Fourth Quarter Highlights
Carpenter Technology Corporation (NYSE:CRS) (the “Company”) today
announced financial results for the quarter and fiscal year ended
June 30, 2016. The Company reported net income of $14.9
million or $0.32 per diluted share. Excluding special items,
adjusted earnings per diluted share was $0.35 in the quarter.
“Our solid fourth quarter results were generated by successfully
driving cost efficiencies across our organization combined with
higher sequential volume,” said Tony Thene, Carpenter's President
and CEO. “We delivered strong operating profitability,
despite headwinds from select end-use markets, while continuing to
execute on a number of initiatives aimed at better positioning
Carpenter to generate growth and improve margins over the
long-term.”
“Overall, the fourth quarter marked a strong finish to a
successful year for Carpenter. We significantly reduced our
operating costs in fiscal year 2016, which offset a substantial
portion of the volume decline impact we experienced in select
end-use markets. Our results also benefited from our product
and end-use market diversity. All of our Aerospace sub-markets
generated growth compared to 2015, except fasteners which continues
to be impacted by inventory channel adjustments. Our
Transportation market delivered solid growth over last year and we
experienced steady demand for our high-end Medical products.
The solid performance of these markets was overshadowed by
our Energy and Industrial & Consumer markets which were both
impacted by the weak oil and gas environment.”
Mr. Thene added, “As a result of the ongoing implementation of
the Carpenter Operating Model, we enter fiscal year 2017 with a
stronger foundation for both growth and improved operating
efficiency. Through our realigned commercial team, we are
aggressively seeking avenues to deepen customer relationships and
expand the participation of our high-end specialty alloys across
the most critical applications. These market efforts will be
supported by the ongoing execution of the Carpenter Operating Model
as we look to continue strengthening our organization. At the
same time, we have maintained a strong liquidity position and are
well positioned to continue to invest in next-generation
technologies that build on our leadership as a preferred solutions
provider.”
Financial Highlights
($ in
millions) |
|
|
Q4 |
|
Q4 |
|
Q3 |
|
YTD |
|
|
YTD |
|
|
|
FY2016 |
|
FY2015 |
|
FY2016 |
|
FY2016 |
|
|
FY2015 |
Net
Sales |
|
$ |
457.7 |
|
$ |
558.0 |
|
|
$ |
456.3 |
|
|
|
$ |
1,813.4 |
|
|
$ |
2,226.7 |
Net Sales
Excluding Surcharge (a) |
|
$ |
405.7 |
|
$ |
463.0 |
|
|
$ |
402.4 |
|
|
|
$ |
1,572.6 |
|
|
$ |
1,811.8 |
Operating
Income (Loss) |
|
$ |
29.2 |
|
$ |
39.5 |
|
|
$ |
(24.3 |
) |
|
|
$ |
51.6 |
|
|
$ |
111.5 |
Operating
Income Excluding Pension EID and Special Items (a) |
|
$ |
36.1 |
|
$ |
48.2 |
|
|
$ |
35.2 |
|
|
|
$ |
133.2 |
|
|
$ |
155.1 |
Net Income
(Loss) |
|
$ |
14.9 |
|
$ |
22.5 |
|
|
$ |
(23.9 |
) |
|
|
$ |
11.3 |
|
|
$ |
58.7 |
Cash
Provided from Operating Activities |
|
$ |
119.7 |
|
$ |
134.1 |
|
|
$ |
65.5 |
|
|
|
$ |
256.9 |
|
|
$ |
282.6 |
Free Cash
Flow (a) |
|
$ |
83.2 |
|
$ |
106.7 |
|
|
$ |
46.8 |
|
|
|
$ |
138.6 |
|
|
$ |
74.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
non-GAAP financial measure explained in the attached tables |
|
|
|
Net sales for the fourth quarter of fiscal year 2016 were $457.7
million. Net sales excluding surcharge were $405.7 million, a
decrease of $57.3 million (or 12 percent) from the same quarter
last year, on 4 percent lower volume.
Operating income was $29.2 million, a decrease of $10.3 million
from the fourth quarter of the prior year. Operating
income—excluding pension earnings, interest and deferrals (EID) and
special items—was $36.1 million, compared to $48.2 million in the
prior year period. These results primarily reflect lower
volume, partially offset by lower operating costs compared to the
same period one year ago.
