8-K
CARPENTER TECHNOLOGY CORP false 0000017843 0000017843 2020-04-30 2020-04-30

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report: April 30, 2020 

 

CARPENTER TECHNOLOGY CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

 

1-5828

 

23-0458500

(State of or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

I.D. No.)

1735 Market Street

Philadelphia, Pennsylvania

 

19103

(Address of principal executive offices)

 

(Zip Code)

(610) 208-2000

Registrant’s telephone number, including area code

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered or required to be registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol

 

Name of each exchange

on which registered

Common Stock, $5 Par Value

 

CRS

 

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b.2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

 


Item 2.02 - Results of Operations and Financial Condition.

On April 30, 2020, Carpenter Technology Corporation issued a press release announcing fiscal 2020 third quarter results for the period ended March 31, 2020. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K and shall not be deemed to be “filed” for any purpose.

Item 9.01 - Financial Statements and Exhibits

(d)    Exhibits

Exhibit
    No.    

   

Description

         
 

99.1

   

Press Release regarding earnings, dated April 30, 2020


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CARPENTER TECHNOLOGY CORPORATION

     

By

 

/s/ Timothy Lain

 

Timothy Lain

 

Vice President and Chief Financial Officer

Date: May 1, 2020

EX-99.1

Exhibit 99.1

 

LOGO

 

Media Inquiries:    Investor Inquiries:
Heather Beardsley    The Plunkett Group
+1 610-208-2278    Brad Edwards
hbeardsley@cartech.com    +1 212-739-6740
   brad@theplunkettgroup.com

CARPENTER TECHNOLOGY REPORTS THIRD QUARTER

FISCAL YEAR 2020 RESULTS

Earnings per diluted share of $0.82

Results significantly impacted by COVID-19

Action plan implemented to safeguard employees and customers against COVID-19

Initiated actions to maintain solid balance sheet and preserve liquidity

PHILADELPHIA – April 30, 2020 – 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.

“Our third quarter results reflected solid execution in a challenging environment due to the impact of the 737 MAX production halt as well as the COVID-19 pandemic,” said Tony. R. Thene, President and CEO of Carpenter Technology. “Our performance speaks largely to the dedication of our employees who have responded to an unprecedented situation with a focused commitment to delivering for our customers while also adopting enhanced safety measures. In response to COVID-19, we moved quickly to develop and implement benchmark safety protocols aimed at protecting our employees in a rapidly changing environment.”

“Looking ahead, visibility is limited given the ongoing COVID-19 pandemic and its potential impact on demand patterns across our end-use markets. We remain in close contact with our customers and will continue working alongside them to fulfill their material requirements. We believe our financial position remains healthy and we are executing targeted portfolio restructurings and cost reductions to drive enhanced flexibility. While we


cannot predict the duration of COVID-19 and the total impact it will have on our business, we remain fully committed to the safety of our employees and continuing to serve as a critical supply chain partner for our customers during this difficult time. Our long-term growth profile remains solid as we are a key supplier of mission-critical applications with strong customer relationships, a deep solutions portfolio and established market leadership across a number of attractive end-use markets.”

Savings Actions Initiated to Address COVID-19 and Preserve Liquidity

COVID-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 Highlights

 

($ in millions)    Q3      Q3      Q2  
     FY2020      FY2019      FY2020  

Net Sales

   $ 585.4      $ 609.9      $ 573.0  

Net Sales Excluding Surcharge Revenue (a)

   $ 495.0      $ 503.0      $ 471.2  

Operating Income

   $ 58.7      $ 73.2      $ 55.0  

Operating Income Excluding Special Items (a)

   $ 58.7      $ 73.2      $ 57.3  

Net Income

   $ 39.9      $ 51.1      $ 38.8  

Cash Provided from Operating Activities

   $ 72.3      $ 10.0      $ 21.8  

Free Cash Flow (a)

   $ 13.0      $ (37.0    $ (34.5

 

(a)

Non-GAAP financial measures explained in the attached tables

Net 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 Presentation

Carpenter 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 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, 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 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 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.


