Carpenter Technology Corporation (NYSE: CRS) (the “Company”) today
announced financial results for the fiscal third quarter ended
March 31, 2021. For the quarter, the Company reported a net loss of
$40.5 million, or $0.84 loss per diluted share. Excluding special
items, adjusted loss per diluted share was $0.54 for the quarter.
“Our third quarter results were in-line with our expectations as
we continue to weather near-term volume headwinds, as we had
anticipated,” said Tony R. Thene, President and CEO of Carpenter
Technology. “While current conditions remain challenging, we have
recently completed multiple contract extensions in the Medical,
Transportation and Aerospace and Defense end-use markets. We remain
in close engagement with our customers and during the quarter began
to see initial signs of recovery in some areas of our Aerospace and
Defense end-use market. In addition, we continued to capitalize on
solid demand in the Transportation end-use market and we benefited
from signs of improving demand conditions in our Medical end-use
market. We finished the quarter in a strong financial position with
total liquidity of $538.8 million, including $244.2 million of cash
on hand.”
“Looking ahead, we believe end-use market conditions will
continue to improve as we move through calendar year 2021. The
long-term outlook across our end-use markets remains strong and we
are well positioned in each with critical material solutions to
address our customers' complex needs. We have deepened our customer
relationships and continue to believe we will emerge from the
pandemic a stronger company. Our core business is centered on
delivering mission-critical material solutions and has been for
over 130 years. Our investments in additive manufacturing and
electrification capabilities further strengthen our sustainable
long-term growth profile.”
Financial Highlights
($ in millions) |
Q3 |
|
Q3 |
|
Q2 |
|
|
FY2021 |
|
FY2020 |
|
FY2021 |
|
Net Sales |
$ |
351.9 |
|
|
$ |
585.4 |
|
|
$ |
348.8 |
|
|
|
Net Sales Excluding Surcharge
Revenue (a) |
$ |
298.1 |
|
|
$ |
495.0 |
|
|
$ |
299.4 |
|
|
|
Operating (Loss) Income |
$ |
(40.0 |
) |
|
$ |
58.7 |
|
|
$ |
(89.0 |
) |
|
|
Adjusted Operating (Loss)
Income Excluding Special Items (a) |
$ |
(29.7 |
) |
|
$ |
58.7 |
|
|
$ |
(32.3 |
) |
|
|
Net (Loss) Income |
$ |
(40.5 |
) |
|
$ |
39.9 |
|
|
$ |
(84.9 |
) |
|
|
Cash Provided from Operating
Activities |
$ |
3.8 |
|
|
$ |
72.3 |
|
|
$ |
83.6 |
|
|
|
Free Cash Flow (a) |
$ |
(24.5 |
) |
|
$ |
13.0 |
|
|
$ |
51.0 |
|
|
|
|
|
|
|
|
|
|
|
(a) Non-GAAP
financial measures explained in the attached tables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales for the third quarter of fiscal year 2021 were $351.9
million compared with $585.4 million in the third quarter of fiscal
year 2020, a decrease of $233.5 million (negative 40 percent), on
39 percent lower volume. Net sales excluding surcharge were $298.1
million, a decrease of $196.9 million (negative 40 percent) from
the same period a year ago.
Operating loss was $40.0 million compared to operating income of
$58.7 million in the prior year period. Adjusted operating loss
excluding special items was $29.7 million in the recent third
quarter. Special items excluded from adjusted operating loss in the
current quarter include restructuring and asset impairment charges,
including inventory write-downs, of $7.6 million related to ongoing
actions to reduce cost and narrow focus for the Additive business
and $2.7 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.
Other expense, net was $8.3 million in the third quarter of
fiscal year 2021, compared to $3.9 million in the third quarter of
fiscal year 2020. The current quarter’s results include an $8.9
million non-cash settlement accounting charge associated with the
Company’s largest qualified pension plan.