Cash flow from operating activities in the fourth quarter of
fiscal 2016 was $119.7 million, compared to $134.1 million in the
same quarter last year. Free cash flow in the fourth quarter
of fiscal year 2016 was $83.2 million, compared to $106.7 million
in the same quarter last year, which included a $54.4 million
reduction in inventory. Capital expenditures were $29.1
million in the fourth quarter of fiscal year 2016. For the
full fiscal year 2016, capital expenditures were $95.2 million,
in-line with prior guidance.
Total liquidity, including cash and available revolver balance,
was $575 million at the end of the fourth quarter. This
consisted of $82 million of cash and $493 million of available
borrowing under the Company’s credit facility.
Conference Call and Webcast Presentation
Carpenter will host a conference call and webcast presentation
today, July 28th at 10:00 a.m. ET, to discuss the financial results
and operations for the fourth quarter and full year fiscal 2016.
Please dial +1 412-317-6789 for access to the live conference call.
Access to the live webcast will be available at Carpenter’s
website (http://www.cartech.com), and a replay will soon be made
available at http://www.cartech.com. Presentation materials used
during this conference call will be available for viewing and
download at http://www.cartech.com. An audio replay of the
conference call can be accessed by dialing +1 412-317-0088 and
using passcode 10089380. The audio replay will be available for one
week.
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 leading producer and
distributor of premium specialty alloys, including titanium alloys,
powder metals, stainless steels, alloy steels and tool
steels. Carpenter’s high-performance materials and advanced
process solutions are an integral part of critical applications
used within the aerospace, transportation, medical and energy
markets, among other markets. Building on its history of
innovation, Carpenter’s superalloy powder technologies support a
range of next-generation products and manufacturing techniques,
including additive manufacturing or 3D Printing. Information
about Carpenter can be found at www.cartech.com.
Forward-Looking Statements
This presentation 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’s filings with the Securities and
Exchange Commission, including its annual report on Form 10-K for
the year ended June 30, 2015, Forms 10-Q for the quarters ended
September 30, 2015, December 31, 2015 and March 31, 2016 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,
industrial, transportation, consumer, medical and energy, or other
influences on Carpenter’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 to achieve cash
generation, growth, earnings, profitability, cost savings and
reductions, 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 degree of success of government
trade actions; (7) the valuation of the assets and liabilities in
Carpenter’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, 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’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) the success
of restructuring actions; and (17) share repurchases are at
Carpenter’s discretion and could be affected by changes in
Carpenter’s share price, operating results, capital spending, cash
flows, inventory, acquisitions, investments, tax laws and general