PRELIMINARY

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share data)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     March 31,     March 31,  
     2020     2019     2020     2019  

NET SALES

   $ 585.4     $ 609.9     $ 1,743.8     $ 1,738.8  

Cost of sales

     475.9       486.7       1,409.0       1,416.9  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     109.5       123.2       334.8       321.9  

Selling, general and administrative expenses

     50.8       50.0       159.0       148.3  

Restructuring charges

     —         —         2.3       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     58.7       73.2       173.5       173.6  

Interest expense

     (4.9     (7.1     (15.6     (20.3

Other (expense) income, net

     (3.9     1.9       (3.4     0.1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     49.9       68.0       154.5       153.4  

Income tax expense

     10.0       16.9       34.6       35.3  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME

   $ 39.9     $ 51.1     $ 119.9     $ 118.1  
  

 

 

   

 

 

   

 

 

   

 

 

 

EARNINGS PER COMMON SHARE:

        

Basic

   $ 0.82     $ 1.06     $ 2.47     $ 2.45  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.82     $ 1.05     $ 2.46     $ 2.43  
  

 

 

   

 

 

   

 

 

   

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

        

Basic

     48.1       47.7       48.0       47.7  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     48.3       48.1       48.4       48.1  
  

 

 

   

 

 

   

 

 

   

 

 

 


PRELIMINARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)

 

     Nine Months Ended  
     March 31,  
     2020     2019  

OPERATING ACTIVITIES

    

Net income

   $ 119.9     $ 118.1  

Adjustments to reconcile net income to net cash provided from operating activities:

    

Depreciation and amortization

     92.2       90.9  

Non-cash restructuring charges

     1.5       —    

Deferred income taxes

     7.0       7.0  

Net pension expense

     11.5       8.7  

Share-based compensation expense

     12.4       12.7  

Net loss on disposals of property, plant and equipment and assets held for sale

     —         0.7  

Gain on insurance recovery

     —         (11.4

Changes in working capital and other:

    

Accounts receivable

     7.6       (12.1

Inventories

     (85.2     (168.3

Other current assets

     (5.2     7.6  

Accounts payable

     (26.9     36.6  

Accrued liabilities

     (33.4     (25.2

Pension plan contributions

     (4.9     (4.3

Other postretirement plan contributions

     (2.7     (2.5

Other, net

     1.1       (1.3
  

 

 

   

 

 

 

Net cash provided from operating activities

     94.9       57.2  
  

 

 

   

 

 

 

INVESTING ACTIVITIES

    

Purchases of property, plant, equipment and software

     (144.0     (130.7

Proceeds from disposals of property, plant and equipment and assets held for sale

     0.3       0.3  

Acquisition of business, net of cash acquired

     —         (79.0

Proceeds from sales and maturities of marketable securities

     —         2.9  

Proceeds from insurance recovery

     —         11.4  
  

 

 

   

 

 

 

Net cash used for investing activities

     (143.7     (195.1
  

 

 

   

 

 

 

FINANCING ACTIVITIES

    

Credit agreement borrowings

     331.1       163.9  

Credit agreement repayments

     (181.1     (63.9

Net change in short-term credit agreement borrowings

     0.3       27.0  

Dividends paid

     (29.1     (28.9

Proceeds from stock options exercised

     4.3       3.7  

Withholding tax payments on share-based compensation awards

     (7.8     (4.4
  

 

 

   

 

 

 

Net cash provided from financing activities

     117.7       97.4  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (2.9     3.2  
  

 

 

   

 

 

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     66.0       (37.3

Cash and cash equivalents at beginning of period

     27.0       56.2  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 93.0     $ 18.9  
  

 

 

   

 

 

 


PRELIMINARY

CONSOLIDATED BALANCE SHEETS

(in millions)

(Unaudited)

 

     March 31,     June 30,  
     2020     2019  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 93.0     $ 27.0  

Accounts receivable, net

     374.4       384.1  

Inventories

     869.0       787.7  

Other current assets

     40.7       37.4  
  

 

 

   

 

 

 

Total current assets

     1,377.1       1,236.2  

Property, plant and equipment, net

     1,395.2       1,366.2  

Goodwill

     325.1       326.4  

Other intangibles, net

     61.2       67.2  

Deferred income taxes

     3.8       4.2  

Other assets

     267.0       187.6  
  

 

 

   

 

 

 

Total assets

   $ 3,429.4     $ 3,187.8  
  

 

 

   

 

 

 

LIABILITIES

    

Current liabilities:

    

Short-term credit agreement borrowings

   $ 170.0     $ 19.7  

Accounts payable

     209.6       238.7  

Accrued liabilities

     136.4       157.6  
  

 

 

   

 

 

 