Cash provided from operating activities in the third quarter of
fiscal year 2021 was $3.8 million, compared to $72.3 million in the
same quarter last year. Free cash flow in the third quarter of
fiscal year 2021 was negative $24.5 million, compared to positive
$13.0 million in the same quarter last year. The decrease in
operating cash flow primarily reflects the impact of lower earnings
relative to the same quarter a year ago. This was partially offset
by lower capital expenditures of $18.6 million in the third quarter
of fiscal year 2021 compared to $49.7 million in the same quarter
last year.
Total liquidity, including cash and available credit facility
borrowings, was $538.8 million at the end of the third quarter of
fiscal year 2021. This consisted of $244.2 million of cash and
$294.6 million of available borrowings under the Company’s recently
amended and extended secured credit facility.
Conference Call and Webcast Presentation
Carpenter Technology will host a conference call and webcast
presentation today, April 29th at 10:00 a.m. ET, to discuss the
financial results of operations for the third 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,
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, 2020, Form 10-Q for the quarters ended
September 30, 2020 and December 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 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 |
|
Nine Months Ended |
|
|
March 31, |
|
March 31, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
NET SALES |
|
$ |
351.9 |
|
|
|
$ |
585.4 |
|
|
|
$ |
1,054.0 |
|
|
|
$ |
1,743.8 |
|
|
Cost of sales |
|
336.5 |
|
|
|
475.9 |
|
|
|
1,029.1 |
|
|
|
1,409.0 |
|
|
Cost of sales - inventory
write-downs from restructuring |
|
2.6 |
|
|
|
— |
|
|
|
2.6 |
|
|
|
— |
|
|
Gross profit |
|
12.8 |
|
|
|
109.5 |
|
|
|
22.3 |
|
|
|
334.8 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
47.8 |
|
|
|
50.8 |
|
|
|
132.3 |
|
|
|
159.0 |
|
|
Restructuring and asset
impairment charges |
|
5.0 |
|
|
|
— |
|
|
|
15.0 |
|
|
|
2.3 |
|
|
Goodwill impairment |
|
— |
|
|
|
— |
|
|
|
52.8 |
|
|
|
— |
|
|
Operating (loss) income |
|
(40.0 |
) |
|
|
58.7 |
|
|
|
(177.8 |
) |
|
|
173.5 |
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
(8.9 |
) |
|
|
(4.9 |
) |
|
|
(23.5 |
) |
|
|
(15.6 |
) |
|
Debt extinguishment losses,
net |
|
— |
|
|
|
— |
|
|
|
(8.2 |
) |
|
|
— |
|
|
Other expense, net |
|
(8.3 |
) |
|
|
(3.9 |
) |
|
|
(9.4 |
) |
|
|
(3.4 |
) |
|
|
|
|
|
|
|
|
|
|
(Loss) income before income
taxes |
|
(57.2 |
) |
|
|
49.9 |
|
|
|
(218.9 |
) |
|
|
154.5 |
|
|
Income tax (benefit)
expense |
|
(16.7 |
) |
|
|
10.0 |
|
|
|
(46.4 |
) |
|
|
34.6 |
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS) INCOME |