market conditions. Any of these factors could have an adverse
and/or fluctuating effect on Carpenter’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, and Section 21E of the
Securities Exchange Act of 1934, as amended. Carpenter undertakes
no obligation to update or revise any forward-looking
statements.
PRELIMINARY |
CONSOLIDATED STATEMENTS OF
INCOME |
(in millions, except per share data) |
(Unaudited) |
|
|
|
Three Months Ended |
|
Year Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
NET SALES |
|
$ |
457.7 |
|
|
$ |
558.0 |
|
|
$ |
1,813.4 |
|
|
$ |
2,226.7 |
|
Cost of sales |
|
384.2 |
|
|
469.6 |
|
|
1,535.0 |
|
|
1,908.4 |
|
Cost of sales - excess
inventory write-down |
|
— |
|
|
— |
|
|
22.5 |
|
|
— |
|
Gross profit |
|
73.5 |
|
|
88.4 |
|
|
255.9 |
|
|
318.3 |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
44.3 |
|
|
45.2 |
|
|
173.8 |
|
|
177.7 |
|
Restructuring and asset
impairment charges |
|
— |
|
|
3.7 |
|
|
18.0 |
|
|
29.1 |
|
Goodwill
impairment |
|
— |
|
|
— |
|
|
12.5 |
|
|
— |
|
Operating income |
|
29.2 |
|
|
39.5 |
|
|
51.6 |
|
|
111.5 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(7.2 |
) |
|
(6.8 |
) |
|
(28.0 |
) |
|
(27.7 |
) |
Other income (expense),
net |
|
1.3 |
|
|
0.6 |
|
|
(2.1 |
) |
|
5.3 |
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
23.3 |
|
|
33.3 |
|
|
21.5 |
|
|
89.1 |
|
Income tax expense |
|
8.4 |
|
|
10.8 |
|
|
10.2 |
|
|
30.4 |
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
14.9 |
|
|
$ |
22.5 |
|
|
$ |
11.3 |
|
|
$ |
58.7 |
|
|
|
|
|
|
|
|
|
|
EARNINGS PER COMMON
SHARE: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.32 |
|
|
$ |
0.44 |
|
|
$ |
0.23 |
|
|
$ |
1.11 |
|
Diluted |
|
$ |
0.32 |
|
|
$ |
0.44 |
|
|
$ |
0.23 |
|
|
$ |
1.11 |
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING: |
|
|
|
|
|
|
|
|
Basic |
|
46.9 |
|
|
50.9 |
|
|
48.1 |
|
|
52.6 |
|
Diluted |
|
47.0 |
|
|
51.0 |
|
|
48.2 |
|
|
52.7 |
|
|
|
|
|
|
|
|
|
|
Cash dividends per
common share |
|
$ |
0.18 |
|
|
$ |
0.18 |
|
|
$ |
0.72 |
|
|
$ |
0.72 |
|
PRELIMINARY |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(in millions) |
(Unaudited) |
|
|
|
|
|
Year Ended |
|
|
June 30, |
|
|
2016 |
|
2015 |
OPERATING
ACTIVITIES: |
|
|
|
|
Net income |
|
$ |
11.3 |
|
|
$ |
58.7 |
|
Adjustments to
reconcile net income to net cash provided from
operatingactivities: |
|
|
|
|
Depreciation and amortization |
|
119.3 |
|
|
122.3 |
|
Goodwill impairment charge |
|
12.5 |
|
|
— |
|
Non-cash excess inventory
write-down |
|
22.5 |
|
|
— |
|
Non-cash restructuring and asset
impairment charges |
|
7.6 |
|
|
7.6 |
|
Deferred income taxes |
|
0.8 |
|
|
60.4 |
|
Net pension expense |
|
53.8 |
|
|
44.5 |
|
Payments from qualified pension
plan associated with restructuring |
|
9.4 |
|
|
8.3 |
|
Stock-based compensation
expense |
|
8.7 |
|
|
10.0 |
|
Net loss on disposals of property
and equipment |
|
0.6 |
|
|
1.2 |
|
Changes in working
capital and other: |
|
|
|
|
Accounts receivable |
|
48.2 |
|
|
25.4 |
|
Inventories |
|
1.6 |
|
|
36.0 |
|
Other current assets |
|
(2.1 |
) |
|
(0.3 |
) |
Accounts payable |
|
(7.6 |
) |
|
(59.9 |
) |
Accrued liabilities |
|
(14.0 |
) |
|
(12.1 |
) |
Pension plan contributions |
|
— |
|
|
(7.2 |
) |
Other postretirement plan
contributions |
|
(13.0 |
) |
|
(13.2 |
) |
Other, net |
|
(2.7 |
) |
|
0.9 |
|
Net cash provided from operating
activities |
