First Quarter Fiscal Year 2024 Highlights
- Exceeded expectations with reported earnings per diluted share of
$0.88 , up from$0.78 the previous quarter - Achieved operating income of
$69.0 million , up from$62.9 million in the previous quarter - Specialty Alloys Operations segment exceeded expectations with operating income of
$80.8 million , up from$80.0 million in the previous quarter - Specialty Alloys Operations segment adjusted operating margin reached 19.4 percent, up from 16.8 percent in the previous quarter
“On our last earnings call, we expected the first quarter of fiscal year 2024 would represent a meaningful improvement compared to the historical trend of a sequential decline in profits in the first quarter of a fiscal year. Building on our strong operating momentum in fiscal year 2023, we exceeded our expectations and reported first quarter operating income of
“Notably, the Specialty Alloys Operations (“SAO”) segment demonstrated improvement, reaching
“Demand for our material solutions across our end-use markets remains strong. We continue to see our backlog grow, setting new records every quarter, with lead times extending further even as we are actively managing incoming orders. In this demand environment we are well-positioned to continue to drive profit margin expansion through productivity improvements, product mix optimization and higher prices.”
“In addition to the strong operating performance, we generated
“Looking ahead, we expect operating income for the second quarter to be in line with the first quarter, in the range of
“As previously announced, our goal is to double fiscal year 2019 operating income by fiscal year 2027 and we expect to make significant progress toward that goal in fiscal year 2024. We are well-positioned to realize our target by increasing our productivity across facilities, realizing higher prices and improving our product mix.”
“This is an exciting time at
Financial Highlights
Q1 | Q4 | Q1 | |||||||||
($ in millions except per share amounts) | FY2024 | FY2023 | FY2023 | ||||||||
Net sales | $ | 651.9 | $ | 758.1 | $ | 522.9 | |||||
Net sales excluding surcharge (a) | $ | 492.8 | $ | 560.0 | $ | 375.7 | |||||
Operating income | $ | 69.0 | $ | 62.9 | $ | 8.3 | |||||
Net income (loss) | $ | 43.9 | $ | 38.4 | $ | (6.9 | ) | ||||
Earnings (loss) per diluted share | $ | 0.88 | $ | 0.78 | $ | (0.14 | ) | ||||
Net cash provided from (used for) operating activities | $ | 7.4 | $ | 174.9 | $ | (78.0 | ) | ||||
Adjusted free cash flow (a) | $ | (14.6 | ) | $ | 144.1 | $ | (91.5 | ) | |||
(a) Non-GAAP financial measures explained in the attached tables |
Net sales for the first quarter of fiscal year 2024 were
Operating income was
Cash provided from operating activities in the first quarter of fiscal year 2024 was
Total liquidity, including cash and available revolver balance, was
Conference Call and Webcast Presentation
Non-GAAP Financial Measures
This press release includes discussions of financial measures that have not been determined in accordance with
About
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
PRELIMINARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(Unaudited)
Three Months Ended | |||||||
2023 | 2022 | ||||||
$ | 651.9 | $ | 522.9 | ||||
Cost of sales | 527.8 | 468.1 | |||||
Gross profit | 124.1 | 54.8 | |||||
Selling, general and administrative expenses | 55.1 | 46.5 | |||||
Operating income | 69.0 | 8.3 | |||||
Interest expense, net | 12.7 | 12.6 | |||||
Other expense, net | 4.0 | 3.5 | |||||
Income (loss) before income taxes | 52.3 | (7.8 | ) | ||||
Income tax expense (benefit) | 8.4 | (0.9 | ) | ||||
NET INCOME (LOSS) | $ | 43.9 | $ | (6.9 | ) | ||
EARNINGS (LOSS) PER COMMON SHARE: | |||||||
