Carpenter Technology reported a record second quarter operating income of $118.9 million, raising its FY25 outlook and increasing share repurchases.
Quiver AI Summary
Carpenter Technology Corporation reported strong financial results for its second quarter ending December 31, 2024, achieving a record operating income of $118.9 million, a 70% increase year-over-year, with earnings per diluted share at $1.66. The Specialty Alloys Operations segment saw a significant rise in operating income to $135.6 million with an adjusted operating margin of 28.3%, up from 20.0% the previous year. The company generated $67.9 million in cash from operating activities and $38.6 million in adjusted free cash flow, while also repurchasing $8.2 million in shares under its authorized buyback program. Looking forward, the company has raised its operating income guidance for FY25 to between $500 million and $520 million and expects $250 million to $300 million in adjusted free cash flow. A virtual investor update event is scheduled for February 18, 2025, to discuss market trends and the company's long-term outlook.
Potential Positives
- Delivered record second quarter operating income of $118.9 million, a 70% increase year-over-year.
- Achieved an adjusted operating margin of 28.3% in the Specialty Alloys Operations segment, up from 20.0% in the prior year.
- Generated positive adjusted free cash flow of $38.6 million, compared to a negative $10.7 million in the same quarter last year.
- Increased fiscal year 2025 operating income outlook to $500 million - $520 million, indicating growth potential.
Potential Negatives
- Despite significant growth in operating income, the company faced an 8% increase in net sales primarily overshadowed by a 6% decrease in shipment volume, indicating potential demand or operational challenges.
- The $8.2 million share repurchase during the quarter, while a part of a $400 million program, highlights a relatively small commitment to returning capital to shareholders compared to the total authorization, which may raise questions about shareholder value maximization.
- Negative changes in working capital, particularly a decrease in inventories by $80.7 million compared to the previous year, could indicate potential supply chain or production issues affecting future operations.
FAQ
What were Carpenter Technology's operating income results for Q2 FY2025?
Carpenter Technology reported a record operating income of $118.9 million for Q2 FY2025, up 70% year-over-year.
How did the Specialty Alloys Operations segment perform?
The Specialty Alloys Operations segment achieved $135.6 million in operating income, showing a 63% increase compared to the previous year.
What is the adjusted free cash flow reported by Carpenter Technology?
The company generated $38.6 million in adjusted free cash flow in the second quarter of FY2025.
What are Carpenter Technology's FY2025 outlook expectations?
Carpenter Technology expects operating income to be between $500 million and $520 million for FY2025, increasing its previous outlook.
When is the upcoming investor update event?
The next virtual investor update event is scheduled for February 18, 2025, at 10:00 AM ET.
Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.
$CRS Insider Trading Activity
$CRS insiders have traded $CRS stock on the open market 9 times in the past 6 months. Of those trades, 0 have been purchases and 9 have been sales.
Here’s a breakdown of recent trading of $CRS stock by insiders over the last 6 months:
- TONY R THENE (President and CEO) has made 0 purchases and 3 sales selling 28,500 shares for an estimated $5,161,263.
- STEVEN E KAROL sold 15,000 shares for an estimated $2,711,520
- TIMOTHY LAIN (SVP and CFO) sold 3,250 shares for an estimated $595,091
- RAMIN YOUNESSI has made 0 purchases and 3 sales selling 3,946 shares for an estimated $593,848.
- I MARTIN INGLIS sold 750 shares for an estimated $107,722
To track insider transactions, check out Quiver Quantitative's insider trading dashboard.
$CRS Hedge Fund Activity
We have seen 207 institutional investors add shares of $CRS stock to their portfolio, and 208 decrease their positions in their most recent quarter.
