Second Quarter Highlights
Reported earnings per share of
Net sales up 46% year-over-year; Net sales excluding surcharge up 34% year-over-year
Backlog up 9% sequentially and 107% year-over-year
“The second quarter of fiscal year 2023 was a meaningful step on our path back to pre-pandemic levels and further long-term growth,” said
“The Specialty Alloys Operations (‘SAO’) segment demonstrated continued improvement with operating income of
“Looking ahead, we remain confident in our growth trajectory. We continue to see strong demand across each of our end-use markets and are focused on driving operational improvements. As a result, we expect to realize accelerating sales momentum and improved margins.”
Financial Highlights
Q2 | Q2 | Q1 | ||||||||||
($ in millions except per share amounts) | FY2023 | FY2022 | FY2023 | |||||||||
Net sales | $ | 579.1 | $ | 396.0 | $ | 522.9 | ||||||
Net sales excluding surcharge (a) | $ | 420.8 | $ | 314.9 | $ | 375.7 | ||||||
Operating income (loss) | $ | 22.6 | $ | (31.5 | ) | $ | 8.3 | |||||
Adjusted operating income (loss) excluding special item (a) | $ | 22.6 | $ | (29.8 | ) | $ | 8.3 | |||||
Net income (loss) | $ | 6.2 | $ | (29.4 | ) | $ | (6.9 | ) | ||||
Earnings (loss) per share | $ | 0.13 | $ | (0.61 | ) | $ | (0.14 | ) | ||||
Adjusted earnings (loss) per share (a) | $ | 0.13 | $ | (0.58 | ) | $ | (0.14 | ) | ||||
Net cash used for operating activities | $ | (86.4 | ) | $ | (89.2 | ) | $ | (78.0 | ) | |||
Free cash flow (a) | $ | (113.7 | ) | $ | (116.3 | ) | $ | (101.3 | ) | |||
(a) Non-GAAP financial measures explained in the attached tables | ||||||||||||
Net sales for the second quarter of fiscal year 2023 were
Operating income was
Cash used for operating activities in the second quarter of fiscal year 2023 was
Total liquidity, including cash and available revolver balance, was
Conference Call and Webcast Presentation
Non-GAAP Financial Measures
This press release includes discussions of financial measures that have not been determined in accordance with
About
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
PRELIMINARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(Unaudited)
Three Months Ended | Six Months Ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
$ | 579.1 | $ | 396.0 | $ | 1,102.0 | $ | 783.6 | ||||||||
Cost of sales | 509.1 | 382.9 | 977.2 | 745.3 | |||||||||||
Gross profit | 70.0 | 13.1 | 124.8 | 38.3 | |||||||||||
Selling, general and administrative expenses | 47.4 | 44.6 | 93.9 | 88.9 | |||||||||||
Operating income (loss) | 22.6 | (31.5 | ) | 30.9 | (50.6 | ) | |||||||||
Interest expense, net | 13.0 | 10.1 | 25.6 | 20.3 | |||||||||||
Other expense (income), net | 1.9 | (6.6 | ) | 5.4 | (10.7 | ) | |||||||||
Income (loss) before income taxes | 7.7 | (35.0 | ) | (0.1 | ) | (60.2 | ) | ||||||||
Income tax expense (benefit) | 1.5 | (5.6 | ) | 0.5 | (16.1 | ) | |||||||||
NET INCOME (LOSS) | $ | 6.2 | $ | (29.4 | ) | $ | (0.6 | ) | $ | (44.1 | ) | ||||
EARNINGS (LOSS) PER COMMON SHARE: | |||||||||||||||
Basic | $ | 0.13 | $ | (0.61 | ) | $ | (0.02 | ) | $ | (0.91 | ) | ||||
Diluted | $ | 0.13 | $ | (0.61 | ) | $ | (0.02 | ) | $ | (0.91 | ) | ||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||||||||||
Basic | 48.8 | 48.6 | 48.7 | 48.5 | |||||||||||
Diluted | 49.0 | 48.6 | 48.7 | 48.5 |
PRELIMINARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Six Months Ended | ||||||||
2022 | 2021 | |||||||
OPERATING ACTIVITIES | ||||||||
Net loss | $ | (0.6 | ) | $ | (44.1 | ) | ||
