-
Fourth quarter:
-
Net income of $38.1 million or $0.71 per share
-
Net sales of $604.6 million
-
Cash flow from operations of $95.5 million, free cash flow of
$34.9 million
-
Full year:
-
Net income of $132.8 million or $2.47 per share
-
Net sales down 4 percent on 6 percent higher volume
-
Adjusted EBITDA of $381.8 million
WYOMISSING, Pa.--(BUSINESS WIRE)--Jul. 29, 2014--
Carpenter Technology Corporation (NYSE: CRS) today announced financial
results for the quarter ended June 30, 2014. Carpenter reported net
income of $38.1 million or $0.71 per diluted share, compared to $40.9
million or $0.77 per diluted share in the same quarter last year.
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|
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|
|
|
|
|
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Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
Q4
|
|
Q4
|
|
Q3
|
|
YTD
|
|
YTD
|
|
|
|
FY2014
|
|
FY2013
|
|
FY2014
|
|
FY2014
|
|
FY2013
|
|
Net Sales
|
|
$
|
604.6
|
|
$
|
611.8
|
|
$
|
566.3
|
|
|
$
|
2,173.0
|
|
|
$
|
2,271.7
|
|
|
Net Sales Excluding Surcharge (a)
|
|
$
|
488.9
|
|
$
|
496.6
|
|
$
|
467.2
|
|
|
$
|
1,782.8
|
|
|
$
|
1,839.3
|
|
|
Operating Income
|
|
$
|
59.2
|
|
$
|
65.4
|
|
$
|
49.5
|
|
|
$
|
212.0
|
|
|
$
|
232.7
|
|
|
Net Income
|
|
$
|
38.1
|
|
$
|
40.9
|
|
$
|
30.6
|
|
|
$
|
132.8
|
|
|
$
|
146.1
|
|
|
Free Cash Flow (a)
|
|
$
|
34.9
|
|
$
|
61.3
|
|
$
|
(22.2
|
)
|
|
$
|
(147.8
|
)
|
|
$
|
(159.3
|
)
|
|
Adjusted EBITDA (a)
|
|
$
|
105.2
|
|
$
|
109.5
|
|
$
|
92.0
|
|
|
$
|
381.8
|
|
|
$
|
405.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) non-GAAP financial measure explained in the attached tables
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“The Carpenter team drove significant strategic and financial gains in
the quarter,” said William A. Wulfsohn, President and Chief Executive
Officer. “Our Specialty Alloys Operations (SAO) segment grew revenues,
excluding surcharge, by 5 percent on 4 percent higher volume versus the
third quarter, reflecting an improving mix. SAO also continued to reduce
its manufacturing cost per ton. Our Performance Engineered Products
(PEP) segment grew revenues, excluding surcharge, by 5 percent
sequentially, while continuing to drive a richer product mix and improve
its manufacturing processes. Overall Company earnings and margins
improved sequentially from the third quarter and we moved to positive
free cash flow as capital spending on our Athens facility ramps down.
“Looking forward, our visibility has improved as our SAO sales backlog
is up 32 percent versus the prior year. Our first quarter of fiscal year
2015 will be challenging as we expect normal seasonality combined with a
mix similar to our fourth quarter of fiscal year 2014. We expect to see
the impact of our price increases and mix improvement actions beginning
in the second quarter of the fiscal year.
“Our new Athens facility remains critical to supporting our targeted
earnings growth during the remainder of fiscal year 2015 and beyond. We
produced 1,000 tons of saleable product in the fourth quarter and are
making significant progress obtaining internal and customer
qualifications. These qualifications are critical to enable us to
support our growing demand with Athens’ capacity. As we progress through
the year, we expect the Athens facility to enable us to ship higher
volumes, with a richer mix, at a lower cost per ton. The timing of the
facility start-up appears good as we are seeing demand for our premium
and ultra-premium products growing. The potential of Athens, combined
with our strong market positions, solid balance sheet and growing
backlog, points to a bright future for Carpenter.”