Here are some of the largest recent moves:
- FMR LLC added 1,108,963 shares (+47.1%) to their portfolio in Q3 2024, for an estimated $176,968,315
- SURGOCAP PARTNERS LP added 662,712 shares (+inf%) to their portfolio in Q3 2024, for an estimated $105,755,580
- THIRD POINT LLC added 660,000 shares (+inf%) to their portfolio in Q3 2024, for an estimated $105,322,800
- DIMENSIONAL FUND ADVISORS LP removed 556,505 shares (-18.4%) from their portfolio in Q3 2024, for an estimated $88,807,067
- HENNESSY ADVISORS INC removed 493,800 shares (-100.0%) from their portfolio in Q4 2024, for an estimated $83,802,798
- ALLSPRING GLOBAL INVESTMENTS HOLDINGS, LLC added 479,985 shares (+428.4%) to their portfolio in Q4 2024, for an estimated $81,458,254
- AMERICAN CENTURY COMPANIES INC removed 368,561 shares (-43.4%) from their portfolio in Q3 2024, for an estimated $58,814,964
To track hedge funds' stock portfolios, check out Quiver Quantitative's institutional holdings dashboard.
Full Release
Delivered Record Second Quarter Operating Income
Expanded Operating Margins in Specialty Alloys Operations Segment
Generated Positive Adjusted Free Cash Flow
Repurchased Shares Against Authorized Share Repurchase Program
Increased FY25 Outlook
Investor Event Scheduled
PHILADELPHIA, Jan. 30, 2025 (GLOBE NEWSWIRE) -- Carpenter Technology Corporation (NYSE: CRS) (the “Company”) today announced financial results for the fiscal second quarter ended December 31, 2024. For the quarter, the Company reported operating income of $118.9 million, and earnings per diluted share of $1.66.
Second Quarter Fiscal Year 2025 Highlights
Delivered
$118.9
million of operating income, up 70 percent year-over-year and a record second quarter result
Realized earnings per diluted share of
$1.66
Delivered adjusted operating margin of 28.3 percent in the
Specialty Alloys Operations (“SAO”)
segment, up from 20.0 percent in the second quarter of the previous year
Achieved
$135.6 million of operating income in the
SAO
segment, up 63 percent year-over-year
Generated
$67.9 million
of cash from operating activities, or
$38.6
million of adjusted free cash flow
Executed $8.2 million in share repurchases against $400.0 million repurchase authorization
Fiscal Year 2025 Outlook
Increasing operating income expectations to the range of $500 million to $520 million, up from the high end of the range of $460 million to $500 million
Projecting $250 million to $300 million in adjusted free cash flow, which represents approximately 85 percent conversion rate
Anticipating between $126 million and $134 million in operating income for the third quarter of fiscal year 2025
Well-positioned for continued growth beyond fiscal year 2025 with strong market demand outlook for our broad portfolio of specialized solutions, and a focus on increasing productivity, optimizing product mix and pricing actions
Investor Update Event
Will host virtual Investor Update Event on Tuesday, February 18, 2025, at 10:00 am ET
Provide general business update, including:
View of demand trends across end-use markets
Status and review of commercial and operations initiatives
Financial outlook beyond fiscal year 2025
“In the second quarter of fiscal year 2025 we delivered $118.9 million of operating income, a record second fiscal quarter and our second most profitable quarter on record,” said Tony R. Thene, President and CEO of Carpenter Technology. “Our ability to deliver these financial results while navigating the current Aerospace supply chain environment speaks to our strong market position and intense focus on execution.”
“We continue to drive earnings momentum through improved productivity, product mix optimization and pricing actions. Notably, the SAO segment realized $135.6 million in operating income with an adjusted operating margin of 28.3 percent, up from 20.0 percent in the second quarter a year ago. This marks the twelfth quarter in a row with increasing adjusted operating margins in SAO.”
“With the strong quarterly earnings, we generated $67.9 million in cash from operations and $38.6 million of adjusted free cash flow. We also repurchased shares and funded a long-standing dividend, returning cash to shareholders as a part of our balanced approach to capital allocation.”
“Our outlook continues to strengthen. We anticipate earnings to continue to grow through fiscal year 2025, with total operating income in the range of $500 million to $520 million for the fiscal year. In addition, we expect to generate $250 million to $300 million in adjusted free cash flow.”
