended September
30, 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 pandemic; 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 |
|
Six Months Ended |
| |
|
December 31, |
|
December 31, |
| |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| |
|
|
|
|
|
|
|
|
|
NET SALES |
|
$ |
348.8 |
|
|
$ |
573.0 |
|
|
$ |
702.1 |
|
|
$ |
1,158.4 |
|
| Cost of sales |
|
342.8 |
|
|
460.4 |
|
|
692.6 |
|
|
933.1 |
|
| Gross profit |
|
6.0 |
|
|
112.6 |
|
|
9.5 |
|
|
225.3 |
|
| |
|
|
|
|
|
|
|
|
| Selling, general and
administrative expenses |
|
42.2 |
|
|
55.3 |
|
|
84.5 |
|
|
108.2 |
|
| Restructuring and asset
impairment charges |
|
— |
|
|
2.3 |
|
|
10.0 |
|
|
2.3 |
|
| Goodwill impairment |
|
52.8 |
|
|
— |
|
|
52.8 |
|
|
— |
|
| Operating (loss) income |
|
(89.0 |
) |
|
55.0 |
|
|
(137.8 |
) |
|
114.8 |
|
| |
|
|
|
|
|
|
|
|
| Interest expense, net |
|
(7.9 |
) |
|
(5.3 |
) |
|
(14.6 |
) |
|
(10.7 |
) |
| Loss on debt extinguishment,
net |
|
— |
|
|
— |
|
|
(8.2 |
) |
|
— |
|
| Other income (expense),
net |
|
1.3 |
|
|
0.8 |
|
|
(1.1 |
) |
|
0.5 |
|
| |
|
|
|
|
|
|
|
|
| (Loss) income before income
taxes |
|
(95.6 |
) |
|
50.5 |
|
|
(161.7 |
) |
|
104.6 |
|
| Income tax (benefit)
expense |
|
(10.7 |
) |
|
11.7 |
|
|
(29.7 |
) |
|
24.6 |
|
| |
|
|
|
|
|
|
|
|
| NET (LOSS) INCOME |
|
$ |
(84.9 |
) |
|
$ |
38.8 |
|
|
$ |
(132.0 |
) |
|
$ |
80.0 |
|
| |
|
|
|
|
|
|
|
|
| (LOSS) EARNINGS PER COMMON
SHARE: |
|
|
|
|
|
|
|
|
| Basic |
|
$ |
(1.76 |
) |
|
$ |
0.80 |
|
|
$ |
(2.74 |
) |
|
$ |
1.65 |
|
| Diluted |
|
$ |
(1.76 |
) |
|
$ |
0.79 |
|
|
$ |
(2.74 |
) |
|
$ |
1.64 |
|
| |
|
|
|
|
|
|
|
|
| WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING: |
|
|
|
|
|
|
|
|
| Basic |
|
48.3 |
|
|
48.1 |
|
|
48.3 |
|
|
48.0 |
|
| Diluted |
|
48.3 |
|
|
48.5 |
|
|
48.3 |
|
|
48.4 |
|
PRELIMINARYCONSOLIDATED
STATEMENTS OF CASH FLOWS(in millions)(Unaudited)
| |
|
Six Months Ended |
| |
|
December 31, |
| |
|
2020 |
|
2019 |
| OPERATING ACTIVITIES |
|
|
|
|
|
Net (loss) income |
|
$ |
(132.0 |
) |
|
$ |
80.0 |
|
| Adjustments to reconcile net
(loss) income to net cash provided from operating activities: |
|
|
|
|
|
Loss on debt extinguishment, net |
|
8.2 |
|
|
— |
|
|
Depreciation and amortization |
|
59.6 |
|
|
61.0 |
|
|
Non-cash restructuring and asset impairment charges |
|
8.7 |
|
|
1.5 |
|
|
Deferred income taxes |
|
(10.1 |
) |
|
5.5 |
|
|
Net pension expense |
|
8.1 |
|
|
7.6 |
|
|
Goodwill impairment charge |
|
52.8 |
|
|
— |
|
|
Share-based compensation expense |
|
5.4 |
|
|
8.5 |
|
|
Net loss on disposals of property, plant and equipment and assets
held for sale |
|
0.1 |