Net Sales and Operating Income
Net sales for the fourth quarter of fiscal year 2014 were $604.6
million, and net sales excluding surcharge were $488.9 million, a
decrease of $7.7 million (or 2 percent) from the same quarter last year,
on 7 percent higher shipments.
Operating income was $59.2 million, a decrease of $6.2 million from the
fourth quarter of the prior year. Operating income—excluding pension
earnings, interest and deferrals (EID)—was $65.2 million, a decrease of
$8.1 million (or 11 percent) from the fourth quarter of the prior year.
The lower operating income largely reflects a weaker product mix and
higher Athens depreciation versus the prior year fourth quarter.
Cash Flow
Cash flow from operations in the fourth quarter of fiscal year 2014 was
$95.5 million, which included a $23.8 million decrease in working
capital and $1.7 million of pension contributions. This compares to a
cash flow from operations of $179.2 million in the prior year’s fourth
quarter, which included a $122.5 million decrease in working capital and
$1.6 million of pension contributions. Free cash flow in the fourth
quarter was $34.9 million, compared to $61.3 million in the same quarter
last year. Capital spending in the fourth quarter, largely related to
the construction of the Athens facility, was $51.0 million, compared to
$109.1 million in the prior year’s fourth quarter.
Total liquidity, including cash and available revolver balance, was $612
million at the end of the fourth quarter. This consisted of $120 million
of cash and $492 million of available revolver.
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|
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|
|
|
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End Markets
|
|
|
|
|
|
|
|
|
|
Q4 FY14
|
|
Q4 FY14
|
|
Q4 FY14
|
|
|
|
Sales*
|
|
vs.
|
|
vs.
|
|
|
|
Ex. Surcharge
|
|
Q4 FY13
|
|
Q3 FY14
|
|
|
|
(in Millions)
|
|
|
|
|
|
Aerospace and Defense
|
|
$212.2
|
|
-7%
|
|
+5%
|
|
Energy
|
|
$73.4
|
|
-10%
|
|
+1%
|
|
Medical
|
|
$28.0
|
|
+6%
|
|
-1%
|
|
Transportation
|
|
$33.5
|
|
+20%
|
|
+10%
|
|
Industrial and Consumer
|
|
$107.1
|
|
+10%
|
|
+9%
|
|
|
|
|
|
|
|
|
* Excludes sales through Carpenter’s distribution businesses
Aerospace and Defense
-
Overall revenue declined year-over-year due to continued demand
weakness for engine and defense materials.
-
Titanium fastener revenue was up 6 percent year-over-year as demand
continued to grow.
-
Demand was stable for nickel fasteners and structural components.
Energy
-
Carpenter continued to see weak demand in the power generation segment.
-
While Amega West posted solid revenue growth in manufacturing and
rentals versus the prior year and the directional rig count grew 9
percent versus the same quarter last year, Carpenter continued to see
soft demand for materials used in oil well completions.
Medical
Year-over-year volume and revenue growth was driven by:
-
Improving demand for orthopedic and surgical devices.
-
A resumption of more normalized buying patterns by OEMs as inventories
have stabilized.
-
Increased distributor demand for titanium products.
Transportation
-
North American light vehicle sales are expected to remain at high
levels.
-
The richer mix is due to improved positioning in higher value internal
engine components.
-
Carpenter results continue to benefit from a strong demand for
materials used in the next generation of fuel delivery systems.
Industrial and Consumer
Demand for Carpenter materials continues to be strong in:
-
Plant and equipment applications
-
Bridge infrastructure projects
-
Semiconductor applications
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.
Conference Call and Webcast Presentation
Carpenter will host a conference call and webcast presentation today,
July 29, at 10 a.m. ET, to discuss the financial results and operations
for the fiscal fourth quarter of 2014. Please call 610-208-2097 for
details. Access to both the call and webcast presentation will also be
available at Carpenter’s website (http://www.cartech.com)
and through CCBN (http://www.ccbn.com),
and a replay of the call will soon be made available at http://www.cartech.com
and at http://www.ccbn.com.
Presentation materials used during this conference call will be
available for viewing and download at 7:00 a.m. ET today, at http://www.cartech.com.