“Over the course of the last 9 months, we have pulled what was a four-year target in by two years into fiscal year 2025; and now we have increased our overall goal for fiscal year 2025. As we look ahead, we anticipate growth well beyond our fiscal year 2025 with strong demand for our highly specialized portfolio of products and our unique capacity and capabilities. We will provide a general update on the business, including demand across end-use markets and our operations, and detail our financial outlook beyond our fiscal year 2025 at an upcoming virtual investor update event, scheduled for February 18, 2025, at 10:00 am.”
“Carpenter Technology continues to exceed performance and outlook expectations. With continued growth, a strong balance sheet and meaningful adjusted free cash flow, we are well positioned to drive long-term value to shareholders. We will continue to take a balanced approach to capital allocation: sustaining our current asset base to achieve our targets, investing in incremental growth initiatives, and returning cash to shareholders.”
Financial Highlights
Q2 | Q1 | Q2 | ||||||||
($ in millions, except per share amounts) | FY2025 | FY2025 | FY2024 | |||||||
Net sales | $ | 676.9 | $ | 717.6 | $ | 624.2 | ||||
Net sales excluding surcharge (a) | $ | 548.0 | $ | 577.4 | $ | 485.3 | ||||
Operating income | $ | 118.9 | $ | 113.6 | $ | 69.8 | ||||
Adjusted operating income excluding special item (a) | $ | 118.9 | $ | 117.2 | $ | 69.8 | ||||
Net income | $ | 84.1 | $ | 84.8 | $ | 42.7 | ||||
Earnings per diluted share | $ | 1.66 | $ | 1.67 | $ | 0.85 | ||||
Adjusted earnings per diluted share (a) | $ | 1.66 | $ | 1.73 | $ | 0.85 | ||||
Net cash provided from operating activities | $ | 67.9 | $ | 40.2 | $ | 14.6 | ||||
Adjusted free cash flow (a) | $ | 38.6 | $ | 13.3 | $ | (10.7 | ) | |||
(a) Non-GAAP financial measures explained in the attached tables | ||||||||||
Net sales for the second quarter of fiscal year 2025 were $676.9 million, compared with $624.2 million in the second quarter of fiscal year 2024, an increase of $52.7 million (or 8 percent), on a 6 percent decrease in shipment volume. Net sales excluding surcharge were $548.0 million for the current quarter, an increase of $62.7 million (or 13 percent) from the same period a year ago.
Operating income was $118.9 million compared to operating income of $69.8 million in the prior year period. Earnings per diluted share in the second quarter of fiscal year 2025 was $1.66 compared to $0.85 per diluted share in the prior year second quarter. These results primarily reflect an ongoing improvement in product mix with a shift in capacity to more complex, higher value materials as well as expanding operating efficiencies compared to the prior year period.
Cash provided from operating activities in the second quarter of fiscal year 2025 was $67.9 million compared to $14.6 million in the same quarter last year. Adjusted free cash flow in the second quarter of fiscal year 2025 was $38.6 million, compared to negative $10.7 million in the same quarter last year. The improvements in operating cash flow and adjusted free cash flow in the second quarter of fiscal year 2025 reflect improved earnings partially offset by higher pension contributions and capital expenditures compared to the prior year period. Capital expenditures in the second quarter of fiscal year 2025 were $29.3 million, compared to $25.3 million in the same quarter last year. Under the Company's authorized share repurchase program of up to $400.0 million, the Company purchased 45,000 shares of its common stock on the open market for an aggregate of $8.2 million during the quarter ended December 31, 2024. As of December 31, 2024, $359.7 million remains available for future purchases.
Total liquidity, including cash and available revolver balance, was $511.0 million at the end of the second quarter of fiscal year 2025. This consisted of $162.1 million of cash and $348.9 million of available borrowings under the Company’s credit facility.
Conference Call and Webcast Presentation
Carpenter Technology will host a conference call and webcast presentation today, January 30, 2025, at 10:00 a.m. ET, to discuss the financial results of operations for the second quarter of fiscal year 2025. 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 (
https://www.carpentertechnology.com
), and a replay will soon be made available at
https://www.carpentertechnology.com
. Presentation materials used during this conference call will be available for viewing and download at
https://www.carpentertechnology.com
.
