Carpenter Technology Reports Second Quarter Fiscal Year 2021 Results
Carpenter Technology Corporation (NYSE: CRS) reported fiscal Q2 2021 results showing a net loss of $84.9 million, or $1.76 per diluted share. Adjusted loss per diluted share was $0.61. Despite challenges, the company generated $84 million in operating cash flow and $51 million in free cash flow, reflecting strong cash management. Total liquidity reached $665 million, including $271 million in cash. The company secured multiple long-term contracts in Aerospace and Defense, anticipating gradual market recovery in the second half of fiscal 2021.
- Generated $51 million in free cash flow.
- Total liquidity of $665 million, with $271 million cash on hand.
- Secured beneficial long-term contracts in Aerospace and Defense.
- Net sales decreased by 39% year-over-year to $348.8 million.
- Operating loss of $89 million compared to a $55 million income in Q2 FY2020.
- Goodwill impairment charge of $52.8 million related to the Additive reporting unit.
Generated
Total liquidity of
PHILADELPHIA, Jan. 28, 2021 (GLOBE NEWSWIRE) -- Carpenter Technology Corporation (NYSE: CRS) (the “Company”) today announced financial results for the fiscal second quarter ended December 31, 2020. For the quarter, the Company reported a net loss of
“Our second quarter results reflect our continued emphasis on driving cash flow generation as we ended the second quarter with
“During the pandemic, we continued to strengthen our customer relationships. To that end, in the Aerospace and Defense end-use market, we have recently secured multiple, beneficial long-term contracts with key customers which further demonstrates the future outlook is strong. We are also well positioned to benefit from a recovery in the Medical end-use market as the supply chain gains confidence to meet pent up demand for elective procedures. Overall, we believe end-use market conditions will gradually improve during the second half of fiscal year 2021 and are working hard to capitalize on the recovery.”
“Our core business is built upon over 130 years of advanced material development, production and expertise. We remain a critical supply chain partner today and have made strategic investments to build upon that position in the years to come. The addition of our hot strip mill will significantly strengthen our soft magnetic capabilities at a time when electrification is helping to shape the long-term profile of many of our end-use markets. We also have built an additive manufacturing platform focused on powder lifecycle management. These investments are a strategic extension of our core business and consistent with our mandate to deliver increasing value to our customers and our stakeholders.”
Financial Highlights
| ($ 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
Operating loss was
Cash provided from operating activities in the second quarter of fiscal year 2021 was
Total liquidity, including cash and available credit facility borrowings, was
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.
PRELIMINARY
CONSOLIDATED 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 | ||||||||||||
PRELIMINARY
CONSOLIDATED 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 | ||||
PRELIMINARY
CONSOLIDATED 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 |
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FAQ
What were Carpenter Technology's fiscal Q2 2021 earnings results for stock symbol CRS?
Carpenter Technology reported a net loss of $84.9 million, or $1.76 per diluted share, with an adjusted loss of $0.61.
How much cash flow did Carpenter Technology generate in Q2 2021?
The company generated $84 million in operating cash flow and $51 million in free cash flow.
What is Carpenter Technology's liquidity position as of Q2 2021?
Total liquidity stood at $665 million, including $271 million in cash.
What challenges did Carpenter Technology face in Q2 2021?
The company experienced a 39% decrease in net sales and reported an operating loss of $89 million.
Carpenter Technology Corp
NYSE:CRSCRS RankingsCRS Latest NewsCRS Stock Data
8.45B
47.43M
2.25%
95.13%
4.59%
Metal Fabrication
Steel Works, Blast Furnaces & Rolling Mills (coke Ovens)
United States of America
PHILADELPHIA
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