About Carpenter Technology
Carpenter produces and distributes premium alloys, including special
alloys, titanium alloys and powder metals, as well as stainless steels,
alloy steels and tool steels. Information about Carpenter can be found
at http://www.cartech.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’s filings with the Securities and Exchange Commission,
including its annual report on Form 10-K for the year ended June 30,
2013, 10-Qs for the quarters ended September 30, 2013, December 31, 2013
and March 31, 2014, 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,
profitability, cost savings, 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, Latrobe and Athens, for
which there may be limited alternatives if there are significant
equipment failures or catastrophic events; and (14) Carpenter’s future
success depends on the continued service and availability of key
personnel, including members of the executive management team,
management, metallurgists and other skilled personnel, and the loss of
these key personnel could affect Carpenter’s ability to perform until
suitable replacements are found. 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,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
NET SALES
|
|
$
|
604.6
|
|
|
$
|
611.8
|
|
|
$
|
2,173.0
|
|
|
$
|
2,271.7
|
|
|
Cost of sales
|
|
|
499.0
|
|
|
|
491.3
|
|
|
|
1,774.1
|
|
|
|
1,838.2
|
|
|
Gross profit
|
|
|
105.6
|
|
|
|
120.5
|
|
|
|
398.9
|
|
|
|
433.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
46.4
|
|
|
|
55.1
|
|
|
|
186.9
|
|
|
|
200.8
|
|
|
Operating income
|
|
|
59.2
|
|
|
|
65.4
|
|
|
|
212.0
|
|
|
|
232.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(6.2
|
)
|
|
|
(6.3
|
)
|
|
|
(17.0
|
)
|
|
|
(21.0
|
)
|
|
Other income (expense), net
|
|
|
1.2
|
|
|
|
(0.1
|
)
|
|
|
1.4
|
|
|
|
5.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
54.2
|
|
|
|
59.0
|
|
|
|
196.4
|
|
|
|
216.8
|
|
|
Income tax expense
|
|
|
16.1
|
|
|
|
18.1
|
|
|
|
63.6
|
|
|
|
70.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
38.1
|
|
|
|
40.9
|
|
|
|
132.8
|
|
|
|
146.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO CARPENTER
|
|
$
|
38.1
|
|
|
$
|
40.9
|
|
|
$
|
132.8
|
|
|
$
|
146.1
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.71
|
|
|
$
|
0.77
|
|
|
$
|
2.48
|
|
|
$
|
2.75
|
|
|
Diluted
|
|
$
|
0.71
|
|
|
$
|
0.77
|
|
|
$
|
2.47
|
|
|
$
|
2.73
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
53.4
|
|
|
|
52.9
|
|
|
|
53.3
|
|
|
|
52.9
|
|
|
Diluted
|
|
|
53.8
|
|
|
|
53.3
|
|
|
|
53.6
|
|
|
|
53.2
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net income
|
|
$
|
132.8
|
|
|
$
|
146.5
|
|
|
Adjustments to reconcile net income to net cash provided from
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
111.9
|
|
|
|
104.1
|
|
|
Deferred income taxes
|
|
|
(9.7
|
)
|
|
|
9.4
|
|
|
Net pension expense
|
|
|
57.9
|
|
|
|
68.8
|
|
|
Net loss on disposal of property and equipment
|
|
|
1.5
|
|
|
|
2.2
|
|
|
Changes in working capital and other:
|
|
|
|
|
|
Accounts receivable
|
|
|
5.6
|
|
|
|
12.6
|
|
|
Inventories
|
|
|
(37.0
|
)
|
|
|
(14.9
|
)
|
|
Other current assets