Investor Update Event
Carpenter Technology will host a conference call and webcast presentation on February 18, 2025, at 10:00 a.m. ET, to provide a business update including market demand trends, manufacturing operations initiatives and long-term financial outlook. Access to the live webcast will be available at Carpenter Technology’s website (
https://www.carpentertechnology.com
), and a replay will be made available shortly after the event at
https://www.carpentertechnology.com
. Presentation materials used during the event will be available for viewing and download at
https://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 materials and process solutions for critical applications in the aerospace and defense, medical, and other markets. Founded in 1889, Carpenter Technology has evolved to become a pioneer in premium specialty alloys including nickel, cobalt, and titanium and material process capabilities that solve our customers' current and future material challenges. More information about Carpenter Technology can be found at
https://www.carpentertechnology.com
.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected, anticipated or implied. The most significant of these uncertainties are described in Carpenter Technology's filings with the Securities and Exchange Commission, including its report on Form 10-K for the fiscal year ended
June 30, 2024
, Form 10-Q for the fiscal quarter ended September 30, 2024, 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, energy, transportation, 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 and interest rates; (6) the effect of government trade actions, including tariffs; (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 a qualified workforce and 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 impact of potential cyber attacks and information technology or data security breaches; (17) the ability of suppliers to meet obligations due to supply chain disruptions or otherwise; (18) the ability to meet increased demand, production targets or commitments; (19) the ability to manage the impacts of natural disasters, climate change, pandemics and outbreaks of contagious diseases and other adverse public health developments; (20) geopolitical, economic, and regulatory risks relating to our global business, including geopolitical and diplomatic tensions, instabilities and conflicts, such as the war in Ukraine and the war between Israel and HAMAS, and Houthi attacks on commercial shipping vessels and other naval vessels as well as compliance with U.S. and foreign trade and tax laws, sanctions, embargoes and other regulations; (21) challenges affecting the commercial aviation industry or key participants including, but not limited to production and other challenges at The Boeing Company; and (22) the consequences of the announcement, maintenance or use of Carpenter Technology’s share repurchase program. 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. We caution you not to place undue reliance on forward-looking statements, which speak only as of the date of this press release or as of the dates otherwise indicated in such forward-looking statements. Carpenter Technology undertakes no obligation to update or revise any forward-looking statements.
PRELIMINARY CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) (Unaudited) | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||
NET SALES | $ | 676.9 | $ | 624.2 | $ | 1,394.5 | $ | 1,276.1 | ||||