Adjustments to reconcile net loss to net cash used for operating activities: | ||||||||
Depreciation and amortization | 64.8 | 65.3 | ||||||
Deferred income taxes | (0.9 | ) | (17.6 | ) | ||||
Net pension expense (income) | 9.9 | (3.6 | ) | |||||
Share-based compensation expense | 7.1 | 5.6 | ||||||
Net loss on disposals of property, plant and equipment | 0.6 | 0.2 | ||||||
Changes in working capital and other: | ||||||||
Accounts receivable | (58.5 | ) | — | |||||
Inventories | (226.7 | ) | (109.8 | ) | ||||
Other current assets | (4.1 | ) | (7.4 | ) | ||||
Accounts payable | 62.1 | 26.9 | ||||||
Accrued liabilities | (12.1 | ) | (42.9 | ) | ||||
Pension plan contributions | — | (0.2 | ) | |||||
Other postretirement plan contributions | (1.5 | ) | (1.9 | ) | ||||
Other, net | (4.6 | ) | (6.8 | ) | ||||
Net cash used for operating activities | (164.5 | ) | (136.3 | ) | ||||
INVESTING ACTIVITIES | ||||||||
Purchases of property, plant, equipment and software | (31.0 | ) | (33.4 | ) | ||||
Proceeds from disposals of property, plant and equipment and assets held for sale | — | 1.8 | ||||||
Net cash used for investing activities | (31.0 | ) | (31.6 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Short-term credit agreement borrowings, net change | 41.2 | — | ||||||
Credit agreement borrowings | 60.1 | — | ||||||
Credit agreement repayments | (20.1 | ) | — | |||||
Dividends paid | (19.7 | ) | (19.7 | ) | ||||
Withholding tax payments on share-based compensation awards | (3.4 | ) | (3.1 | ) | ||||
Net cash provided from (used for) financing activities | 58.1 | (22.8 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 3.2 | 0.2 | ||||||
DECREASE IN CASH AND CASH EQUIVALENTS | (134.2 | ) | (190.5 | ) | ||||
Cash and cash equivalents at beginning of year | 154.2 | 287.4 | ||||||
Cash and cash equivalents at end of period | $ | 20.0 | $ | 96.9 |
PRELIMINARY
CONSOLIDATED BALANCE SHEETS
(in millions)
(Unaudited)
2022 | 2022 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 20.0 | $ | 154.2 | ||||
Accounts receivable, net | 441.6 | 382.3 | ||||||
Inventories | 722.7 | 496.1 | ||||||
Other current assets | 99.1 | 86.8 | ||||||
Total current assets | 1,283.4 | 1,119.4 | ||||||
Property, plant and equipment, net | 1,390.5 | 1,420.8 | ||||||
241.4 | 241.4 | |||||||
Other intangibles, net | 31.7 | 35.2 | ||||||
Deferred income taxes | 5.2 | 5.7 | ||||||
Other assets | 104.3 | 109.8 | ||||||
Total assets | $ | 3,056.5 | $ | 2,932.3 | ||||
LIABILITIES | ||||||||
Current liabilities: | ||||||||
Short-term credit agreement borrowings | $ | 81.2 | $ | — | ||||
Accounts payable | 304.7 | 242.1 | ||||||
Accrued liabilities | 124.4 | 133.5 | ||||||
Total current liabilities | 510.3 | 375.6 | ||||||
Long-term debt | 692.4 | 691.8 | ||||||
Accrued pension liabilities | 199.4 | 196.6 | ||||||
Accrued postretirement benefits | 78.3 | 77.4 | ||||||
Deferred income taxes | 162.0 | 162.4 | ||||||
Other liabilities | 93.0 | 98.0 | ||||||
Total liabilities | 1,735.4 | 1,601.8 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common stock | 280.1 | 280.1 | ||||||
Capital in excess of par value | 315.3 | 320.3 | ||||||
Reinvested earnings | 1,190.7 | 1,211.0 | ||||||
Common stock in treasury, at cost | (298.4 | ) | (307.4 | ) | ||||
Accumulated other comprehensive loss | (166.6 | ) | (173.5 | ) | ||||
Total stockholders’ equity | 1,321.1 | 1,330.5 | ||||||
Total liabilities and stockholders’ equity | $ | 3,056.5 | $ | 2,932.3 |
PRELIMINARY