|
|
|
(4.0
|
)
|
|
|
11.5
|
|
|
Accounts payable
|
|
|
16.8
|
|
|
|
(10.3
|
)
|
|
Accrued liabilities
|
|
|
(21.1
|
)
|
|
|
9.9
|
|
|
Pension plan contributions
|
|
|
(6.3
|
)
|
|
|
(144.9
|
)
|
|
Other, net
|
|
|
(8.8
|
)
|
|
|
(6.4
|
)
|
|
Net cash provided from operating activities
|
|
|
239.6
|
|
|
|
188.5
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
Purchases of property, equipment and software
|
|
|
(349.2
|
)
|
|
|
(310.2
|
)
|
|
Proceeds from disposals of property and equipment
|
|
|
0.3
|
|
|
|
1.2
|
|
|
Proceeds from sale of equity method investment
|
|
|
-
|
|
|
|
7.9
|
|
|
Proceeds from sales and maturities of marketable securities
|
|
|
0.3
|
|
|
|
0.1
|
|
|
Net cash used for investing activities
|
|
|
(348.6
|
)
|
|
|
(301.0
|
)
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
Proceeds from issuance of long-term debt, net of discount and
offering costs
|
|
|
-
|
|
|
|
297.0
|
|
|
Payments on long-term debt
|
|
|
-
|
|
|
|
(101.0
|
)
|
|
Dividends paid
|
|
|
(38.5
|
)
|
|
|
(38.3
|
)
|
|
Purchase of subsidiary shares from noncontrolling interest
|
|
|
-
|
|
|
|
(8.4
|
)
|
|
Tax benefits on share-based compensation
|
|
|
2.3
|
|
|
|
3.9
|
|
|
Proceeds from stock options exercised
|
|
|
7.1
|
|
|
|
2.3
|
|
|
Net cash (used for) provided from financing activities
|
|
|
(29.1
|
)
|
|
|
155.5
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
0.6
|
|
|
|
3.5
|
|
|
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(137.5
|
)
|
|
|
46.5
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
257.5
|
|
|
|
211.0
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
120.0
|
|
|
$
|
257.5
|
|
|
|
|
|
|
|
|
|
|
PRELIMINARY
|
|
CONSOLIDATED BALANCE SHEETS
|
|
(in millions)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
120.0
|
|
|
$
|
257.5
|
|
|
Accounts receivable, net
|
|
|
339.6
|
|
|
|
342.0
|
|
|
Inventories
|
|
|
699.2
|
|
|
|
659.2
|
|
|
Deferred income taxes
|
|
|
-
|
|
|
|
2.7
|
|
|
Other current assets
|
|
|
34.7
|
|
|
|
20.1
|
|
|
Total current assets
|
|
|
1,193.5
|
|
|
|
1,281.5
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
1,407.0
|
|
|
|
1,168.4
|
|
|
Goodwill
|
|
|
257.7
|
|
|
|
257.7
|
|
|
Other intangibles, net
|
|
|
80.6
|
|
|
|
95.0
|
|
|
Other assets
|
|
|
117.7
|
|
|
|
80.3
|
|
|
Total assets
|
|
$
|
3,056.5
|
|
|
$
|
2,882.9
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
278.1
|
|
|
$
|
252.7
|
|
|
Accrued liabilities
|
|
|
148.0
|
|
|
|
168.5
|
|
|
Deferred income taxes
|
|
|
3.5
|
|
|
|
-
|
|
|
Total current liabilities
|
|
|
429.6
|
|
|
|
421.2
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion
|
|
|
604.3
|
|
|
|
604.2
|
|
|
Accrued pension liabilities
|
|
|
203.4
|
|
|
|
246.9
|
|
|
Accrued postretirement benefits
|
|
|
163.2
|
|
|
|
151.2
|
|
|
Deferred income taxes
|
|
|
110.7
|
|
|
|
73.3
|
|
|
Other liabilities
|
|
|
41.0
|
|
|
|
83.0
|
|
|
Total liabilities
|
|
|
1,552.2
|
|
|
|
1,579.8
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Common stock
|
|
|
275.8
|
|
|
|
274.6
|
|
|
Capital in excess of par value
|
|
|
263.5
|
|
|
|
254.4
|
|
|
Reinvested earnings
|
|
|
1,311.6
|
|
|
|
1,217.3
|
|
|