Cost of sales | 499.4 | 501.6 | 1,040.7 | 1,029.4 | ||||||||
Gross profit | 177.5 | 122.6 | 353.8 | 246.7 | ||||||||
Selling, general and administrative expenses | 58.6 | 52.8 | 117.7 | 107.9 | ||||||||
Restructuring and asset impairment charges | — | — | 3.6 | — | ||||||||
Operating income | 118.9 | 69.8 | 232.5 | 138.8 | ||||||||
Interest expense, net | 12.2 | 13.0 | 24.6 | 25.7 | ||||||||
Other expense, net | 1.6 | 1.6 | 1.6 | 5.5 | ||||||||
Income before income taxes | 105.1 | 55.2 | 206.3 | 107.6 | ||||||||
Income tax expense | 21.0 | 12.5 | 37.4 | 21.0 | ||||||||
NET INCOME | $ | 84.1 | $ | 42.7 | $ | 168.9 | $ | 86.6 | ||||
EARNINGS PER COMMON SHARE: | ||||||||||||
Basic | $ | 1.68 | $ | 0.86 | $ | 3.37 | $ | 1.75 | ||||
Diluted | $ | 1.66 | $ | 0.85 | $ | 3.33 | $ | 1.73 | ||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||
Basic | 50.2 | 49.7 | 50.2 | 49.4 | ||||||||
Diluted | 50.7 | 50.2 | 50.7 | 50.0 | ||||||||
Cash dividends per common share | $ | 0.20 | $ | 0.20 | $ | 0.40 | $ | 0.40 | ||||
PRELIMINARY CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (Unaudited) | ||||||||
Six Months Ended | ||||||||
December 31, | ||||||||
2024 | 2023 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 168.9 | $ | 86.6 | ||||
Adjustments to reconcile net income to net cash provided from operating activities: | ||||||||
Depreciation and amortization | 68.1 | 66.7 | ||||||
Noncash restructuring and asset impairment charges | 2.5 | — | ||||||
Deferred income taxes | (8.4 | ) | (1.0 | ) | ||||
Net pension expense | 12.4 | 11.8 | ||||||
Share-based compensation expense | 9.8 | 8.5 | ||||||
Net loss on disposals of property, plant and equipment | 0.5 | 1.2 | ||||||
Changes in working capital and other: | ||||||||
Accounts receivable | (6.1 | ) | 23.9 | |||||
Inventories | (80.7 | ) | (157.5 | ) | ||||
Other current assets | (6.8 | ) | (25.4 | ) | ||||
Accounts payable | 3.6 | 37.8 | ||||||
Accrued liabilities | (36.9 | ) | (26.8 | ) | ||||
Pension plan contributions | (15.1 | ) | (4.8 | ) | ||||
Other postretirement plan contributions | (1.8 | ) | (0.7 | ) | ||||
Other, net | (1.9 | ) | 1.6 | |||||
Net cash provided from operating activities | 108.1 | 21.9 | ||||||
INVESTING ACTIVITIES | ||||||||
Purchases of property, plant, equipment and software | (56.2 | ) | (47.3 | ) | ||||
Net cash used for investing activities | (56.2 | ) | (47.3 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Short-term credit agreement borrowings, net change | — | 13.9 | ||||||
Credit agreement borrowings | — | 46.5 | ||||||
Credit agreement repayments | — | (46.5 | ) | |||||
Dividends paid | (20.2 | ) | (19.8 | ) | ||||
Purchases of treasury stock | (40.3 | ) | — | |||||
Proceeds from stock options exercised | 3.9 | 19.4 | ||||||
Withholding tax payments on share-based compensation awards | (32.0 | ) | (18.0 | ) | ||||
Net cash used for financing activities | (88.6 | ) | (4.5 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (0.3 | ) | 1.1 | |||||
DECREASE IN CASH AND CASH EQUIVALENTS | (37.0 | ) | (28.8 | ) | ||||
Cash and cash equivalents at beginning of year | 199.1 | 44.5 | ||||||
Cash and cash equivalents at end of period | $ | 162.1 | $ | 15.7 | ||||
PRELIMINARY CONSOLIDATED BALANCE SHEETS (in millions) (Unaudited) | ||||||||
December 31, | June 30, | |||||||
2024 | 2024 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 162.1 | $ | 199.1 | ||||
Accounts receivable, net | 565.4 | 562.6 | ||||||
Inventories | 812.0 | 735.4 | ||||||
Other current assets | 100.8 | 94.1 | ||||||