Basic | $ | 0.89 | $ | (0.14 | ) | ||
Diluted | $ | 0.88 | $ | (0.14 | ) | ||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||
Basic | 49.2 | 48.7 | |||||
Diluted | 49.9 | 48.7 |
PRELIMINARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Three Months Ended | ||||||||
2023 | 2022 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income (loss) | $ | 43.9 | $ | (6.9 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided from (used for) operating activities: | ||||||||
Depreciation and amortization | 33.1 | 32.3 | ||||||
Deferred income taxes | 2.4 | (2.2 | ) | |||||
Net pension expense | 5.9 | 5.0 | ||||||
Share-based compensation expense | 4.4 | 3.6 | ||||||
Net loss on disposals of property, plant and equipment | 0.3 | 0.3 | ||||||
Changes in working capital and other: | ||||||||
Accounts receivable | 18.4 | (12.1 | ) | |||||
Inventories | (67.8 | ) | (121.2 | ) | ||||
Other current assets | (19.9 | ) | (11.5 | ) | ||||
Accounts payable | 40.3 | 46.7 | ||||||
Accrued liabilities | (48.4 | ) | (11.9 | ) | ||||
Pension plan contributions | (4.6 | ) | — | |||||
Other postretirement plan contributions | — | (0.3 | ) | |||||
Other, net | (0.6 | ) | 0.2 | |||||
Net cash provided from (used for) operating activities | 7.4 | (78.0 | ) | |||||
INVESTING ACTIVITIES | ||||||||
Purchases of property, plant, equipment and software | (22.0 | ) | (13.5 | ) | ||||
Net cash used for investing activities | (22.0 | ) | (13.5 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Dividends paid | (9.9 | ) | (9.8 | ) | ||||
Proceeds from stock options exercised | 13.8 | — | ||||||
Withholding tax payments on share-based compensation awards | (16.8 | ) | (3.2 | ) | ||||
Net cash used for financing activities | (12.9 | ) | (13.0 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 1.1 | 2.9 | ||||||
DECREASE IN CASH AND CASH EQUIVALENTS | (26.4 | ) | (101.6 | ) | ||||
Cash and cash equivalents at beginning of year | 44.5 | 154.2 | ||||||
Cash and cash equivalents at end of period | $ | 18.1 | $ | 52.6 |
PRELIMINARY
CONSOLIDATED BALANCE SHEETS
(in millions)
(Unaudited)
2023 | 2023 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 18.1 | $ | 44.5 | ||||
Accounts receivable, net | 510.8 | 531.3 | ||||||
Inventories | 706.7 | 639.7 | ||||||
Other current assets | 86.3 | 66.4 | ||||||
Total current assets | 1,321.9 | 1,281.9 | ||||||
Property, plant, equipment and software, net | 1,371.2 | 1,383.8 | ||||||
241.4 | 241.4 | |||||||
Other intangibles, net | 26.8 | 28.7 | ||||||
Deferred income taxes | 6.6 | 6.6 | ||||||
Other assets | 108.9 | 111.5 | ||||||
Total assets | $ | 3,076.8 | $ | 3,053.9 | ||||
LIABILITIES | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 315.5 | $ | 278.1 | ||||
Accrued liabilities | 133.1 | 181.3 | ||||||
Total current liabilities | 448.6 | 459.4 | ||||||
Long-term debt | 693.3 | 693.0 | ||||||
Accrued pension liabilities | 188.4 | 190.1 | ||||||
Accrued postretirement benefits | 46.9 | 45.8 | ||||||
Deferred income taxes | 172.6 | 170.3 | ||||||
Other liabilities | 97.7 | 99.2 | ||||||
Total liabilities | 1,647.5 | 1,657.8 | ||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock | 282.6 | 280.7 | ||||||
Capital in excess of par value | 320.4 | 328.4 | ||||||
Reinvested earnings | 1,262.0 | 1,228.0 | ||||||
Common stock in treasury, at cost | (290.2 | ) | (298.0 | ) | ||||
Accumulated other comprehensive loss | (145.5 | ) | (143.0 | ) | ||||
Total stockholders' equity | 1,429.3 | 1,396.1 | ||||||
Total liabilities and stockholders' equity | $ | 3,076.8 | $ | 3,053.9 |
PRELIMINARY
SEGMENT FINANCIAL DATA
(in millions, except pounds sold)
(Unaudited)
Three Months Ended | |||||||
2023 | 2022 | ||||||
Pounds sold (000): | |||||||
Specialty Alloys Operations | 49,992 | 44,562 | |||||