SEGMENT FINANCIAL DATA
(in millions, except pounds sold)
(Unaudited)
Three Months Ended | Six Months Ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Pounds sold (000): | |||||||||||||||
Specialty Alloys Operations | 49,442 | 43,248 | 94,006 | 86,256 | |||||||||||
Performance Engineered Products | 2,978 | 2,776 | 5,304 | 5,148 | |||||||||||
Intersegment | (1,920 | ) | (2,942 | ) | (3,920 | ) | (4,792 | ) | |||||||
Consolidated pounds sold | 50,500 | 43,082 | 95,390 | 86,612 | |||||||||||
Net sales: | |||||||||||||||
Specialty Alloys Operations | |||||||||||||||
Net sales excluding surcharge | $ | 346.2 | $ | 251.6 | $ | 651.9 | $ | 509.8 | |||||||
Surcharge | 149.6 | 79.2 | 291.3 | 153.0 | |||||||||||
Specialty Alloys Operations net sales | 495.8 | 330.8 | 943.2 | 662.8 | |||||||||||
Performance Engineered Products | |||||||||||||||
Net sales excluding surcharge | 98.0 | 83.8 | 185.6 | 157.4 | |||||||||||
Surcharge | 8.7 | 1.9 | 14.4 | 2.9 | |||||||||||
Performance Engineered Products net sales | 106.7 | 85.7 | 200.0 | 160.3 | |||||||||||
Intersegment | |||||||||||||||
Net sales excluding surcharge | (23.4 | ) | (20.5 | ) | (41.0 | ) | (39.4 | ) | |||||||
Surcharge | — | — | (0.2 | ) | (0.1 | ) | |||||||||
Intersegment net sales | (23.4 | ) | (20.5 | ) | (41.2 | ) | (39.5 | ) | |||||||
Consolidated net sales | $ | 579.1 | $ | 396.0 | $ | 1,102.0 | $ | 783.6 | |||||||
Operating income (loss): | |||||||||||||||
Specialty Alloys Operations | $ | 30.3 | $ | (20.3 | ) | $ | 50.2 | $ | (26.2 | ) | |||||
Performance Engineered Products | 9.3 | 3.0 | 15.6 | 3.6 | |||||||||||
Corporate | (16.4 | ) | (14.5 | ) | (33.5 | ) | (28.6 | ) | |||||||
Intersegment | (0.6 | ) | 0.3 | (1.4 | ) | 0.6 | |||||||||
Consolidated operating income (loss) | $ | 22.6 | $ | (31.5 | ) | $ | 30.9 | $ | (50.6 | ) | |||||
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
The PEP segment is comprised of the Company’s differentiated operations. This segment includes the
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 expense (income), net.
PRELIMINARY
NON-GAAP FINANCIAL MEASURES
(in millions, except per share data)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
ADJUSTED OPERATING MARGIN EXCLUDING SURCHARGE REVENUE AND SPECIAL ITEM | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Net sales | $ | 579.1 | $ | 396.0 | $ | 1,102.0 | $ | 783.6 | ||||||||
Less: surcharge revenue | 158.3 | 81.1 | 305.5 | 155.8 | ||||||||||||
Net sales excluding surcharge revenue | $ | 420.8 | $ | 314.9 | $ | 796.5 | $ | 627.8 | ||||||||
Operating income (loss) | $ | 22.6 | $ | (31.5 | ) | $ | 30.9 | $ | (50.6 | ) | ||||||
Special item: | ||||||||||||||||
COVID-19 costs | — | 1.7 | — | 3.3 | ||||||||||||
Adjusted operating income (loss) | $ | 22.6 | $ | (29.8 | ) | $ | 30.9 | $ | (47.3 | ) | ||||||
Operating margin | 3.9 | % | (8.0 | )% | 2.8 | % | (6.5 | )% | ||||||||
Adjusted operating margin excluding surcharge revenue and special item | 5.4 | % | (9.5 | )% | 3.9 | % | (7.5 | )% | ||||||||
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 PER SHARE EXCLUDING SPECIAL ITEM | Income Before Income Taxes | Income Tax Expense | Net Income | Earnings Per Diluted Share* | |||||||||
Three Months Ended | $ | 7.7 | $ | (1.5 | ) | $ | 6.2 | $ | 0.13 | ||||
Special item: | |||||||||||||
None reported | — | — | — | — | |||||||||
Three Months Ended | $ | 7.7 | $ | (1.5 | ) | $ | 6.2 | $ | 0.13 | ||||
* Impact per diluted share calculated using weighted average common shares outstanding of 49.0 million for the three months ended |