Total current assets | 1,640.3 | 1,591.2 | ||||||
Property, plant, equipment and software, net | 1,325.2 | 1,335.2 | ||||||
Goodwill | 227.3 | 227.3 | ||||||
Other intangibles, net | 12.4 | 15.2 | ||||||
Deferred income taxes | 7.6 | 7.5 | ||||||
Other assets | 113.9 | 115.3 | ||||||
Total assets | $ | 3,326.7 | $ | 3,291.7 | ||||
LIABILITIES | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 266.9 | $ | 263.9 | ||||
Accrued liabilities | 165.2 | 202.4 | ||||||
Total current liabilities | 432.1 | 466.3 | ||||||
Long-term debt | 694.8 | 694.2 | ||||||
Accrued pension liabilities | 198.9 | 207.6 | ||||||
Accrued postretirement benefits | 22.1 | 21.1 | ||||||
Deferred income taxes | 166.7 | 174.1 | ||||||
Other liabilities | 95.2 | 99.6 | ||||||
Total liabilities | 1,609.8 | 1,662.9 | ||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock | 285.6 | 284.9 | ||||||
Capital in excess of par value | 338.0 | 352.6 | ||||||
Reinvested earnings | 1,523.2 | 1,374.5 | ||||||
Common stock in treasury, at cost | (333.7 | ) | (289.3 | ) | ||||
Accumulated other comprehensive loss | (96.2 | ) | (93.9 | ) | ||||
Total stockholders' equity | 1,716.9 | 1,628.8 | ||||||
Total liabilities and stockholders' equity | $ | 3,326.7 | $ | 3,291.7 | ||||
PRELIMINARY SEGMENT FINANCIAL DATA (in millions, except pounds sold) (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Pounds sold ('000): | |||||||||||||||
Specialty Alloys Operations | 44,714 | 50,114 | 94,814 | 100,104 | |||||||||||
Performance Engineered Products | 2,208 | 2,318 | 4,840 | 4,620 | |||||||||||
Intersegment | (752 | ) | (3,350 | ) | (1,916 | ) | (5,414 | ) | |||||||
Consolidated pounds sold | 46,170 | 49,082 | 97,738 | 99,310 | |||||||||||
Net sales: | |||||||||||||||
Specialty Alloys Operations | |||||||||||||||
Net sales excluding surcharge | $ | 479.6 | $ | 416.2 | $ | 990.5 | $ | 833.4 | |||||||
Surcharge | 121.9 | 133.2 | 256.1 | 286.0 | |||||||||||
Specialty Alloys Operations net sales | 601.5 | 549.4 | 1,246.6 | 1,119.4 | |||||||||||
Performance Engineered Products | |||||||||||||||
Net sales excluding surcharge | 86.2 | 87.9 | 178.5 | 181.0 | |||||||||||
Surcharge | 8.8 | 7.8 | 17.3 | 16.4 | |||||||||||
Performance Engineered Products net sales | 95.0 | 95.7 | 195.8 | 197.4 | |||||||||||
Intersegment | |||||||||||||||
Net sales excluding surcharge | (17.8 | ) | (18.8 | ) | (43.6 | ) | (36.3 | ) | |||||||
Surcharge | (1.8 | ) | (2.1 | ) | (4.3 | ) | (4.4 | ) | |||||||
Intersegment net sales | (19.6 | ) | (20.9 | ) | (47.9 | ) | (40.7 | ) | |||||||
Consolidated net sales | $ | 676.9 | $ | 624.2 | $ | 1,394.5 | $ | 1,276.1 | |||||||
Operating income (loss): | |||||||||||||||
Specialty Alloys Operations | $ | 135.6 | $ | 83.3 | $ | 270.2 | $ | 164.1 | |||||||
Performance Engineered Products | 7.0 | 7.1 | 14.3 | 16.2 | |||||||||||
Corporate | (23.6 | ) | (20.7 | ) | (51.6 | ) | (42.0 | ) | |||||||
Intersegment | (0.1 | ) | 0.1 | (0.4 | ) | 0.5 | |||||||||
Consolidated operating income | $ | 118.9 | $ | 69.8 | $ | 232.5 | $ | 138.8 | |||||||
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, 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 Additive 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 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 included in other expense, net, and is comprised of the expected return on plan assets, interest costs on the projected benefit obligations of the plans, amortization of actuarial gains and losses and prior service costs.