|
|
0.1 |
|
| Changes in working capital and
other: |
|
|
|
|
|
Accounts receivable |
|
64.2 |
|
|
5.0 |
|
|
Inventories |
|
155.8 |
|
|
(108.2 |
) |
|
Other current assets |
|
(26.8 |
) |
|
(12.9 |
) |
|
Accounts payable |
|
(13.1 |
) |
|
(1.0 |
) |
|
Accrued liabilities |
|
(3.1 |
) |
|
(17.1 |
) |
|
Pension plan contributions |
|
(4.7 |
) |
|
(3.6 |
) |
|
Other postretirement plan contributions |
|
(1.2 |
) |
|
(1.6 |
) |
|
Other, net |
|
(0.3 |
) |
|
(2.2 |
) |
|
Net cash provided from operating activities |
|
171.6 |
|
|
22.6 |
|
| INVESTING ACTIVITIES |
|
|
|
|
| Purchases of property, plant,
equipment and software |
|
(59.9 |
) |
|
(94.3 |
) |
| Proceeds from disposals of
property, plant and equipment and assets held for sale |
|
1.5 |
|
|
0.1 |
|
| Proceeds from divestiture of
business |
|
20.0 |
|
|
— |
|
|
Net cash used for investing activities |
|
(38.4 |
) |
|
(94.2 |
) |
| FINANCING ACTIVITIES |
|
|
|
|
| Credit agreement
borrowings |
|
— |
|
|
114.6 |
|
| Credit agreement
repayments |
|
— |
|
|
(45.7 |
) |
| Net change in short-term
credit agreement borrowings |
|
(170.0 |
) |
|
30.3 |
|
| Proceeds from issuance of
long-term debt, net of offering costs |
|
395.5 |
|
|
— |
|
| Payments on long-term
debt |
|
(250.0 |
) |
|
— |
|
| Payments for debt
extinguishment costs, net |
|
(8.2 |
) |
|
— |
|
| Payments for debt issue
costs |
|
(1.1 |
) |
|
— |
|
| Dividends paid |
|
(19.5 |
) |
|
(19.4 |
) |
| Proceeds from stock options
exercised |
|
— |
|
|
4.2 |
|
| Withholding tax payments on
share-based compensation awards |
|
(2.2 |
) |
|
(7.7 |
) |
|
Net cash (used for) provided from financing activities |
|
(55.5 |
) |
|
76.3 |
|
| Effect of exchange rate
changes on cash and cash equivalents |
|
0.6 |
|
|
(1.8 |
) |
| INCREASE IN CASH AND CASH
EQUIVALENTS |
|
78.3 |
|
|
2.9 |
|
| Cash and cash equivalents at
beginning of period |
|
193.1 |
|
|
27.0 |
|
| Cash and cash equivalents at
end of period |
|
$ |
271.4 |
|
|
$ |
29.9 |
|
PRELIMINARYCONSOLIDATED
BALANCE SHEETS(in millions)(Unaudited)
| |
|
December 31, |
|
June 30, |
| |
|
2020 |
|
2020 |
| ASSETS |
|
|
|
|
| Current assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
271.4 |
|
|
$ |
193.1 |
|
|
Accounts receivable, net |
|
230.3 |
|
|
292.3 |
|
|
Inventories |
|
565.1 |
|
|
724.3 |
|
|
Other current assets |
|
85.8 |
|
|
56.6 |
|
|
Total current assets |
|
1,152.6 |
|
|
1,266.3 |
|
| Property, plant and equipment,
net |
|
1,326.1 |
|
|
1,351.1 |
|
| Goodwill |
|
241.4 |
|
|
290.4 |
|
| Other intangibles, net |
|
45.4 |
|
|
52.1 |
|
| Deferred income taxes |
|
5.1 |
|
|
4.9 |
|
| Other assets |
|
273.3 |
|
|