|
256.9 |
|
|
282.6 |
|
|
|
|
|
|
INVESTING
ACTIVITIES: |
|
|
|
|
Purchases of property,
equipment and software |
|
(95.2 |
) |
|
(170.5 |
) |
Proceeds from disposals
of property and equipment and assets held for sale |
|
1.4 |
|
|
0.2 |
|
Proceeds from the sale
of equity method investment |
|
6.3 |
|
|
— |
|
Proceeds from sales and
maturities of marketable securities |
|
0.9 |
|
|
0.3 |
|
Other |
|
4.0 |
|
|
— |
|
Net cash used for investing
activities |
|
(82.6 |
) |
|
(170.0 |
) |
|
|
|
|
|
FINANCING
ACTIVITIES: |
|
|
|
|
Dividends paid |
|
(34.8 |
) |
|
(37.9 |
) |
Purchases of treasury
stock |
|
(123.9 |
) |
|
(124.5 |
) |
Payments on seller
financed debt related to purchase of software |
|
(4.9 |
) |
|
— |
|
Tax benefits on
share-based compensation |
|
— |
|
|
0.7 |
|
Proceeds from stock
options exercised |
|
0.5 |
|
|
2.3 |
|
Net cash used for financing
activities |
|
(163.1 |
) |
|
(159.4 |
) |
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
0.8 |
|
|
(3.2 |
) |
|
|
|
|
|
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS |
|
12.0 |
|
|
(50.0 |
) |
Cash and cash
equivalents at beginning of period |
|
70.0 |
|
|
120.0 |
|
|
|
|
|
|
Cash and cash
equivalents at end of period |
|
$ |
82.0 |
|
|
$ |
70.0 |
|
PRELIMINARY |
CONSOLIDATED BALANCE SHEETS |
(in millions) |
(Unaudited) |
|
|
|
June 30, |
|
June 30, |
|
|
2016 |
|
2015 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
82.0 |
|
|
$ |
70.0 |
|
Accounts receivable, net |
|
253.6 |
|
|
304.1 |
|
Inventories |
|
628.7 |
|
|
655.8 |
|
Deferred income taxes |
|
— |
|
|
3.3 |
|
Other current assets |
|
46.4 |
|
|
37.2 |
|
Total current assets |
|
1,010.7 |
|
|
1,070.4 |
|
Property, plant and
equipment, net |
|
1,351.4 |
|
|
1,397.0 |
|
Goodwill |
|
244.8 |
|
|
257.4 |
|
Other intangibles,
net |
|
63.2 |
|
|
71.6 |
|
Deferred income taxes |
|
8.2 |
|
|
— |
|
Other assets |
|
116.0 |
|
|
106.2 |
|
Total assets |
|
$ |
2,794.3 |
|
|
$ |
2,902.6 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
159.6 |
|
|
$ |
169.5 |
|
Accrued liabilities |
|
139.2 |
|
|
152.6 |
|
Total current liabilities |
|
298.8 |
|
|
322.1 |
|
|
|
|
|
|
Long-term debt, net of
current portion |
|
611.3 |
|
|
603.8 |
|
Accrued pension
liabilities |
|
509.3 |
|
|
334.1 |
|
Accrued postretirement
benefits |
|
116.6 |
|
|
111.2 |
|
Deferred income taxes |
|
102.4 |
|
|
146.5 |
|
Other liabilities |
|
51.0 |
|
|
59.0 |
|
Total liabilities |
|
1,689.4 |
|
|
1,576.7 |
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY |
|
|
|
|
Common stock |
|
276.3 |
|
|
276.2 |
|
Capital in excess of
par value |
|
273.5 |
|
|
266.6 |
|
Reinvested
earnings |
|
1,308.9 |
|
|
1,332.4 |
|
Common stock in
treasury, at cost |
|
(343.9 |
) |
|
(221.1 |
) |
Accumulated other
comprehensive loss |
|
(409.9 |
) |
|
(328.2 |
) |
Total stockholders' equity |
|
1,104.9 |
|
|
1,325.9 |
|
Total liabilities and stockholders'
equity |
|
$ |
2,794.3 |
|
|
$ |
2,902.6 |
|
PRELIMINARY |
SEGMENT FINANCIAL DATA |
(in millions, except pounds sold) |
(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
June 30, |
|
June 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Pounds sold (000): |
|
|
|
|
|
|
|
Specialty Alloys Operations |
63,606 |
|
|
66,598 |
|
|
234,296 |
|
|
269,550 |
|
Performance Engineered
Products |
3,096 |
|
|
4,200 |
|
|
11,626 |
|
|
15,262 |
|
Intersegment |
(832 |
) |
|
(1,826 |
) |
|
(3,362 |