Total current liabilities

     516.0       416.0  

Long-term debt

     552.4       550.6  

Accrued pension liabilities

     359.7       371.2  

Accrued postretirement benefits

     122.8       122.1  

Deferred income taxes

     151.5       142.7  

Other liabilities

     108.5       65.1  
  

 

 

   

 

 

 

Total liabilities

     1,810.9       1,667.7  
  

 

 

   

 

 

 

STOCKHOLDERS’ EQUITY

    

Common stock

     280.1       279.0  

Capital in excess of par value

     325.7       320.4  

Reinvested earnings

     1,696.1       1,605.3  

Common stock in treasury, at cost

     (328.1     (332.8

Accumulated other comprehensive loss

     (355.3     (351.8
  

 

 

   

 

 

 

Total stockholders’ equity

     1,618.5       1,520.1  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 3,429.4     $ 3,187.8  
  

 

 

   

 

 

 


PRELIMINARY

SEGMENT FINANCIAL DATA

(in millions, except pounds sold)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     March 31,     March 31,  
     2020     2019     2020     2019  

Pounds sold (000):

        

Specialty Alloys Operations

     59,052       65,296       175,660       189,678  

Performance Engineered Products

     3,202       3,540       9,874       9,572  

Intersegment

     (116     (918     (1,800     (1,798
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated pounds sold

     62,138       67,918       183,734       197,452  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net sales:

        

Specialty Alloys Operations

        

Net sales excluding surcharge

   $ 398.8     $ 393.3     $ 1,174.5     $ 1,111.0  

Surcharge

     89.3       105.0       287.7       324.4  
  

 

 

   

 

 

   

 

 

   

 

 

 

Specialty Alloys Operations net sales

     488.1       498.3       1,462.2       1,435.4  

Performance Engineered Products

        

Net sales excluding surcharge

     107.1       125.9       319.1       343.3  

Surcharge

     1.5       2.8       4.9       10.1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Performance Engineered Products net sales

     108.6       128.7       324.0       353.4  

Intersegment

        

Net sales excluding surcharge

     (10.9     (16.2     (40.8     (45.5

Surcharge

     (0.4     (0.9     (1.6     (4.5
  

 

 

   

 

 

   

 

 

   

 

 

 

Intersegment net sales

     (11.3     (17.1     (42.4     (50.0
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated net sales

   $ 585.4     $ 609.9     $ 1,743.8     $ 1,738.8  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income (Loss):

        

Specialty Alloys Operations

   $ 76.4     $ 73.6     $ 233.7     $ 195.3  

Performance Engineered Products

     (0.3     16.6       (2.0     28.3  

Corporate (including restructuring charges)

     (17.8     (17.3     (58.8     (51.5

Intersegment

     0.4       0.3       0.6       1.5  
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated operating income

   $ 58.7     $ 73.2     $ 173.5     $ 173.6  
  

 

 

   

 

 

   

 

 

   

 

 

 

The Company has two reportable segments, Specialty Alloys Operations (“SAO”) and Performance Engineered Products (“PEP”).


The SAO segment is comprised of Carpenter Technology’s major premium alloy and stainless steel manufacturing operations. This includes operations performed at mills primarily in Reading and Latrobe, Pennsylvania and surrounding areas as well as 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 Carpenter Additive (Additive) business and the Latrobe and Mexico distribution businesses. Effective July 1, 2019, the Company’s LPW, CalRAM and Powder business in Alabama and West Virginia were combined into the Carpenter Additive business. 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, CPP and Additive businesses.

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 income (expense), net.


PRELIMINARY

NON-GAAP FINANCIAL MEASURES

(in millions, except per share data)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     March 31,     March 31,  
     2020     2019     2020     2019  

ADJUSTED OPERATING MARGIN EXCLUDING SURCHARGE REVENUE AND SPECIAL ITEMS

        

Net sales

   $ 585.4     $ 609.9     $ 1,743.8     $ 1,738.8  

Less: surcharge revenue

     90.4       106.9       291.0       330.0  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net sales excluding surcharge revenue

   $ 495.0     $ 503.0     $ 1,452.8     $ 1,408.8  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 58.7     $ 73.2     $ 173.5     $ 173.6  

Special items:

        

Restructuring charges

     —         —         2.3       —    

Acquisition-related costs

     —         —         —         1.2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income excluding special items

   $ 58.7     $ 73.2     $ 175.8     $ 174.8  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating margin

     10.0     12.0     9.9     10.0
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted operating margin excluding surcharge revenue and special items

     11.9     14.6     12.1     12.4
  

 

 

   

 

 

   

 

 

   

 

 

 

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.