262.4 |
|
|
Total assets |
|
$ |
3,043.9 |
|
|
$ |
3,227.2 |
|
| |
|
|
|
|
| LIABILITIES |
|
|
|
|
| Current liabilities: |
|
|
|
|
|
Short-term credit agreement borrowings |
|
$ |
— |
|
|
$ |
170.0 |
|
|
Accounts payable |
|
108.4 |
|
|
124.2 |
|
|
Accrued liabilities |
|
157.4 |
|
|
157.9 |
|
|
Total current liabilities |
|
265.8 |
|
|
452.1 |
|
| Long-term debt |
|
694.0 |
|
|
551.8 |
|
| Accrued pension
liabilities |
|
375.2 |
|
|
399.5 |
|
| Accrued postretirement
benefits |
|
138.0 |
|
|
137.4 |
|
| Deferred income taxes |
|
127.5 |
|
|
130.2 |
|
| Other liabilities |
|
110.5 |
|
|
110.5 |
|
|
Total liabilities |
|
1,711.0 |
|
|
1,781.5 |
|
| |
|
|
|
|
| STOCKHOLDERS’ EQUITY |
|
|
|
|
| Common stock |
|
280.1 |
|
|
280.1 |
|
| Capital in excess of par
value |
|
317.0 |
|
|
321.4 |
|
| Reinvested earnings |
|
1,416.5 |
|
|
1,568.0 |
|
| Common stock in treasury, at
cost |
|
(317.6 |
) |
|
(325.8 |
) |
| Accumulated other
comprehensive loss |
|
(363.1 |
) |
|
(398.0 |
) |
|
Total stockholders' equity |
|
1,332.9 |
|
|
1,445.7 |
|
|
Total liabilities and stockholders' equity |
|
$ |
3,043.9 |
|
|
$ |
3,227.2 |
|
PRELIMINARYSEGMENT
FINANCIAL DATA(in millions, except pounds
sold)(Unaudited)
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
December 31, |
|
December 31, |
| |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| Pounds sold (000): |
|
|
|
|
|
|
|
|
|
Specialty Alloys Operations |
|
38,602 |
|
|
56,564 |
|
|
81,970 |
|
|
116,606 |
|
|
Performance Engineered Products |
|
1,534 |
|
|
3,424 |
|
|
2,998 |
|
|
6,674 |
|
|
Intersegment |
|
(516 |
) |
|
(690 |
) |
|
(1,000 |
) |
|
(1,684 |
) |
|
Consolidated pounds sold |
|
39,620 |
|
|
59,298 |
|
|
83,968 |
|
|
121,596 |
|
| |
|
|
|
|
|
|
|
|
| Net sales: |
|
|
|
|
|
|
|
|
|
Specialty Alloys Operations |
|
|
|
|
|
|
|
|
|
Net sales excluding surcharge |
|
$ |
251.6 |
|
|
$ |
382.5 |
|
|
$ |
506.4 |
|
|
$ |
775.7 |
|
|
Surcharge |
|
48.8 |
|
|
100.5 |
|
|
94.7 |
|
|
198.4 |
|
|
Specialty Alloys Operations net sales |
|
300.4 |
|
|
483.0 |
|
|
601.1 |
|
|
974.1 |
|
| |
|
|
|
|
|
|
|
|
|
Performance Engineered Products |
|
|
|
|
|
|
|
|
|
Net sales excluding surcharge |
|
54.1 |
|
|
104.1 |
|
|
115.3 |
|
|
212.0 |
|
|
Surcharge |
|
0.7 |
|
|
1.9 |
|
|
1.4 |
|
|
3.4 |
|
|
Performance Engineered Products net sales |
|
54.8 |
|
|
106.0 |
|
|
116.7 |
|
|
215.4 |
|
| |
|
|
|
|
|
|
|
|
|
Intersegment |
|
|
|
|
|
|
|
|
|
Net sales excluding surcharge |
|
(6.3 |
) |
|
(15.4 |
) |
|
(15.2 |
) |
|
(29.9 |
) |
|
Surcharge |
|
(0.1 |
) |
|
(0.6 |
) |
|
(0.5 |
) |
|
(1.2 |
) |
|
Intersegment net sales |
|
(6.4 |
) |
|
(16.0 |
) |
|