Performance Engineered Products | 2,302 | 2,326 | |||||
Intersegment | (2,066 | ) | (1,998 | ) | |||
Consolidated pounds sold | 50,228 | 44,890 | |||||
Net sales: | |||||||
Specialty Alloys Operations | |||||||
Net sales excluding surcharge | $ | 417.3 | $ | 305.7 | |||
Surcharge | 152.8 | 141.6 | |||||
Specialty Alloys Operations net sales | 570.1 | 447.3 | |||||
Performance Engineered Products | |||||||
Net sales excluding surcharge | 93.1 | 87.7 | |||||
Surcharge | 8.7 | 5.5 | |||||
Performance Engineered Products net sales | 101.8 | 93.2 | |||||
Intersegment | |||||||
Net sales excluding surcharge | (17.6 | ) | (17.7 | ) | |||
Surcharge | (2.4 | ) | 0.1 | ||||
Intersegment net sales | (20.0 | ) | (17.6 | ) | |||
Consolidated net sales | $ | 651.9 | $ | 522.9 | |||
Operating income (loss): | |||||||
Specialty Alloys Operations | $ | 80.8 | $ | 19.9 | |||
Performance Engineered Products | 9.1 | 6.3 | |||||
Corporate | (21.3 | ) | (17.1 | ) | |||
Intersegment | 0.4 | (0.8 | ) | ||||
Consolidated operating income | $ | 69.0 | $ | 8.3 | |||
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
The PEP segment is comprised of the Company’s differentiated operations. This segment includes the
Corporate costs are comprised of executive and director compensation, and other corporate facilities and administrative expenses not allocated to the segments. Also included are items that management considers not representative of ongoing operations 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 expense, net.
PRELIMINARY
NON-GAAP FINANCIAL MEASURES
(in millions, except per share data)
(Unaudited)
Three Months Ended | ||||||||
ADJUSTED OPERATING MARGIN EXCLUDING SURCHARGE REVENUE | 2023 | 2022 | ||||||
Net sales | $ | 651.9 | $ | 522.9 | ||||
Less: surcharge revenue | 159.1 | 147.2 | ||||||
Net sales excluding surcharge revenue | $ | 492.8 | $ | 375.7 | ||||
Operating income | $ | 69.0 | $ | 8.3 | ||||
Operating margin | 10.6 | % | 1.6 | % | ||||
Adjusted operating margin excluding surcharge revenue | 14.0 | % | 2.2 | % | ||||
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. 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 | ||||||||
ADJUSTED FREE CASH FLOW | 2023 | 2022 | ||||||
Net cash provided from (used for) operating activities | $ | 7.4 | $ | (78.0 | ) | |||
Purchases of property, plant, equipment and software | (22.0 | ) | (13.5 | ) | ||||
Adjusted free cash flow | $ | (14.6 | ) | $ | (91.5 | ) | ||
Management believes that the adjusted free cash flow measure provides useful information to investors regarding the Company's financial condition because it is a measure of cash generated which management evaluates for alternative uses. Historically, the presentation of this non-GAAP financial measure included cash used for dividends paid on outstanding common stock and participating securities. Management believes that excluding cash dividends paid from adjusted free cash flow will provide a more direct comparison to operating cash flow, a GAAP-defined financial measure. Fiscal year 2023 has been reclassified to conform to the current presentation.
PRELIMINARY
SUPPLEMENTAL SCHEDULE
(in millions)
(Unaudited)
Three Months Ended | ||||||
NET SALES BY END-USE MARKET | 2023 | 2022 | ||||
End-Use Market Excluding Surcharge Revenue: | ||||||
Aerospace and Defense | $ | 260.9 | $ | 183.5 | ||
Medical | 66.6 | 49.8 | ||||
Transportation | 29.2 | 23.7 | ||||
Energy | 29.2 | 18.3 | ||||
Industrial and Consumer | 79.4 | 68.4 | ||||
Distribution | 27.5 | 32.0 | ||||
Total net sales excluding surcharge revenue | 492.8 | 375.7 | ||||
Surcharge revenue | 159.1 | 147.2 | ||||
Total net sales | $ | 651.9 | $ | 522.9 |
Source:
2023 GlobeNewswire, Inc., source