) |
|
(7,330 |
) |
Consolidated pounds sold |
65,870 |
|
|
68,972 |
|
|
242,560 |
|
|
277,482 |
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
Specialty Alloys Operations |
|
|
|
|
|
|
|
Net sales excluding surcharge |
$ |
322.3 |
|
|
$ |
357.1 |
|
|
$ |
1,239.6 |
|
|
$ |
1,373.5 |
|
Surcharge |
52.0 |
|
|
95.5 |
|
|
241.4 |
|
|
423.1 |
|
Specialty Alloys Operations net
sales |
374.3 |
|
|
452.6 |
|
|
1,481.0 |
|
|
1,796.6 |
|
|
|
|
|
|
|
|
|
Performance Engineered
Products |
|
|
|
|
|
|
|
Net sales excluding surcharge |
90.2 |
|
|
113.3 |
|
|
357.9 |
|
|
496.5 |
|
Surcharge |
0.2 |
|
|
0.3 |
|
|
0.8 |
|
|
1.2 |
|
Performance Engineered
Products net sales |
90.4 |
|
|
113.6 |
|
|
358.7 |
|
|
497.7 |
|
|
|
|
|
|
|
|
|
Intersegment |
|
|
|
|
|
|
|
Net sales excluding surcharge |
(6.8 |
) |
|
(7.4 |
) |
|
(24.9 |
) |
|
(58.2 |
) |
Surcharge |
(0.2 |
) |
|
(0.8 |
) |
|
(1.4 |
) |
|
(9.4 |
) |
Intersegment net
sales |
(7.0 |
) |
|
(8.2 |
) |
|
(26.3 |
) |
|
(67.6 |
) |
|
|
|
|
|
|
|
|
Consolidated net
sales |
$ |
457.7 |
|
|
$ |
558.0 |
|
|
$ |
1,813.4 |
|
|
$ |
2,226.7 |
|
|
|
|
|
|
|
|
|
Operating income: |
|
|
|
|
|
|
|
Specialty Alloys Operations |
$ |
48.6 |
|
|
$ |
49.2 |
|
|
$ |
176.9 |
|
|
$ |
155.2 |
|
Performance Engineered
Products |
(1.3 |
) |
|
8.3 |
|
|
(5.5 |
) |
|
39.1 |
|
Corporate costs (including
restructuring and impairment charges) |
(13.7 |
) |
|
(16.1 |
) |
|
(103.0 |
) |
|
(72.0 |
) |
Pension earnings, interest and
deferrals |
(4.8 |
) |
|
(2.4 |
) |
|
(19.3 |
) |
|
(9.4 |
) |
Intersegment |
0.4 |
|
|
0.5 |
|
|
2.5 |
|
|
(1.4 |
) |
Consolidated operating income |
$ |
29.2 |
|
|
$ |
39.5 |
|
|
$ |
51.6 |
|
|
$ |
111.5 |
|
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 and
surrounding areas in Pennsylvania, 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 Specialty Steel Supply 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 and CPP
businesses.
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,
such as restructuring and asset impairment charges, goodwill
impairment 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, or pension earnings, interest and deferrals (pension EID),
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 under the heading "Pension earnings, interest and
deferrals".
PRELIMINARY |
NON-GAAP FINANCIAL MEASURES |
(in millions, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
OPERATING INCOME AND
MARGIN EXCLUDING SURCHARGE, PENSION EARNINGS, INTEREST |
|
|
|
|
|
|
|
|
AND DEFERRALS AND SPECIAL
ITEMS |
|
Three Months Ended |
|
Year Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
457.7 |
|
|
$ |
558.0 |
|
|
$ |
1,813.4 |
|
|
$ |
2,226.7 |
|
Less: surcharge
revenue |
|
52.0 |
|
|
95.0 |
|
|
240.8 |
|
|
414.9 |
|
Net sales excluding
surcharge |
|
$ |
405.7 |
|
|
$ |
463.0 |
|
|
$ |
1,572.6 |
|
|
$ |
1,811.8 |
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
29.2 |
|
|
$ |
39.5 |
|
|
$ |
51.6 |
|
|
$ |
111.5 |
|
Pension earnings,
interest and deferrals |
|
4.8 |
|
|
2.4 |
|
|
19.3 |
|
|
9.4 |
|
Operating income
excluding pension earnings, interest and deferrals |
|
34.0 |
|
|
41.9 |
|
|
$ |
70.9 |
|
|
$ |
120.9 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Excess inventory write-down |
|
— |
|
|
— |
|
|
22.5 |
|
|
— |
|
Restructuring and asset impairment
charges |
|
— |
|
|
3.7 |
|
|
18.0 |
|
|
29.1 |
|
Goodwill impairment |
|
— |
|
|
— |