PRELIMINARY NON-GAAP FINANCIAL MEASURES (in millions, except per share data) (Unaudited) | ||||||||||||||||
ADJUSTED OPERATING MARGIN EXCLUDING SURCHARGE REVENUE AND SPECIAL ITEM | Three Months Ended | Six Months Ended | ||||||||||||||
December 31, | December 31, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Net sales | $ | 676.9 | $ | 624.2 | $ | 1,394.5 | $ | 1,276.1 | ||||||||
Less: surcharge revenue | 128.9 | 138.9 | 269.1 | 298.0 | ||||||||||||
Net sales excluding surcharge revenue | $ | 548.0 | $ | 485.3 | $ | 1,125.4 | $ | 978.1 | ||||||||
Operating income | $ | 118.9 | $ | 69.8 | $ | 232.5 | $ | 138.8 | ||||||||
Special item: | ||||||||||||||||
Restructuring and asset impairment charges | — | — | 3.6 | — | ||||||||||||
Adjusted operating income | $ | 118.9 | $ | 69.8 | $ | 236.1 | $ | 138.8 | ||||||||
Operating margin | 17.6 | % | 11.2 | % | 16.7 | % | 10.9 | % | ||||||||
Adjusted operating margin excluding surcharge revenue and special item | 21.7 | % | 14.4 | % | 21.0 | % | 14.2 | % | ||||||||
ADJUSTED SEGMENT OPERATING MARGIN EXCLUDING SURCHARGE REVENUE | Three Months Ended | Six Months Ended | ||||||||||||||
December 31, | December 31, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Specialty Alloys Operations | ||||||||||||||||
Net sales | $ | 601.5 | $ | 549.4 | $ | 1,246.6 | $ | 1,119.4 | ||||||||
Less: surcharge revenue | 121.9 | 133.2 | 256.1 | 286.0 | ||||||||||||
Net sales excluding surcharge revenue | $ | 479.6 | $ | 416.2 | $ | 990.5 | $ | 833.4 | ||||||||
Operating income | $ | 135.6 | $ | 83.3 | $ | 270.2 | $ | 164.1 | ||||||||
Operating margin | 22.5 | % | 15.2 | % | 21.7 | % | 14.7 | % | ||||||||
Adjusted operating margin excluding surcharge revenue | 28.3 | % | 20.0 | % | 27.3 | % | 19.7 | % | ||||||||
ADJUSTED SEGMENT OPERATING MARGIN EXCLUDING SURCHARGE REVENUE | Three Months Ended | Six Months Ended | ||||||||||||||
December 31, | December 31, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Performance Engineered Products | ||||||||||||||||
Net sales | $ | 95.0 | $ | 95.7 | $ | 195.8 | $ | 197.4 | ||||||||
Less: surcharge revenue | 8.8 | 7.8 | 17.3 | 16.4 | ||||||||||||
Net sales excluding surcharge revenue | $ | 86.2 | $ | 87.9 | $ | 178.5 | $ | 181.0 | ||||||||
Operating income | $ | 7.0 | $ | 7.1 | $ | 14.3 | $ | 16.2 | ||||||||
Operating margin | 7.4 | % | 7.4 | % | 7.3 | % | 8.2 | % | ||||||||
Adjusted operating margin excluding surcharge revenue | 8.1 | % | 8.1 | % | 8.0 | % | 9.0 | % | ||||||||
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.
ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEM | Earnings Before Income Taxes | Income Tax Expense | Net Income | Earnings Per Diluted Share* | |||||||||
Three Months Ended December 31, 2024, as reported | $ | 105.1 | $ | (21.0 | ) | $ | 84.1 | $ | 1.66 | ||||
Special item: | |||||||||||||
None reported | — | — | — | — | |||||||||
Three Months Ended December 31, 2024, as adjusted | $ | 105.1 | $ | (21.0 | ) | $ | 84.1 | $ | 1.66 | ||||
* Impact per diluted share calculated using weighted average common shares outstanding of 50.7 million for the three months ended December 31, 2024. | |||||||||||||
ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEM | Earnings Before Income Taxes | Income Tax Expense | Net Income | Earnings Per Diluted Share* | |||||||||
Three Months Ended December 31, 2023, as reported | $ | 55.2 | $ | (12.5 | ) | $ | 42.7 | $ | 0.85 | ||||
Special item: | |||||||||||||
None reported | — | — | — | — | |||||||||
Three Months Ended December 31, 2023, as adjusted | $ | 55.2 | $ | (12.5 | ) | $ | 42.7 | $ | 0.85 | ||||
* Impact per diluted share calculated using weighted average common shares outstanding of 50.2 million for the three months ended December 31, 2023. | |||||||||||||
ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEM | Earnings Before Income Taxes | Income Tax Expense | Net Income | Earnings Per Diluted Share* | |||||||||
Six Months Ended December 31, 2024, as reported | $ | 206.3 | $ | (37.4 | ) | $ | 168.9 | $ | 3.33 | ||||
Special item: | |||||||||||||
Restructuring and asset impairment charges | 3.6 | (0.9 | ) | 2.7 | 0.06 | ||||||||
Six Months Ended December 31, 2024, as adjusted | $ | 209.9 | $ | (38.3 | ) | $ | 171.6 | $ | 3.39 | ||||
* Impact per diluted share calculated using weighted average common shares outstanding of 50.7 million for the six months ended December 31, 2024. | |||||||||||||
ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS | Earnings Before Income Taxes | Income Tax Expense | Net Income | Earnings Per Diluted Share* | |||||||||
Six Months Ended December 31, 2023, as reported | $ | 107.6 | $ | (21.0 | ) | $ | 86.6 | $ | 1.73 | ||||
Special item: | |||||||||||||
None reported | — | — | — | — | |||||||||
Six Months Ended December 31, 2023, as adjusted | $ | 107.6 | $ | (21.0 | ) | $ | 86.6 | $ | 1.73 | ||||
* Impact per diluted share calculated using weighted average common shares outstanding of 50.0 million for the six months ended December 31, 2023. | |||||||||||||
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 | Six Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
ADJUSTED FREE CASH FLOW | 2024 | 2023 | 2024 | 2023 | ||||||||||||
Net cash provided from operating activities | $ | 67.9 | $ | 14.6 | $ | 108.1 | $ | 21.9 | ||||||||
Purchases of property, plant, equipment and software | (29.3 | ) | (25.3 | ) | (56.2 | ) | (47.3 | ) | ||||||||
Adjusted free cash flow | $ | 38.6 | $ | (10.7 | ) | $ | 51.9 | $ | (25.4 | ) | ||||||
Management believes that the presentation of adjusted free cash flow provides useful information to investors regarding our financial condition because it is a measure of cash generated which management evaluates for alternative uses. It is management's current intention to use excess cash to fund investments in capital equipment, acquisition opportunities and consistent dividend payments. Additionally, we will discretionarily use excess cash to fund share repurchases of our outstanding common stock. Adjusted free cash flow is not a U.S. GAAP financial measure and should not be considered in isolation of, or as a substitute for, cash flows calculated in accordance with U.S. GAAP.
PRELIMINARY SUPPLEMENTAL SCHEDULE (in millions) (Unaudited) | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
NET SALES BY END-USE MARKET | 2024 | 2023 | 2024 | 2023 | ||||||||
End-Use Market Excluding Surcharge Revenue: | ||||||||||||
Aerospace and Defense | $ | 333.8 | $ | 246.7 | $ | 683.7 | $ | 507.8 | ||||
Medical | 73.4 | 73.0 | 146.8 | 139.5 | ||||||||
Energy | 32.2 | 36.8 | 71.6 | 66.0 | ||||||||
Transportation | 21.4 | 26.8 | 42.5 | 56.0 | ||||||||
Industrial and Consumer | 67.4 | 80.2 | 139.8 | 159.6 | ||||||||
Distribution | 19.8 | 21.8 | 41.0 | 49.2 | ||||||||
Total net sales excluding surcharge revenue | 548.0 | 485.3 | 1,125.4 | 978.1 | ||||||||
Surcharge revenue | 128.9 | 138.9 | 269.1 | 298.0 | ||||||||
Total net sales | $ | 676.9 | $ | 624.2 | $ | 1,394.5 | $ | 1,276.1 | ||||
Investor Inquiries: John Huyette +1 610-208-2061 jhuyette@cartech.com | Media Inquiries: Heather Beardsley +1 610-208-2278 hbeardsley@cartech.com |
This article was originally published on Quiver News, read the full story.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