|
$ |
(40.5 |
) |
|
|
$ |
39.9 |
|
|
|
$ |
(172.5 |
) |
|
|
$ |
119.9 |
|
|
|
|
|
|
|
|
|
|
|
(LOSS) EARNINGS PER COMMON
SHARE: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.84 |
) |
|
|
$ |
0.82 |
|
|
|
$ |
(3.58 |
) |
|
|
$ |
2.47 |
|
|
Diluted |
|
$ |
(0.84 |
) |
|
|
$ |
0.82 |
|
|
|
$ |
(3.58 |
) |
|
|
$ |
2.46 |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING: |
|
|
|
|
|
|
|
|
Basic |
|
48.3 |
|
|
|
48.1 |
|
|
|
48.3 |
|
|
|
48.0 |
|
|
Diluted |
|
48.3 |
|
|
|
48.3 |
|
|
|
48.3 |
|
|
|
48.4 |
|
|
|
|
|
|
|
|
|
|
|
PRELIMINARYCONSOLIDATED
STATEMENTS OF CASH FLOWS(in millions)(Unaudited)
|
|
Nine Months Ended |
|
|
March 31, |
|
|
2021 |
|
2020 |
OPERATING ACTIVITIES |
|
|
|
|
Net (loss) income |
|
$ |
(172.5 |
) |
|
|
$ |
119.9 |
|
Adjustments to reconcile net
(loss) income to net cash provided from operating activities: |
|
|
|
|
Debt extinguishment losses, net |
|
8.2 |
|
|
|
— |
|
Depreciation and amortization |
|
91.6 |
|
|
|
92.2 |
|
Goodwill impairment charge |
|
52.8 |
|
|
|
— |
|
Non-cash excess inventory write-down |
|
2.6 |
|
|
|
— |
|
Non-cash restructuring and asset impairment charges |
|
13.6 |
|
|
|
1.5 |
|
Deferred income taxes |
|
(19.3 |
) |
|
|
7.0 |
|
Net pension expense |
|
20.3 |
|
|
|
11.5 |
|
Share-based compensation expense |
|
7.8 |
|
|
|
12.4 |
|
Net loss on disposals of property, plant and equipment and assets
held for sale |
|
0.1 |
|
|
|
— |
|
Changes in working capital and
other: |
|
|
|
|
Accounts receivable |
|
13.8 |
|
|
|
7.6 |
|
Inventories |
|
181.9 |
|
|
|
(85.2 |
) |
Other current assets |
|
(33.4 |
) |
|
|
(5.2 |
) |
Accounts payable |
|
18.2 |
|
|
|
(26.9 |
) |
Accrued liabilities |
|
3.8 |
|
|
|
(33.4 |
) |
Pension plan contributions |
|
(10.9 |
) |
|
|
(4.9 |
) |
Other postretirement plan contributions |
|
(1.6 |
) |
|
|
(2.7 |
) |
Other, net |
|
(1.6 |
) |
|
|
1.1 |
|
Net cash provided from operating activities |
|
175.4 |
|
|
|
94.9 |
|
INVESTING ACTIVITIES |
|
|
|
|
Purchases of property, plant,
equipment and software |
|
(78.5 |
) |
|
|
(144.0 |
) |
Proceeds from disposals of
property, plant and equipment and assets held for sale |
|
1.6 |
|
|
|
0.3 |
|
Proceeds from divestiture of
business |
|
20.0 |
|
|
|
— |
|
Net cash used for investing activities |
|
(56.9 |
) |
|
|
(143.7 |
) |
FINANCING ACTIVITIES |
|
|
|
|
Credit agreement
borrowings |
|
— |
|
|
|
331.1 |
|
Credit agreement
repayments |
|
— |
|
|
|
(181.1 |
) |
Net change in short-term
credit agreement borrowings |
|
(170.0 |
) |
|
|
0.3 |
|
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 |
|
(2.5 |
) |
|
|
— |
|
Dividends paid |
|
(29.3 |
) |
|
|
(29.1 |
) |
Proceeds from stock options
exercised |
|
0.2 |
|
|
|
4.3 |
|