|
|
12.5 |
|
|
— |
|
Consulting costs |
|
2.1 |
|
|
2.6 |
|
|
9.3 |
|
|
5.1 |
|
Operating income
excluding pension earnings, interest and deferrals and other
special items |
|
$ |
36.1 |
|
|
$ |
48.2 |
|
|
$ |
133.2 |
|
|
$ |
155.1 |
|
|
|
|
|
|
|
|
|
|
Operating margin |
|
6.4 |
% |
|
7.1 |
% |
|
2.8 |
% |
|
5.0 |
% |
|
|
|
|
|
|
|
|
|
Operating margin
excluding surcharge, pension earnings, interest and deferrals and
other special items |
|
8.9 |
% |
|
10.4 |
% |
|
8.5 |
% |
|
8.6 |
% |
Management believes that removing the impacts 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 pension
earnings, interest and deferrals, which may be volatile due to
changes in the financial markets, is helpful in analyzing the true
operating performance of the Company. Management also believes that
removing the impact of restructuring and asset impairment charges,
goodwill impairment, excess inventory write-down and other special
items is helpful in analyzing the operating performance of the
Company, as these costs 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 ITEMS |
|
Income Before Income Taxes |
|
Income Tax Expense |
|
Net Income |
|
Earnings Per Diluted Share |
|
|
|
|
|
|
|
|
|
Three months ended June
30, 2016, as reported |
|
$ |
23.3 |
|
|
$ |
|
(8.4 |
) |
|
$ |
14.9 |
|
|
$ |
0.32 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
|
Consulting costs |
|
2.1 |
|
|
|
(0.7 |
) |
|
1.4 |
|
|
0.03 |
Total impact of special
items |
|
2.1 |
|
|
|
(0.7 |
) |
|
1.4 |
|
|
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June
30, 2016, as adjusted |
|
$ |
25.4 |
|
|
$ |
|
(9.1 |
) |
|
$ |
16.3 |
|
|
$ |
0.35 |
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EARNINGS PER
SHARE EXCLUDING SPECIAL ITEMS |
|
Income Before Income Taxes |
|
Income Tax Expense |
|
Net Income |
|
Earnings Per Diluted Share |
|
|
|
|
|
|
|
|
|
Three months ended June
30, 2015, as reported |
|
$ |
33.3 |
|
$ |
|
(10.8 |
) |
|
$ |
22.5 |
|
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Restructuring
charges |
|
3.7 |
|
|
(1.3 |
) |
|
2.4 |
|
|
0.05 |
Consulting
costs |
|
2.6 |
|
|
(0.9 |
) |
|
1.7 |
|
|
0.03 |
Total impact of special
items |
|
6.3 |
|
|
(2.2 |
) |
|
4.1 |
|
|
0.08 |
|
|
|
|
|
|
|
|
|
Three months ended June
30, 2015, as adjusted |
|
$ |
39.6 |
|
$ |
|
(13.0 |
) |
|
$ |
26.6 |
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
ADJUSTED EARNINGS PER
SHARE EXCLUDING SPECIAL ITEMS |
|
Income Before Income Taxes |
|
Income Tax Benefit (Expense) |
|
Net Income |
|
Earnings Per Diluted Share |
|
|
|
|
|
|
|
|
|
Year ended June 30,
2016, as reported |
|
$ |
21.5 |
|
$ |
|
(10.2 |
) |
$ |
11.3 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
Excess inventory
write-down |
|
22.5 |
|
|
|
(7.8 |
) |
|
14.7 |
|
|
0.31 |
|
Restructuring and asset
impairment charges |
|
18.0 |
|
|
|
(5.7 |
) |
|
12.3 |
|
|
0.26 |
|
Goodwill
impairment |
|
12.5 |
|
|
|
(3.2 |
) |
|
9.3 |
|
|
0.19 |
|
Consulting costs |
|
9.3 |
|
|
|
(3.3 |
) |
|
6.0 |
|
|
0.13 |
|
Income tax items |
|
— |
|
|
|
2.8 |
|
|
2.8 |
|
|
0.06 |
|
Impact of tax law
change |
|
— |
|
|
|
(0.8 |
) |
|
(0.8 |
) |
|
(0.02 |
) |
Total impact of special
items |
|
62.3 |
|
|
|
(18.0 |
) |
|
44.3 |
|
|
0.93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30,
2016, as adjusted |
|
$ |
83.8 |
|
|
$ |
(28.2 |
) |
|
$ |
55.6 |
|
|
$ |
1.16 |
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EARNINGS PER