ADJUSTED LOSS PER SHARE EXCLUDING SPECIAL ITEM | Loss Before Income Taxes | Income Tax Benefit | Net Loss | Loss Per Diluted Share* | ||||||||||||
Three Months Ended | $ | (35.0 | ) | $ | 5.6 | $ | (29.4 | ) | $ | (0.61 | ) | |||||
Special item: | ||||||||||||||||
COVID-19 costs | 1.7 | (0.3 | ) | 1.4 | 0.03 | |||||||||||
Three Months Ended | $ | (33.3 | ) | $ | 5.3 | $ | (28.0 | ) | $ | (0.58 | ) | |||||
* Impact per diluted share calculated using weighted average common shares outstanding of 48.6 million for the three months ended |
ADJUSTED LOSS PER SHARE EXCLUDING SPECIAL ITEM | Loss Before Income Taxes | Income Tax Expense | Net Loss | Loss Per Diluted Share* | ||||||||||||
Six Months Ended | $ | (0.1 | ) | $ | (0.5 | ) | $ | (0.6 | ) | $ | (0.02 | ) | ||||
Special item: | ||||||||||||||||
None reported | — | — | — | — | ||||||||||||
Six Months Ended | $ | (0.1 | ) | $ | (0.5 | ) | $ | (0.6 | ) | $ | (0.02 | ) | ||||
* Impact per diluted share calculated using weighted average common shares outstanding of 48.7 million for the six months ended |
ADJUSTED LOSS PER SHARE EXCLUDING SPECIAL ITEM | Loss Before Income Taxes | Income Tax Benefit | Net Loss | Loss Per Diluted Share* | ||||||||||||
Six Months Ended | $ | (60.2 | ) | $ | 16.1 | $ | (44.1 | ) | $ | (0.91 | ) | |||||
Special item: | ||||||||||||||||
COVID-19 costs | 3.3 | (0.8 | ) | 2.5 | 0.05 | |||||||||||
Six Months Ended | $ | (56.9 | ) | $ | 15.3 | $ | (41.6 | ) | $ | (0.86 | ) | |||||
* Impact per diluted share calculated using weighted average common shares outstanding of 48.5 million for the six months ended | ||||||||||||||||
Management believes that earnings (loss) 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 | |||||||||||||||
FREE CASH FLOW | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Net cash used for operating activities | $ | (86.4 | ) | $ | (89.2 | ) | $ | (164.5 | ) | $ | (136.3 | ) | ||||
Purchases of property, plant, equipment and software | (17.5 | ) | (19.1 | ) | (31.0 | ) | (33.4 | ) | ||||||||
Proceeds from disposals of property, plant and equipment and assets held for sale | — | 1.8 | — | 1.8 | ||||||||||||
Dividends paid | (9.8 | ) | (9.8 | ) | (19.7 | ) | (19.7 | ) | ||||||||
Free cash flow | $ | (113.7 | ) | $ | (116.3 | ) | $ | (215.2 | ) | $ | (187.6 | ) | ||||
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.
PRELIMINARY
SUPPLEMENTAL SCHEDULE
(in millions)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||
NET SALES BY END-USE MARKET | 2022 | 2021 | 2022 | 2021 | ||||||||
End-Use Market Excluding Surcharge Revenue: | ||||||||||||
Aerospace and Defense | $ | 200.4 | $ | 134.0 | $ | 383.8 | $ | 268.8 | ||||
Medical | 62.7 | 40.4 | 112.5 | 77.4 | ||||||||
Transportation | 27.3 | 28.5 | 51.0 | 60.0 | ||||||||
Energy | 22.6 | 16.0 | 40.9 | 32.2 | ||||||||
Industrial and Consumer | 78.6 | 66.4 | 147.0 | 132.7 | ||||||||
Distribution | 29.2 | 29.6 | 61.3 | 56.7 | ||||||||
Total net sales excluding surcharge revenue | 420.8 | 314.9 | 796.5 | 627.8 | ||||||||
Surcharge revenue | 158.3 | 81.1 | 305.5 | 155.8 | ||||||||
Total net sales | $ | 579.1 | $ | 396.0 | $ | 1,102.0 | $ | 783.6 |
Media Inquiries: | Investor Inquiries: |
+1 610-208-2278 | |
hbeardsley@cartech.com | +1 914-582-4187 |
brad@theplunkettgroup.com |
![](https://ml.globenewswire.com/media/MDlmMjAxYzUtOTEzYy00NWMzLWEzMmEtYzU1YWE3ZTVlM2RjLTEwMTY5MTk=/tiny/Carpenter-Technology-Corporati.png)
2023 GlobeNewswire, Inc., source