Common stock in treasury, at cost
|
|
|
(101.4
|
)
|
|
|
(107.5
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(245.2
|
)
|
|
|
(335.7
|
)
|
|
Total stockholders' equity
|
|
|
1,504.3
|
|
|
|
1,303.1
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
3,056.5
|
|
|
$
|
2,882.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRELIMINARY
|
|
SEGMENT FINANCIAL DATA
|
|
(in millions, except pounds sold)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
Pounds sold* (000):
|
|
|
|
|
|
|
|
|
|
Specialty Alloys Operations
|
|
|
77,932
|
|
|
|
72,191
|
|
|
|
282,914
|
|
|
|
264,606
|
|
|
Performance Engineered Products
|
|
|
3,790
|
|
|
|
3,502
|
|
|
|
12,248
|
|
|
|
13,451
|
|
|
Intersegment
|
|
|
(1,184
|
)
|
|
|
(333
|
)
|
|
|
(4,774
|
)
|
|
|
(4,333
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated pounds sold
|
|
|
80,538
|
|
|
|
75,360
|
|
|
|
290,388
|
|
|
|
273,724
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
Specialty Alloys Operations
|
|
|
|
|
|
|
|
|
|
Net sales excluding surcharge
|
|
$
|
369.1
|
|
|
$
|
377.8
|
|
|
$
|
1,344.6
|
|
|
$
|
1,388.5
|
|
|
Surcharge
|
|
|
118.0
|
|
|
|
115.3
|
|
|
|
397.0
|
|
|
|
435.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty Alloys Operations net sales
|
|
|
487.1
|
|
|
|
493.1
|
|
|
|
1,741.6
|
|
|
|
1,823.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Engineered Products
|
|
|
|
|
|
|
|
|
|
Net sales excluding surcharge
|
|
|
136.0
|
|
|
|
131.4
|
|
|
|
496.6
|
|
|
|
513.7
|
|
|
Surcharge
|
|
|
0.3
|
|
|
|
1.5
|
|
|
|
2.0
|
|
|
|
6.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Engineered Products net sales
|
|
|
136.3
|
|
|
|
132.9
|
|
|
|
498.6
|
|
|
|
520.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment
|
|
|
|
|
|
|
|
|
|
Net sales excluding surcharge
|
|
|
(16.2
|
)
|
|
|
(12.6
|
)
|
|
|
(58.4
|
)
|
|
|
(62.9
|
)
|
|
Surcharge
|
|
|
(2.6
|
)
|
|
|
(1.6
|
)
|
|
|
(8.8
|
)
|
|
|
(9.0
|
)
|
|
Intersegment net sales
|
|
|
(18.8
|
)
|
|
|
(14.2
|
)
|
|
|
(67.2
|
)
|
|
|
(71.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net sales
|
|
$
|
604.6
|
|
|
$
|
611.8
|
|
|
$
|
2,173.0
|
|
|
$
|
2,271.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income:
|
|
|
|
|
|
|
|
|
|
Specialty Alloys Operations
|
|
$
|
63.0
|
|
|
$
|
80.4
|
|
|
$
|
232.7
|
|
|
$
|
268.5
|
|
|
Performance Engineered Products
|
|
|
12.2
|
|
|
|
8.9
|
|
|
|
45.5
|
|
|
|
45.2
|
|
|
Corporate costs
|
|
|
(10.1
|
)
|
|
|
(16.4
|
)
|
|
|
(43.8
|
)
|
|
|
(47.7
|
)
|
|
Pension earnings, interest & deferrals
|
|
|
(6.0
|
)
|
|
|
(7.9
|
)
|
|
|
(21.8
|
)
|
|
|
(31.9
|
)
|
|
Intersegment
|
|
|
0.1
|
|
|
|
0.4
|
|
|
|
(0.6
|
)
|
|
|
(1.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating income
|
|
$
|
59.2
|
|
|
$
|
65.4
|
|
|
$
|
212.0
|
|
|
$
|
232.7
|
|
|
|
|
Beginning with the fiscal year 2014 first quarter results, the
Company changed its reportable segments. The Company has two
reportable segments, Specialty Alloys Operations (“SAO”) and
Performance Engineered Products (“PEP”). The change reflects the
completion of the integration of the businesses acquired by the
Company in the acquisition of Latrobe Specialty Metals, Inc.