(15.7 |
) |
|
(31.1 |
) |
| |
|
|
|
|
|
|
|
|
|
Consolidated net sales |
|
$ |
348.8 |
|
|
$ |
573.0 |
|
|
$ |
702.1 |
|
|
$ |
1,158.4 |
|
| |
|
|
|
|
|
|
|
|
| Operating (Loss) Income: |
|
|
|
|
|
|
|
|
|
Specialty Alloys Operations |
|
$ |
(11.6 |
) |
|
$ |
76.3 |
|
|
$ |
(30.2 |
) |
|
$ |
157.3 |
|
|
Performance Engineered Products |
|
(7.2 |
) |
|
0.4 |
|
|
(10.9 |
) |
|
(1.7 |
) |
|
Corporate (including restructuring, goodwill and asset impairment
charges) |
|
(70.6 |
) |
|
(21.9 |
) |
|
(97.1 |
) |
|
(41.0 |
) |
|
Intersegment |
|
0.4 |
|
|
0.2 |
|
|
0.4 |
|
|
0.2 |
|
|
Consolidated (loss) operating income |
|
$ |
(89.0 |
) |
|
$ |
55.0 |
|
|
$ |
(137.8 |
) |
|
$ |
114.8 |
|
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 Additive business and the Latrobe and Mexico
distribution businesses. Effective July 1, 2020, the Company's
Carpenter Powder Products business was merged into the Carpenter
Additive business. The Amega West business was also part of the PEP
segment however the business was divested during the quarter ended
September 30, 2020. 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 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)
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
December 31, |
|
December 31, |
| ADJUSTED OPERATING MARGIN
EXCLUDING SURCHARGE REVENUE AND SPECIAL ITEMS |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
348.8 |
|
|
$ |
573.0 |
|
|
$ |
702.1 |
|
|
$ |
1,158.4 |
|
| Less: surcharge revenue |
|
49.4 |
|
|
101.8 |
|
|
95.6 |
|
|
|
200.6 |
|
| Net sales excluding surcharge
revenue |
|
$ |
299.4 |
|
|
$ |
471.2 |
|
|
$ |
606.5 |
|
|
$ |
957.8 |
|
| |
|
|
|
|
|
|
|
|
|
| Operating (loss) income |
|
$ |
(89.0 |
) |
|
$ |
55.0 |
|
|
$ |
(137.8 |
) |
|
$ |
114.8 |
|
| Special items: |
|
|
|
|
|
|
|
|
|
|
Restructuring and asset impairment charges |
|
— |
|
|
2.3 |
|
|
10.0 |
|
|
|
2.3 |
|
|
Goodwill impairment |
|
52.8 |
|
|
— |
|
|
52.8 |
|
|
— |
|
|
COVID-19 costs |
|
3.9 |
|
|
— |
|
|
11.8 |
|
|
— |
|
| Operating (loss) income |
|
$ |
(32.3 |
) |
|
$ |
57.3 |
|
|
$ |
(63.2 |
) |
|
$ |
117.1 |
|
| |
|
|
|
|
|
|
|
|
|
| Operating margin |
|
|
(25.5 |
)% |
|
9.6 |
% |
|
|
(19.6 |
)% |
|
9.9 |
% |
| |
|
|
|
|
|
|
|
|
|
| Adjusted operating margin
excluding surcharge revenue and special items |
|
|
(10.8 |
)% |
|
12.2 |
% |
|
|
(10.4 |
)% |
|
12.2 |
% |
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 special items from
operating margin is helpful in analyzing our operating performance,
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 LOSS PER SHARE EXCLUDING SPECIAL ITEMS |
|
Loss Before Income Taxes |
|