Withholding tax payments on
share-based compensation awards |
|
(2.3 |
) |
|
|
(7.8 |
) |
Net cash (used for) provided from financing activities |
|
(66.6 |
) |
|
|
117.7 |
|
Effect of exchange rate
changes on cash and cash equivalents |
|
(0.8 |
) |
|
|
(2.9 |
) |
INCREASE IN CASH AND CASH
EQUIVALENTS |
|
51.1 |
|
|
|
66.0 |
|
Cash and cash equivalents at
beginning of period |
|
193.1 |
|
|
|
27.0 |
|
Cash and cash equivalents at
end of period |
|
$ |
244.2 |
|
|
|
$ |
93.0 |
|
PRELIMINARYCONSOLIDATED
BALANCE SHEETS(in millions)(Unaudited)
|
|
March 31, |
|
June 30, |
|
|
2021 |
|
2020 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
244.2 |
|
|
$ |
193.1 |
|
Accounts receivable, net |
|
279.2 |
|
|
292.3 |
|
Inventories |
|
535.5 |
|
|
724.3 |
|
Other current assets |
|
91.5 |
|
|
56.6 |
|
Total current assets |
|
1,150.4 |
|
|
1,266.3 |
|
Property, plant and equipment,
net |
|
1,306.7 |
|
|
1,351.1 |
|
Goodwill |
|
241.4 |
|
|
290.4 |
|
Other intangibles, net |
|
44.9 |
|
|
52.1 |
|
Deferred income taxes |
|
5.0 |
|
|
4.9 |
|
Other assets |
|
262.6 |
|
|
262.4 |
|
Total assets |
|
$ |
3,011.0 |
|
|
$ |
3,227.2 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Current liabilities: |
|
|
|
|
Short-term credit agreement borrowings |
|
$ |
— |
|
|
$ |
170.0 |
|
Accounts payable |
|
135.1 |
|
|
124.2 |
|
Accrued liabilities |
|
134.2 |
|
|
157.9 |
|
Total current liabilities |
|
269.3 |
|
|
452.1 |
|
Long-term debt |
|
694.3 |
|
|
551.8 |
|
Accrued pension
liabilities |
|
281.2 |
|
|
399.5 |
|
Accrued postretirement
benefits |
|
138.5 |
|
|
137.4 |
|
Deferred income taxes |
|
150.2 |
|
|
130.2 |
|
Other liabilities |
|
96.3 |
|
|
110.5 |
|
Total liabilities |
|
1,629.8 |
|
|
1,781.5 |
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
Common stock |
|
280.1 |
|
|
280.1 |
|
Capital in excess of par
value |
|
319.4 |
|
|
321.4 |
|
Reinvested earnings |
|
1,366.2 |
|
|
1,568.0 |
|
Common stock in treasury, at
cost |
|
(317.5 |
) |
|
(325.8 |
) |
Accumulated other
comprehensive loss |
|
(267.0 |
) |
|
(398.0 |
) |
Total stockholders' equity |
|
1,381.2 |
|
|
1,445.7 |
|
Total liabilities and stockholders' equity |
|
$ |
3,011.0 |
|
|
$ |
3,227.2 |
|
PRELIMINARYSEGMENT
FINANCIAL DATA(in millions, except pounds
sold)(Unaudited)
|
Three Months Ended |
|
Nine Months Ended |
|
March 31, |
|
March 31, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Pounds sold (000): |
|
|
|
|
|
|
|
Specialty Alloys Operations |
37,260 |
|
|
59,052 |
|
|
119,230 |
|
|
175,660 |
|
Performance Engineered Products |
2,026 |
|
|
3,202 |
|
|
5,024 |
|
|
9,874 |
|
Intersegment |
(1,516 |
) |
|
(116 |
) |
|
(2,516 |
) |
|
(1,800 |
) |
Consolidated pounds sold |
37,770 |
|
|
62,138 |
|
|
121,738 |
|
