Second Quarter Fiscal Year 2024 Highlights
- Reported earnings per diluted share of
$0.85 - Achieved operating income of
$69.8 million , up from$69.0 million in the previous quarter, completing the second most profitable first half on record - Exceeded expectations in Specialty Alloys Operations (“SAO”) segment with operating income of
$83.3 million , up from$80.8 million in the previous quarter - Reached adjusted operating margin of 20.0 percent in the SAO segment, up from 19.4 percent in the previous quarter
- Generated
$14.6 million of cash from operating activities
“In the second quarter of fiscal year 2024 we delivered another strong performance, generating
“Further, our fiscal year 2024 projection would be a meaningful step towards our fiscal year 2027 goal of doubling our fiscal year 2019 operating income. And with improving productivity and expanding margins, we see opportunity to accelerate the attainment of our fiscal year 2027 goal.”
Fiscal Year 2024 Outlook
- Unlocking capacity at key work centers, ramping to pre-COVID production rates
- Projecting
$74 million to$79 million in operating income in the third quarter - Expecting step up in profitability in the fourth quarter, reaching
$97 million to$112 million in operating income - Projecting
$310 million to$330 million in total operating income for fiscal year 2024; would achieve the most profitable year on record
Longer Term Fiscal Year 2027 Outlook
- Goal to double fiscal year 2019 operating income by fiscal year 2027 (communicated at
May 2023 Investor Day) - Target represents a 40% CAGR over the period from fiscal year 2023 to fiscal year 2027
- Significant progress towards goal expected in fiscal year 2024
- Strong market demand outlook for our broad portfolio of specialized solutions
- Leading capabilities and capacity in place to achieve goal
- Expanding capacity via higher throughput while optimizing product mix
- Opportunity to accelerate attainment of fiscal year 2027 goal
Financial Highlights
Q2 | Q1 | Q2 | ||||||||||
($ in millions except per share amounts) | FY2024 | FY2024 | FY2023 | |||||||||
Net sales | $ | 624.2 | $ | 651.9 | $ | 579.1 | ||||||
Net sales excluding surcharge (a) | $ | 485.3 | $ | 492.8 | $ | 420.8 | ||||||
Operating income | $ | 69.8 | $ | 69.0 | $ | 22.6 | ||||||
Net income | $ | 42.7 | $ | 43.9 | $ | 6.2 | ||||||
Earnings per diluted share | $ | 0.85 | $ | 0.88 | $ | 0.13 | ||||||
Net cash provided from (used for) operating activities | $ | 14.6 | $ | 7.4 | $ | (86.4 | ) | |||||
Adjusted free cash flow (a) | $ | (10.7 | ) | $ | (14.6 | ) | $ | (103.9 | ) | |||
(a) Non-GAAP financial measures explained in the attached tables |
Net sales for the second quarter of fiscal year 2024 were
Operating income was
Cash provided from operating activities in the second 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 | Six Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
$ | 624.2 | $ | 579.1 | $ | 1,276.1 | $ | 1,102.0 | |||||||||
Cost of sales | 501.6 | 509.1 | 1,029.4 | 977.2 | ||||||||||||
Gross profit | 122.6 | 70.0 | 246.7 | 124.8 | ||||||||||||
Selling, general and administrative expenses | 52.8 | 47.4 | 107.9 | 93.9 | ||||||||||||
Operating income | 69.8 | 22.6 | 138.8 | 30.9 | ||||||||||||
Interest expense, net | 13.0 | 13.0 | 25.7 | 25.6 | ||||||||||||
Other expense, net | 1.6 | 1.9 | 5.5 | 5.4 | ||||||||||||
Income (loss) before income taxes | 55.2 | 7.7 | 107.6 | (0.1 | ) | |||||||||||
Income tax expense | 12.5 | 1.5 | 21.0 | 0.5 | ||||||||||||
NET INCOME (LOSS) | $ | 42.7 | $ | 6.2 | $ | 86.6 | $ | (0.6 | ) | |||||||
EARNINGS (LOSS) PER COMMON SHARE: | ||||||||||||||||
Basic | $ | 0.86 | $ | 0.13 | $ | 1.75 | $ | (0.02 | ) | |||||||
Diluted | $ | 0.85 | $ | 0.13 | $ | 1.73 | $ | (0.02 | ) | |||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||
Basic | 49.7 | 48.8 | 49.4 | 48.7 | ||||||||||||
Diluted | 50.2 | 49.0 | 50.0 | 48.7 |
PRELIMINARY CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (Unaudited) | ||||||||
Six Months Ended | ||||||||