Income Tax Benefit |
|
Net Loss |
|
Loss Per Diluted Share* |
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, 2020 as reported |
|
$ |
(95.6 |
) |
|
$ |
10.7 |
|
|
$ |
(84.9 |
) |
|
$ |
(1.76 |
) |
| |
|
|
|
|
|
|
|
|
| Special items: |
|
|
|
|
|
|
|
|
|
Goodwill impairment |
|
52.8 |
|
|
(0.1 |
) |
|
52.7 |
|
|
1.09 |
|
|
COVID-19 costs |
|
3.9 |
|
|
(0.9 |
) |
|
3.0 |
|
|
0.06 |
|
| |
|
|
|
|
|
|
|
|
| Three months ended December
31, 2020 as adjusted |
|
$ |
(38.9 |
) |
|
$ |
9.7 |
|
|
$ |
(29.2 |
) |
|
$ |
(0.61 |
) |
| |
|
|
|
|
|
|
|
|
| * Impact per
diluted share calculated using weighted average common shares
outstanding of 48.3 million for the three months ended December 31,
2020. |
|
ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS |
|
Income Before Income Taxes |
|
Income Tax Expense |
|
Net Income |
|
Earnings Per Diluted Share* |
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, 2019 as reported |
|
$ |
50.5 |
|
|
$ |
(11.7 |
) |
|
$ |
38.8 |
|
|
$ |
0.79 |
|
| |
|
|
|
|
|
|
|
|
| Special item: |
|
|
|
|
|
|
|
|
|
Restructuring charges |
|
2.3 |
|
|
(0.5 |
) |
|
1.8 |
|
|
0.04 |
|
| |
|
|
|
|
|
|
|
|
| Three months ended December
31, 2019 as adjusted |
|
$ |
52.8 |
|
|
$ |
(12.2 |
) |
|
$ |
40.6 |
|
|
$ |
0.83 |
|
| |
|
|
|
|
|
|
|
|
| * Impact per
diluted share calculated using weighted average common shares
outstanding of 48.5 million for the three months ended December 31,
2019. |
|
ADJUSTED LOSS PER SHARE EXCLUDING SPECIAL ITEMS |
|
Loss Before Income Taxes |
|
Income Tax Benefit |
|
Net Loss |
|
Loss Per Diluted Share* |
|
|
|
|
|
|
|
|
|
|
|
Six months ended December 31, 2020 as reported |
|
$ |
(161.7 |
) |
|
$ |
29.7 |
|
|
$ |
(132.0 |
) |
|
$ |
(2.74 |
) |
| |
|
|
|
|
|
|
|
|
| Special items: |
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment, net |
|
8.2 |
|
|
(2.0 |
) |
|
6.2 |
|
|
0.13 |
|
|
Goodwill impairment |
|
52.8 |
|
|
(0.1 |
) |
|
52.7 |
|
|
1.09 |
|
|
Restructuring and asset impairment charges |
|
10.0 |
|
|
(2.4 |
) |
|
7.6 |
|
|
0.16 |
|
|
COVID-19 costs |
|
11.8 |
|
|
(3.5 |
) |
|
8.3 |
|
|
0.17 |
|
| |
|
|
|
|
|
|
|
|
| Six months ended December 31,
2020 as adjusted |
|
$ |
(78.9 |
) |
|
$ |
21.7 |
|
|
$ |
(57.2 |
) |
|
$ |
(1.19 |
) |
| |
|
|
|
|
|
|
|
|
| * Impact per
diluted share calculated using weighted average common shares
outstanding of 48.3 million for the six months ended December 31,
2020. |
|
ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS |
|
Income Before Income Taxes |
|
Income Tax Expense |
|
Net Income |
|
Earnings Per Diluted Share* |
|
|
|
|
|
|
|
|
|
|
|
Six months ended December 31, 2019 as reported |