(“Latrobe”) in February 2012. Prior to this change, the Latrobe
businesses were reported as a separate segment to provide management
with the focus and visibility into the business of the acquired
operations. The previously reported Latrobe segment also included
the results of the Company’s distribution business in Mexico. Since
the Latrobe businesses are now fully integrated, the previously
reported Latrobe segment has been merged into the Company’s
operating model, in which the Company’s integrated steel mill
operations are managed distinctly from the collection of other
differentiated operations.
|
|
|
|
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 the new premium products
manufacturing facility in Limestone County, 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 speed and
flexibility, and drive overall revenue and profit growth. The pounds
sold data above for the PEP segment includes only the Dynamet and
CPP businesses.
|
|
|
|
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, is included under the
heading "Pension earnings, interest & deferrals."
|
|
|
|
|
|
* Pounds sold excludes sales associated with the distribution
businesses.
|
|
|
|
|
|
|
|
|
|
|
|
PRELIMINARY
|
|
NON-GAAP FINANCIAL MEASURES
|
|
(in millions)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING MARGIN EXCLUDING SURCHARGE AND
|
|
Three Months Ended
|
|
Year Ended
|
|
PENSION EARNINGS, INTEREST AND DEFERRALS
|
|
June 30,
|
|
June 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
604.6
|
|
|
$
|
611.8
|
|
|
$
|
2,173.0
|
|
|
$
|
2,271.7
|
|
|
Less: surcharge revenue
|
|
|
115.7
|
|
|
|
115.2
|
|
|
|
390.2
|
|
|
|
432.4
|
|
|
Consolidated net sales excluding surcharge
|
|
$
|
488.9
|
|
|
$
|
496.6
|
|
|
$
|
1,782.8
|
|
|
$
|
1,839.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
59.2
|
|
|
$
|
65.4
|
|
|
$
|
212.0
|
|
|
$
|
232.7
|
|
|
Pension earnings, interest & deferrals
|
|
|
6.0
|
|
|
|
7.9
|
|
|
|
21.8
|
|
|
|
31.9
|
|
|
Operating income excluding pension earnings, interest and deferrals
|
|
$
|
65.2
|
|
|
$
|
73.3
|
|
|
$
|
233.8
|
|
|
$
|
264.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin excluding surcharge and pension earnings,
interest and deferrals
|
|
|
13.3
|
%
|
|
|
14.8
|
%
|
|
|
13.1
|
%
|
|
|
14.4
|
%
|
|
|
|
|
Management believes that removing the impacts of raw material
surcharges from operating margin provides a more consistent basis
for comparing results of operations from period to period.
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.
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
ADJUSTED EARNINGS BEFORE INTEREST, TAXES,
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
DEPRECIATION AND AMORTIZATION (EBITDA)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
38.1
|
|
|
$
|
40.9
|
|
|
$
|
132.8
|
|
|
$
|
146.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
6.2
|
|
|
|
6.3
|
|
|
|
17.0
|
|
|
|
21.0
|
|
|
Income tax expense
|
|
|
16.1
|
|
|
|
18.1
|
|
|
|
63.6
|
|
|
|
70.3
|
|
|
Depreciation and amortization
|
|
|
31.0
|
|
|
|
27.0
|
|
|
|
111.9
|
|
|
|
104.1
|
|
|
Other (income) expense, net
|
|
|
(1.2
|
)
|
|
|
0.1
|
|
|
|
(1.4
|
)
|
|
|
(5.1
|
)
|
|
EBITDA
|
|
$
|
90.2
|
|
|
$
|
92.4
|
|
|
$
|
323.9
|
|
|
$
|
336.8
|
|
|
Net pension expense
|
|
|
15.0
|
|
|
|
17.1
|
|
|
|
57.9
|
|
|
|
68.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
105.2
|
|
|
$
|
109.5
|
|
|
$
|
381.8
|
|
|
$
|
405.6
|
|
|
|
|
Management believes that earnings before interest, taxes,
depreciation and amortization adjusted to exclude net pension
expense is helpful in analyzing the operating performance of the
Company.