     Income
Before
Income
Taxes
     Income
Tax
Expense
     Net
Income
     Earnings
Per
Diluted
Share*
 

ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS

           

Three months ended March 31, 2020, as reported

   $ 49.9      $ (10.0    $ 39.9      $ 0.82  

Special item:

           

None reported

     —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Three months ended March 31, 2020, as adjusted

   $ 49.9      $ (10.0    $ 39.9      $ 0.82  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

*

Impact per diluted share calculated using weighted average common shares outstanding of 48.3 million for the three months ended March 31, 2020.

 

     Income
Before
Income
Taxes
     Income
Tax
Expense
     Net
Income
     Earnings
Per
Diluted
Share*
 

ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS

           

Three months ended March 31, 2019, as reported

   $ 68.0      $ (16.9    $ 51.1      $ 1.05  

Special item:

           

None reported

     —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Three months ended March 31, 2019, as adjusted

   $ 68.0      $ (16.9    $ 51.1      $ 1.05  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

*

Impact per diluted share calculated using weighted average common shares outstanding of 48.1 million for the three months ended March 31, 2019.

 

     Income
Before
Income
Taxes
     Income
Tax
Expense
     Net
Income
     Earnings
Per
Diluted
Share*
 

ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS

           

Nine months ended March 31, 2020, as reported

   $ 154.5      $ (34.6    $ 119.9      $ 2.46  

Special item:

           

Restructuring charges

     2.3        (0.5      1.8        0.04  
  

 

 

    

 

 

    

 

 

    

 

 

 

Nine months ended March 31, 2020, as adjusted

   $ 156.8      $ (35.1    $ 121.7      $ 2.50  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

*

Impact per diluted share calculated using weighted average common shares outstanding of 48.4 million for the nine months ended March 31, 2020.


     Income
Before
Income
Taxes
     Income
Tax
Expense
     Net
Income
     Earnings
Per
Diluted
Share*
 

ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS

           

Nine months ended March 31, 2019, as reported

   $ 153.4      $ (35.3    $ 118.1      $ 2.43  

Special item:

           

Acquisition-related costs

     1.2        —          1.2        0.03  
  

 

 

    

 

 

    

 

 

    

 

 

 

Nine months ended March 31, 2019, as adjusted

   $ 154.6      $ (35.3    $ 119.3      $ 2.46  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

*

Impact per diluted share calculated using weighted average common shares outstanding of 48.1 million for the nine months ended March 31, 2019.

Management believes that earnings 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      Nine Months Ended  
     March 31,      March 31,  
     2020      2019      2020      2019  

FREE CASH FLOW

           

Net cash provided from operating activities

   $ 72.3      $ 10.0      $ 94.9      $ 57.2  

Purchases of property, plant, equipment and software

     (49.7      (49.0      (144.0      (130.7

Proceeds from disposals of property, plant and equipment and assets held for sale

     0.1        0.2        0.3        0.3  

Acquisition of business, net of cash acquired

     —          —          —          (79.0

Proceeds from insurance recovery

     —          11.4        —          11.4  

Dividends paid

     (9.7      (9.6      (29.1      (28.9
  

 

 

    

 

 

    

 

 

    

 

 

 

Free cash flow

   $ 13.0      $ (37.0    $ (77.9    $ (169.7
  

 

 

    

 

 

    

 

 

    

 

 

 

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 SCHEDULE

(in millions)

(Unaudited)

 

     Three Months Ended      Nine Months Ended  
     March 31,      March 31,  
     2020      2019      2020      2019  

NET SALES BY END-USE MARKET

           

End-Use Market Excluding Surcharge Revenue:

           

Aerospace and Defense

   $ 293.4      $ 273.8      $ 858.3      $ 747.6  

Medical

     47.7        47.1        135.2        125.0  

Transportation

     27.8        33.5        91.4        94.3  

Energy

     28.8        40.8        88.7        114.7  

Industrial and Consumer

     67.8        71.9        191.9        224.0  

Distribution

     29.5        35.9        87.3        103.2  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total net sales excluding surcharge revenue

     495.0        503.0        1,452.8        1,408.8  

Surcharge revenue

     90.4        106.9        291.0        330.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total net sales

   $ 585.4      $ 609.9      $ 1,743.8      $ 1,738.8