|
$ |
104.6 |
|
|
$ |
(24.6 |
) |
|
$ |
80.0 |
|
|
$ |
1.64 |
|
| |
|
|
|
|
|
|
|
|
| Special item: |
|
|
|
|
|
|
|
|
|
Restructuring charges |
|
2.3 |
|
|
(0.5 |
) |
|
1.8 |
|
|
0.03 |
|
| |
|
|
|
|
|
|
|
|
| Six months ended December 31,
2019 as adjusted |
|
$ |
106.9 |
|
|
$ |
(25.1 |
) |
|
$ |
81.8 |
|
|
$ |
1.67 |
|
| |
|
|
|
|
|
|
|
|
| * Impact per
diluted share calculated using weighted average common shares
outstanding of 48.4 million for the six months ended December 31,
2019. |
Management believes that (loss) earnings per share adjusted to
exclude the impact of the 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 |
|
Six Months Ended |
| |
|
December 31, |
|
December 31, |
| FREE CASH FLOW |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| |
|
|
|
|
|
|
|
|
|
Net cash provided from operating activities |
|
$ |
83.6 |
|
|
$ |
21.8 |
|
|
$ |
171.6 |
|
|
$ |
22.6 |
|
| Purchases of property, plant,
equipment and software |
|
(26.6 |
) |
|
(46.7 |
) |
|
(59.9 |
) |
|
(94.3 |
) |
| Proceeds from disposals of
property, plant and equipment and assets held for sale |
|
1.5 |
|
|
0.1 |
|
|
1.5 |
|
|
0.1 |
|
| Proceeds from divestiture of
business |
|
2.4 |
|
|
— |
|
|
20.0 |
|
|
— |
|
| Dividends paid |
|
(9.9 |
) |
|
(9.7 |
) |
|
(19.5 |
) |
|
(19.4 |
) |
| |
|
|
|
|
|
|
|
|
| Free cash flow |
|
$ |
51.0 |
|
|
$ |
(34.5 |
) |
|
$ |
113.7 |
|
|
$ |
(91.0 |
) |
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 |
|
Six Months Ended |
| |
|
December 31, |
|
December 31, |
| NET SALES BY END-USE
MARKET |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| End-Use Market Excluding
Surcharge Revenue: |
|
|
|
|
|
|
|
|
|
Aerospace and Defense |
|
$ |
148.5 |
|
|
$ |
278.8 |
|
|
$ |
296.0 |
|
|
$ |
564.9 |
|
|
Medical |
|
29.0 |
|
|
43.5 |
|
|
59.0 |
|
|
87.5 |
|
|
Transportation |
|
25.8 |
|
|
30.6 |
|
|
50.2 |
|
|
63.6 |
|
|
Energy |
|
17.7 |
|
|
26.9 |
|
|
39.0 |
|
|
59.9 |
|
|
Industrial and Consumer |
|
56.3 |
|
|
63.9 |
|
|
119.4 |
|
|
124.1 |
|
|
Distribution |
|
22.1 |
|
|
27.5 |
|
|
42.9 |
|
|
57.8 |
|
| |
|
|
|
|
|
|
|
|
| Total net sales excluding
surcharge revenue |
|
299.4 |
|
|
471.2 |
|
|
606.5 |
|
|
957.8 |
|
| |
|
|
|
|
|
|
|
|
| Surcharge revenue |
|
49.4 |
|
|
101.8 |
|
|
95.6 |
|
|
200.6 |
|
| |
|
|
|
|
|
|
|
|
| Total net sales |
|
$ |
348.8 |
|
|
$ |
573.0 |
|
|
$ |
702.1 |
|
|
$ |
1,158.4 |
|
| Media Inquiries: |
Investor Inquiries: |
| Heather Beardsley |
The Plunkett Group |
| +1 610-208-2278 |
Brad Edwards |
| hbeardsley@cartech.com |
+1 914-582-4187 |
| |
brad@theplunkettgroup.com |
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