Earnings per diluted share of $0.82Results significantly impacted by COVID-19Action plan implemented to safeguard employees and customers against COVID-19Initiated actions to maintain solid balance sheet and preserve liquidityPHILADELPHIA, April 30, 2020 (GLOBE NEWSWIRE) — Carpenter Technology Corporation (NYSE: CRS) (the “Company”) today announced financial results for the fiscal third quarter ended March 31, 2020. For the quarter, the Company reported net income of $39.9 million, or $0.82 earnings per diluted share.Savings Actions Initiated to Address COVID-19 and Preserve LiquidityCOVID-19 related disruptions negatively impacted operating income results by approximately $5.5 million in the third quarter of fiscal year 2020. This impact is principally associated with disruption in the ability to ship certain materials late in the quarter as additional safety measures were implemented across the Company’s facilities as well as certain customers who were unable to accept deliveries due to shutdowns.As the COVID-19 pandemic continues to impact global economic conditions and near-term customer demand patterns, the Company has taken several actions to initiate cost savings and preserve liquidity. These actions include implementing temporary furloughs for certain production and maintenance employees across facilities based on planned production scheduling, implementing a global hiring freeze and reducing planned capital expenditures for fiscal year 2021 by approximately 25-30% from fiscal year 2020. The Company also initiated actions to reduce working capital levels, principally inventory, to align with anticipated customer demand and expects that working capital represents a significant opportunity for cash generation in the near-term.In addition, the Company recently approved actions to exit the downstream oil and gas (Amega West) business and idle two domestic powder metals production facilities. As a result of the decisions to close these facilities, the Company expects to save $15 million to $20 million annually based on current run rates for these businesses. The Company expects to record restructuring charges including non-cash asset impairments, non-cash lease termination costs and employee separation costs between $80 million and $100 million before taxes, in the fourth quarter of fiscal year 2020.The Company has identified additional actions to preserve and manage cash and has plans to deploy those actions as deemed necessary to respond to the evolving situation.Total liquidity, including cash and available credit facility borrowings, was $317.1 million at the end of the third quarter of fiscal year 2020. This consisted of $93.0 million of cash and $224.1 million of available borrowings under the Company’s credit facility.Financial HighlightsNet sales for the third quarter of fiscal year 2020 were $585.4 million compared with $609.9 million in the third quarter of fiscal year 2019, a decrease of $24.5 million (4 percent), on 9 percent lower volume. Net sales excluding surcharge were $495.0 million, a decrease of $8.0 million (2 percent) from the same period a year ago.Operating income was $58.7 million in the recent third quarter compared to $73.2 million in the same period last year. The results for the third quarter of last year included an $11.4 million insurance recovery benefit.Cash provided from operating activities in the third quarter of fiscal year 2020 was $72.3 million, compared to $10.0 million in the same quarter last year. Free cash flow in the third quarter of fiscal year 2020 was $13.0 million, compared to negative $37.0 million in the same quarter last year. The increases in operating cash flow and free cash flow primarily reflect improvements in working capital. Capital expenditures were $49.7 million in the third quarter of fiscal year 2020 compared to $49.0 million in the same quarter last year.Conference Call and Webcast PresentationCarpenter Technology will host a conference call and webcast presentation today, April 30th at 10:00 a.m. ET, to discuss the financial results of operations for the third quarter of fiscal year 2020. 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 MeasuresThis 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 TechnologyCarpenter 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 StatementsThis 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 Technology’s filings with the Securities and Exchange Commission, including its report on Form 10-K for the year ended June 30, 2019, Form 10-Q for the quarters ended September 30, 2019 and December 31, 2019 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; and (18) 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.
Bay Street News