2023 | 2022 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income (loss) | $ | 86.6 | $ | (0.6 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided from (used for) operating activities: | ||||||||
Depreciation and amortization | 66.7 | 64.8 | ||||||
Deferred income taxes | (1.0 | ) | (0.9 | ) | ||||
Net pension expense | 11.8 | 9.9 | ||||||
Share-based compensation expense | 8.5 | 7.1 | ||||||
Net loss on disposals of property, plant and equipment | 1.2 | 0.6 | ||||||
Changes in working capital and other: | ||||||||
Accounts receivable | 23.9 | (58.5 | ) | |||||
Inventories | (157.5 | ) | (226.7 | ) | ||||
Other current assets | (25.4 | ) | (4.1 | ) | ||||
Accounts payable | 37.8 | 62.1 | ||||||
Accrued liabilities | (26.8 | ) | (12.1 | ) | ||||
Pension plan contributions | (4.8 | ) | — | |||||
Other postretirement plan contributions | (0.7 | ) | (1.5 | ) | ||||
Other, net | 1.6 | (4.6 | ) | |||||
Net cash provided from (used for) operating activities | 21.9 | (164.5 | ) | |||||
INVESTING ACTIVITIES | ||||||||
Purchases of property, plant, equipment and software | (47.3 | ) | (31.0 | ) | ||||
Net cash used for investing activities | (47.3 | ) | (31.0 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Short-term credit agreement borrowings, net change | 13.9 | 41.2 | ||||||
Credit agreement borrowings | 46.5 | 60.1 | ||||||
Credit agreement repayments | (46.5 | ) | (20.1 | ) | ||||
Dividends paid | (19.8 | ) | (19.7 | ) | ||||
Proceeds from stock options exercised | 19.4 | — | ||||||
Withholding tax payments on share-based compensation awards | (18.0 | ) | (3.4 | ) | ||||
Net cash (used for) provided from financing activities | (4.5 | ) | 58.1 | |||||
Effect of exchange rate changes on cash and cash equivalents | 1.1 | 3.2 | ||||||
DECREASE IN CASH AND CASH EQUIVALENTS | (28.8 | ) | (134.2 | ) | ||||
Cash and cash equivalents at beginning of year | 44.5 | 154.2 | ||||||
Cash and cash equivalents at end of period | $ | 15.7 | $ | 20.0 |
PRELIMINARY CONSOLIDATED BALANCE SHEETS (in millions) (Unaudited) | ||||||||
2023 | 2023 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 15.7 | $ | 44.5 | ||||
Accounts receivable, net | 508.4 | 531.3 | ||||||
Inventories | 797.8 | 639.7 | ||||||
Other current assets | 88.3 | 66.4 | ||||||
Total current assets | 1,410.2 | 1,281.9 | ||||||
Property, plant, equipment and software, net | 1,364.2 | 1,383.8 | ||||||
241.4 | 241.4 | |||||||
Other intangibles, net | 25.4 | 28.7 | ||||||
Deferred income taxes | 6.7 | 6.6 | ||||||
Other assets | 111.3 | 111.5 | ||||||
Total assets | $ | 3,159.2 | $ | 3,053.9 | ||||
LIABILITIES | ||||||||
Current liabilities: | ||||||||
Short-term credit agreement borrowings | $ | 13.9 | $ | — | ||||
Accounts payable | 313.4 | 278.1 | ||||||
Accrued liabilities | 158.4 | 181.3 | ||||||
Total current liabilities | 485.7 | 459.4 | ||||||
Long-term debt | 693.6 | 693.0 | ||||||
Accrued pension liabilities | 191.2 | 190.1 | ||||||
Accrued postretirement benefits | 47.2 | 45.8 | ||||||
Deferred income taxes | 168.8 | 170.3 | ||||||
Other liabilities | 98.9 | 99.2 | ||||||
Total liabilities | 1,685.4 | 1,657.8 | ||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock | 283.2 | 280.7 | ||||||
Capital in excess of par value | 327.9 | 328.4 | ||||||
Reinvested earnings | 1,294.8 | 1,228.0 | ||||||
Common stock in treasury, at cost | (289.7 | ) | (298.0 | ) | ||||
Accumulated other comprehensive loss | (142.4 | ) | (143.0 | ) | ||||
Total stockholders' equity | 1,473.8 | 1,396.1 | ||||||
Total liabilities and stockholders' equity | $ | 3,159.2 | $ | 3,053.9 |
PRELIMINARY SEGMENT FINANCIAL DATA (in millions, except pounds sold) (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Pounds sold (000): | |||||||||||||||
Specialty Alloys Operations | 50,114 | 49,442 | 100,104 | 94,006 | |||||||||||
Performance Engineered Products | 2,318 | 2,978 | 4,620 | 5,304 | |||||||||||
Intersegment | (3,350 | ) | (1,920 | ) | (5,414 | ) | (3,920 | ) | |||||||
Consolidated pounds sold | 49,082 | 50,500 | 99,310 | 95,390 | |||||||||||