|
183,734 |
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
Specialty Alloys Operations |
|
|
|
|
|
|
|
Net sales excluding surcharge |
$ |
246.5 |
|
|
$ |
398.8 |
|
|
$ |
753.0 |
|
|
$ |
1,174.5 |
|
Surcharge |
53.1 |
|
|
89.3 |
|
|
147.8 |
|
|
287.7 |
|
Specialty Alloys Operations net sales |
299.6 |
|
|
488.1 |
|
|
900.8 |
|
|
1,462.2 |
|
|
|
|
|
|
|
|
|
Performance Engineered Products |
|
|
|
|
|
|
|
Net sales excluding surcharge |
64.9 |
|
|
107.1 |
|
|
180.3 |
|
|
319.1 |
|
Surcharge |
0.8 |
|
|
1.5 |
|
|
2.0 |
|
|
4.9 |
|
Performance Engineered Products net sales |
65.7 |
|
|
108.6 |
|
|
182.3 |
|
|
324.0 |
|
|
|
|
|
|
|
|
|
Intersegment |
|
|
|
|
|
|
|
Net sales excluding surcharge |
(13.3 |
) |
|
(10.9 |
) |
|
(28.6 |
) |
|
(40.8 |
) |
Surcharge |
(0.1 |
) |
|
(0.4 |
) |
|
(0.5 |
) |
|
(1.6 |
) |
Intersegment net sales |
(13.4 |
) |
|
(11.3 |
) |
|
(29.1 |
) |
|
(42.4 |
) |
|
|
|
|
|
|
|
|
Consolidated net sales |
$ |
351.9 |
|
|
$ |
585.4 |
|
|
$ |
1,054.0 |
|
|
$ |
1,743.8 |
|
|
|
|
|
|
|
|
|
Operating (Loss) Income: |
|
|
|
|
|
|
|
Specialty Alloys Operations |
$ |
(9.9 |
) |
|
$ |
76.4 |
|
|
$ |
(40.1 |
) |
|
$ |
233.7 |
|
Performance Engineered Products |
(3.3 |
) |
|
(0.3 |
) |
|
(14.2 |
) |
|
(2.0 |
) |
Corporate (including restructuring and asset impairment
charges) |
(26.3 |
) |
|
(17.8 |
) |
|
(123.4 |
) |
|
(58.8 |
) |
Intersegment |
(0.5 |
) |
|
0.4 |
|
|
(0.1 |
) |
|
0.6 |
|
Consolidated operating (loss) income |
$ |
(40.0 |
) |
|
$ |
58.7 |
|
|
$ |
(177.8 |
) |
|
$ |
173.5 |
|
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 |
|
|
Nine Months Ended |
|
|
March 31, |
|
|
March 31, |
ADJUSTED OPERATING MARGIN
EXCLUDING SURCHARGE REVENUE AND SPECIAL ITEMS |
|
2021 |
|
2020 |
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
351.9 |
|
|
$ |
585.4 |
|
|
$ |
1,054.0 |
|
|
$ |
1,743.8 |
|
Less: surcharge revenue |
|
53.8 |
|
|
90.4 |
|
|
149.3 |
|
|
|
291.0 |
|
Net sales excluding surcharge
revenue |
|
$ |
298.1 |
|
|
$ |
495.0 |
|
|
$ |
904.7 |
|
|
$ |
1,452.8 |
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
$ |
(40.0 |
) |
|
$ |
58.7 |
|
|
$ |
(177.8 |
) |
|
$ |
173.5 |
|
Special items: |
|
|
|
|
|
|
|
|
|
COVID-19 costs |
|
2.7 |
|
|
— |
|
|
14.5 |
|
|
|
— |
|
Inventory write-downs from restructuring |
|
2.6 |
|
|
— |
|
|
2.6 |
|
|
|
— |
|
Restructuring and asset impairment charges |
|
5.0 |
|
|
— |
|
|
15.0 |
|
|
|
2.3 |
|
Goodwill impairment |
|
— |
|
|
— |
|
|
52.8 |
|
|
|
— |
|
Operating (loss) income |
|
$ |
(29.7 |
) |
|
$ |
58.7 |
|
|
$ |
(92.9 |
) |
|
$ |
175.8 |
|
|
|
|
|
|
|
|
|
|
|
Operating margin |
|
|
(11.4 |
)% |
|
|
10.0 |
% |
|
|
(16.9 |
)% |
|
9.9 |
% |
|
|
|
|
|
|
|
|
|
|
Adjusted operating margin