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
FREE CASH FLOW
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
Net cash provided from operating activities
|
|
$
|
95.5
|
|
|
$
|
179.2
|
|
|
$
|
239.6
|
|
|
$
|
188.5
|
|
|
Purchases of property, equipment and software
|
|
|
(51.0
|
)
|
|
|
(109.1
|
)
|
|
|
(349.2
|
)
|
|
|
(310.2
|
)
|
|
Proceeds from disposals of property and equipment
|
|
|
-
|
|
|
|
0.8
|
|
|
|
0.3
|
|
|
|
1.2
|
|
|
Purchase of subsidiary shares from noncontrolling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8.4
|
)
|
|
Proceeds from sale of equity method investment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7.9
|
|
|
Dividends paid
|
|
|
(9.6
|
)
|
|
|
(9.6
|
)
|
|
|
(38.5
|
)
|
|
|
(38.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
|
$
|
34.9
|
|
|
$
|
61.3
|
|
|
$
|
(147.8
|
)
|
|
$
|
(159.3
|
)
|
|
|
|
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
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
End Use Market Excluding Surcharge:
|
|
|
|
|
|
|
|
|
|
Aerospace and defense
|
|
$
|
212.2
|
|
$
|
227.9
|
|
$
|
775.3
|
|
$
|
832.5
|
|
Industrial and consumer
|
|
|
107.1
|
|
|
97.3
|
|
|
379.8
|
|
|
366.4
|
|
Energy
|
|
|
73.4
|
|
|
81.5
|
|
|
269.9
|
|
|
290.9
|
|
Transportation
|
|
|
33.5
|
|
|
27.9
|
|
|
118.0
|
|
|
106.6
|
|
Medical
|
|
|
28.0
|
|
|
26.4
|
|
|
103.5
|
|
|
103.7
|
|
Distribution
|
|
|
34.7
|
|
|
35.6
|
|
|
136.3
|
|
|
139.2
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net sales excluding surcharge
|
|
|
488.9
|
|
|
496.6
|
|
|
1,782.8
|
|
$
|
1,839.3
|
|
|
|
|
|
|
|
|
|
|
|
Surcharge revenue
|
|
|
115.7
|
|
|
115.2
|
|
|
390.2
|
|
|
432.4
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net sales
|
|
$
|
604.6
|
|
$
|
611.8
|
|
$
|
2,173.0
|
|
$
|
2,271.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
NET SALES BY MAJOR PRODUCT CLASS
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Product Class Excluding Surcharge:
|
|
|
|
|
|
|
|
|
|
Special alloys
|
|
$
|
182.6
|
|
$
|
197.0
|
|
$
|
666.3
|
|
$
|
706.0
|
|
Stainless steel
|
|
|
153.1
|
|
|
143.2
|
|
|
548.7
|
|
|
543.1
|
|
Alloy and tool steel
|
|
|
52.6
|
|
|
55.2
|
|
|
198.4
|
|
|
210.9
|
|
Titanium products
|
|
|
44.1
|
|
|
42.4
|
|
|
157.7
|
|
|
155.0
|
|
Powder metals
|
|
|
15.0
|
|
|
14.5
|
|
|
48.6
|
|
|
55.9
|
|
Distribution and other
|
|
|
41.5
|
|
|
44.3
|
|
|
163.1
|
|
|
168.4
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net sales excluding surcharge
|
|
|
488.9
|
|
|
496.6
|
|
|
1,782.8
|
|
$
|
1,839.3
|
|
|
|
|
|
|
|
|
|
|
|
Surcharge revenue
|
|
|
115.7
|
|
|
115.2
|
|
|
390.2
|
|
|
432.4
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net sales
|
|
$
|
604.6
|
|
$
|
611.8
|
|
$
|
2,173.0
|
|
$
|
2,271.7
|

Source: Carpenter Technology Corporation
Carpenter Technology Corporation
Media Inquiries:
William J.
Rudolph Jr., +1 610-208-3892
wrudolph@cartech.com
or
Investor
Inquiries:
Michael A. Hajost, +1 610-208-3476
mhajost@cartech.com