SHARE EXCLUDING SPECIAL ITEMS |
|
Income Before Income Taxes |
|
Income Tax Benefit (Expense) |
|
Net Income |
|
Earnings Per Diluted Share |
Year ended June 30,
2015, as reported |
|
$ |
89.1 |
|
|
$ |
|
(30.4 |
) |
|
$ |
58.7 |
|
|
$ |
1.11 |
|
|
|
|
|
|
|
|
|
|
Special Items: |
|
|
|
|
|
|
|
|
Restructuring
charges |
|
29.1 |
|
|
|
(10.2 |
) |
|
18.9 |
|
|
0.36 |
|
Consulting
costs |
|
5.1 |
|
|
|
(1.8 |
) |
|
3.3 |
|
|
0.07 |
|
Legal
settlement |
|
(4.4 |
) |
|
|
1.5 |
|
|
(2.9 |
) |
|
(0.06 |
) |
Impact of tax
law change |
|
— |
|
|
|
1.6 |
|
|
1.6 |
|
|
0.03 |
|
Total impact of special
items |
|
|
29.8 |
|
|
|
|
(8.9 |
) |
|
|
20.9 |
|
|
|
0.40 |
|
|
|
|
|
|
|
|
|
|
Year ended June 30,
2015, as adjusted |
|
$ |
118.9 |
|
|
$ |
|
(39.3 |
) |
|
$ |
79.6 |
|
|
$ |
1.51 |
|
|
|
|
|
|
|
|
|
|
Management believes that earnings per share adjusted to exclude
the impact of restructuring and asset impairment charges, goodwill
impairment and special items is helpful in analyzing the operating
performance of the Company, as these costs 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 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Net cash provided from
operating activities |
|
$ |
119.7 |
|
|
$ |
134.1 |
|
|
$ |
256.9 |
|
|
$ |
282.6 |
|
Purchases of property,
equipment and software |
|
(29.1 |
) |
|
(18.3 |
) |
|
(95.2 |
) |
|
(170.5 |
) |
Proceeds from disposals
of property and equipment and assets held for sale |
|
1.1 |
|
|
— |
|
|
1.4 |
|
|
0.2 |
|
Proceeds from the sale
of equity method investment |
|
— |
|
|
— |
|
|
6.3 |
|
|
— |
|
Dividends paid |
|
(8.5 |
) |
|
(9.1 |
) |
|
(34.8 |
) |
|
(37.9 |
) |
Other |
|
— |
|
|
— |
|
|
4.0 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Free cash flow |
|
$ |
83.2 |
|
|
$ |
106.7 |
|
|
$ |
138.6 |
|
|
$ |
74.4 |
|
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.
PRELIMINARY |
SUPPLEMENTAL SCHEDULES |
(in millions) |
(Unaudited) |
|
|
Three Months Ended |
|
Year Ended |
|
June 30, |
|
June 30, |
NET SALES BY END-USE
MARKET |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
End-Use Market
Excluding Surcharge: |
|
|
|
|
|
|
|
Aerospace and Defense |
$ |
219.3 |
|
|
$ |
224.9 |
|
|
$ |
823.1 |
|
|
$ |
823.5 |
|
Energy |
23.5 |
|
|
48.7 |
|
|
115.3 |
|
|
245.0 |
|
Transportation |
33.2 |
|
|
33.5 |
|
|
136.8 |
|
|
130.9 |
|
Medical |
30.1 |
|
|
33.9 |
|
|
114.5 |
|
|
118.5 |
|
Industrial and Consumer |
70.6 |
|
|
88.4 |
|
|
265.2 |
|
|
358.3 |
|
Distribution |
29.0 |
|
|
33.6 |
|
|
117.7 |
|
|
135.6 |
|
|
|
|
|
|
|
|
|
Net sales excluding surcharge |
405.7 |
|
|
463.0 |
|
|
1,572.6 |
|
|
1,811.8 |
|
|
|
|
|
|
|
|
|
Surcharge revenue |
52.0 |
|
|
95.0 |
|
|
240.8 |
|
|
414.9 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
457.7 |
|
|
$ |
558.0 |
|
|
$ |
1,813.4 |
|
|
$ |
2,226.7 |
|
In the quarter ended June 30, 2016 in connection with our
commercial organization realignment, we changed the manner in which
sales are classified by end-use market so that we could better
evaluate our sales results from period to period. All prior period
amounts have been reclassified to conform to the current
presentation.
Media Inquiries:
William J. Rudolph, Jr.
+1 610-208-3892
wrudolph@cartech.com
Investor Inquiries:
Brad Edwards
Brainerd Communicators
+1 212-986-6667
edwards@braincomm.com
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