excluding surcharge revenue and special items |
|
|
(10.0 |
)% |
|
|
11.9 |
% |
|
|
(10.3 |
)% |
|
12.1 |
% |
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 LOSS PER SHARE EXCLUDING SPECIAL ITEMS |
|
LossBeforeIncomeTaxes |
|
IncomeTaxBenefit |
|
Net Loss |
|
Loss PerDilutedShare* |
|
|
|
|
|
|
|
|
|
Three months ended March 31,
2021, as reported |
|
$ |
(57.2 |
) |
|
$ |
16.7 |
|
|
$ |
(40.5 |
) |
|
$ |
(0.84 |
) |
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
COVID-19 costs |
|
2.7 |
|
|
(0.8 |
) |
|
1.9 |
|
|
0.04 |
|
Restructuring and asset impairment charges |
|
7.6 |
|
|
(1.8 |
) |
|
5.8 |
|
|
0.12 |
|
Pension settlement charges |
|
8.9 |
|
|
(2.2 |
) |
|
6.7 |
|
|
0.14 |
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
2021, as adjusted |
|
$ |
(38.0 |
) |
|
$ |
11.9 |
|
|
$ |
(26.1 |
) |
|
$ |
(0.54 |
) |
|
|
|
|
|
|
|
|
|
* Impact per
diluted share calculated using weighted average common shares
outstanding of 48.3 million for the three months ended March 31,
2021. |
ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS |
|
IncomeBeforeIncomeTaxes |
|
IncomeTaxExpense |
|
NetIncome |
|
EarningsPerDilutedShare* |
|
|
|
|
|
|
|
|
|
Three months ended March 31,
2020, as reported |
|
$ |
49.9 |
|
|
$ |
(10.0 |
) |
|
|
$ |
39.9 |
|
|
$ |
0.82 |
|
|
|
|
|
|
|
|
|
|
Special item: |
|
|
|
|
|
|
|
|
None reported |
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
2020, as adjusted |
|
$ |
49.9 |
|
|
$ |
(10.0 |
) |
|
|
$ |
39.9 |
|
|
$ |
0.82 |
|
|
|
|
|
|
|
|
|
|
* Impact per
diluted share calculated using weighted average common shares
outstanding of 48.3 million for the three months ended March 31,
2020. |
ADJUSTED LOSS PER SHARE EXCLUDING SPECIAL ITEMS |
|
LossBeforeIncomeTaxes |
|
IncomeTaxBenefit |
|
Net Loss |
|
Loss PerDilutedShare* |
|
|
|
|
|
|
|
|
|
Nine months ended March 31,
2021, as reported |
|
$ |
(218.9 |
) |
|
$ |
46.4 |
|
|
$ |
(172.5 |
) |
|
$ |
(3.58 |
) |
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
COVID-19 costs |
|
14.5 |
|
|
(4.2 |
) |
|
10.3 |
|
|
0.21 |
|
Restructuring and asset impairment charges |
|
17.6 |
|
|
(4.2 |
) |
|
13.4 |
|
|
0.28 |
|
Goodwill impairment |
|
52.8 |
|
|
(0.1 |
) |
|
52.7 |
|
|
1.09 |
|
Debt extinguishment losses, net |
|
8.2 |
|
|
(2.0 |
) |
|
6.2 |
|
|
0.13 |
|
Pension settlement charges |
|
8.9 |
|
|
(2.2 |
) |
|
6.7 |
|
|
0.14 |
|
|
|
|
|
|
|
|
|
|
Nine months ended March 31,
2021 as adjusted |
|
$ |
(116.9 |
) |
|
$ |
33.7 |
|
|
$ |
(83.2 |
) |
|
$ |
(1.73 |
) |
|
|
|
|
|
|
|
|
|
* Impact per
diluted share calculated using weighted average common shares
outstanding of 48.3 million for the nine months ended March 31,
2021. |
ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS |
|
IncomeBeforeIncomeTaxes |
|
IncomeTaxExpense |
|
NetIncome |
|
EarningsPerDilutedShare* |
|
|
|
|
|
|
|
|
|
Nine months ended March 31,
2020, as reported |
|
$ |
154.5 |
|
|
$ |
(34.6 |
) |
|
|
$ |
119.9 |
|
|
$ |
2.46 |
|
|
|
|
|
|
|
|
|
|
Special item: |
|
|
|
|
|
|
|
|
Restructuring charges |
|
2.3 |
|
|
(0.5 |
) |
|
|
1.8 |
|
|
0.04 |
|
|
|
|
|
|
|
|
|
|
Nine months ended March 31,
2020, as adjusted |
|
$ |
156.8 |
|
|
$ |
(35.1 |
) |
|
|
$ |
121.7 |
|
|
$ |
2.50 |
|
|
|
|
|
|
|
|
|
|
* Impact per
diluted share calculated using weighted average common shares
outstanding of 48.4 million for the nine months ended March 31,
2020. |
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 |
|
Nine Months Ended |
|
|
March 31, |
|
March 31, |
FREE CASH FLOW |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
Net cash provided from
operating activities |
|
$ |
3.8 |
|
|
$ |
72.3 |
|
|
$ |
175.4 |
|
|
$ |
94.9 |
|
Purchases of property, plant,
equipment and software |
|
(18.6 |
) |
|
(49.7 |
) |
|
(78.5 |
) |
|
(144.0 |
) |
Proceeds from disposals of
property, plant and equipment and assets held for sale |
|
0.1 |
|
|
0.1 |
|
|
1.6 |
|
|
0.3 |
|
Proceeds from divestiture of
business |
|
— |
|
|
— |
|
|
20.0 |
|
|
— |
|
Dividends paid |
|
(9.8 |
) |
|
(9.7 |
) |
|
(29.3 |
) |
|
(29.1 |
) |
|
|
|
|
|
|
|
|
|
Free cash flow |
|
$ |
(24.5 |
) |
|
$ |
13.0 |
|
|
$ |
89.2 |
|
|
$ |
(77.9 |
) |
Management believes that the free cash flow measure provides
useful information to investors regarding the Company's financial
condition because it is a measure of cash generated which
management evaluates for alternative uses.
PRELIMINARYSUPPLEMENTAL
SCHEDULE(in millions)(Unaudited)
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
March 31, |
|
March 31, |
NET SALES BY END-USE
MARKET |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
End-Use Market Excluding
Surcharge Revenue: |
|
|
|
|
|
|
|
|
Aerospace and Defense |
|
$ |
137.3 |
|
|
$ |
293.4 |
|
|
$ |
433.4 |
|
|
$ |
858.3 |
|
Medical |
|
31.1 |
|
|
47.7 |
|
|
90.1 |
|
|
135.2 |
|
Transportation |
|
29.1 |
|
|
27.8 |
|
|
79.3 |
|
|
91.4 |
|
Energy |
|
18.1 |
|
|
28.8 |
|
|
57.1 |
|
|
88.7 |
|
Industrial and Consumer |
|
55.9 |
|
|
67.8 |
|
|
175.3 |
|
|
191.9 |
|
Distribution |
|
26.6 |
|
|
29.5 |
|
|
69.5 |
|
|
87.3 |
|
|
|
|
|
|
|
|
|
|
Total net sales excluding
surcharge revenue |
|
298.1 |
|
|
495.0 |
|
|
904.7 |
|
|
1,452.8 |
|
|
|
|
|
|
|
|
|
|
Surcharge revenue |
|
53.8 |
|
|
90.4 |
|
|
149.3 |
|
|
291.0 |
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
351.9 |
|
|
$ |
585.4 |
|
|
$ |
1,054.0 |
|
|
$ |
1,743.8 |
|
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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