Net sales: | |||||||||||||||
Specialty Alloys Operations | |||||||||||||||
Net sales excluding surcharge | $ | 416.2 | $ | 346.2 | $ | 833.4 | $ | 651.9 | |||||||
Surcharge | 133.2 | 149.6 | 286.0 | 291.3 | |||||||||||
Specialty Alloys Operations net sales | 549.4 | 495.8 | 1,119.4 | 943.2 | |||||||||||
Performance Engineered Products | |||||||||||||||
Net sales excluding surcharge | 87.9 | 98.0 | 181.0 | 185.6 | |||||||||||
Surcharge | 7.8 | 8.7 | 16.4 | 14.4 | |||||||||||
Performance Engineered Products net sales | 95.7 | 106.7 | 197.4 | 200.0 | |||||||||||
Intersegment | |||||||||||||||
Net sales excluding surcharge | (18.8 | ) | (23.4 | ) | (36.3 | ) | (41.0 | ) | |||||||
Surcharge | (2.1 | ) | — | (4.4 | ) | (0.2 | ) | ||||||||
Intersegment net sales | (20.9 | ) | (23.4 | ) | (40.7 | ) | (41.2 | ) | |||||||
Consolidated net sales | $ | 624.2 | $ | 579.1 | $ | 1,276.1 | $ | 1,102.0 | |||||||
Operating income (loss): | |||||||||||||||
Specialty Alloys Operations | $ | 83.3 | $ | 30.3 | $ | 164.1 | $ | 50.2 | |||||||
Performance Engineered Products | 7.1 | 9.3 | 16.2 | 15.6 | |||||||||||
Corporate | (20.7 | ) | (16.4 | ) | (42.0 | ) | (33.5 | ) | |||||||
Intersegment | 0.1 | (0.6 | ) | 0.5 | (1.4 | ) | |||||||||
Consolidated operating income | $ | 69.8 | $ | 22.6 | $ | 138.8 | $ | 30.9 |
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 | Six Months Ended | |||||||||||||||
ADJUSTED OPERATING MARGIN EXCLUDING SURCHARGE REVENUE | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Net sales | $ | 624.2 | $ | 579.1 | $ | 1,276.1 | $ | 1,102.0 | ||||||||
Less: surcharge revenue | 138.9 | 158.3 | 298.0 | 305.5 | ||||||||||||
Net sales excluding surcharge revenue | $ | 485.3 | $ | 420.8 | $ | 978.1 | $ | 796.5 | ||||||||
Operating income | $ | 69.8 | $ | 22.6 | $ | 138.8 | $ | 30.9 | ||||||||
Operating margin | 11.2 | % | 3.9 | % | 10.9 | % | 2.8 | % | ||||||||
Adjusted operating margin excluding surcharge revenue | 14.4 | % | 5.4 | % | 14.2 | % | 3.9 | % |
ADJUSTED SEGMENT OPERATING MARGIN EX. SURCHARGE REVENUE | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
SAO | PEP | SAO | PEP | |||||||||||||||||||||||||||||
Net sales | $ | 549.4 | $ | 495.8 | $ | 95.7 | $ | 106.7 | $ | 1,119.4 | $ | 943.2 | $ | 197.4 | $ | 200.0 | ||||||||||||||||
Less: surcharge revenue | 133.2 | 149.6 | 7.8 | 8.7 | 286.0 | 291.3 | 16.4 | 14.4 | ||||||||||||||||||||||||
Net sales excluding surcharge revenue | $ | 416.2 | $ | 346.2 | $ | 87.9 | $ | 98.0 | $ | 833.4 | $ | 651.9 | $ | 181.0 | $ | 185.6 | ||||||||||||||||
Operating income | $ | 83.3 | $ | 30.3 | $ | 7.1 | $ | 9.3 | $ | 164.1 | $ | 50.2 | $ | 16.2 | $ | 15.6 | ||||||||||||||||
Operating margin | 15.2 | % | 6.1 | % | 7.4 | % | 8.7 | % | 14.7 | % | 5.3 | % | 8.2 | % | 7.8 | % | ||||||||||||||||
Adjusted operating margin excluding surcharge revenue | 20.0 | % | 8.8 | % | 8.1 | % | 9.5 | % | 19.7 | % | 7.7 | % | 9.0 | % | 8.4 | % |
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. 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 | |||||||||||||||
ADJUSTED FREE CASH FLOW | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Net cash provided from (used for) operating activities | $ | 14.6 | $ | (86.4 | ) | $ | 21.9 | $ | (164.5 | ) | ||||||
Purchases of property, plant, equipment and software | (25.3 | ) | (17.5 | ) | (47.3 | ) | (31.0 | ) | ||||||||
Adjusted free cash flow | $ | (10.7 | ) | $ | (103.9 | ) | $ | (25.4 | ) | $ | (195.5 | ) |
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, 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 | Six Months Ended | |||||||||||||||
NET SALES BY END-USE MARKET | 2023 | 2022 | 2023 | 2022 | ||||||||||||
End-Use Market Excluding Surcharge Revenue: | ||||||||||||||||
Aerospace and Defense | $ | 246.7 | $ | 200.4 | $ | 507.8 | $ | 383.8 | ||||||||
Medical | 73.0 | 62.7 | 139.5 | 112.5 | ||||||||||||
Transportation | 26.8 | 27.3 | 56.0 | 51.0 | ||||||||||||
Energy | 36.8 | 22.6 | 66.0 | 40.9 | ||||||||||||
Industrial and Consumer | 80.2 | 78.6 | 159.6 | 147.0 | ||||||||||||
Distribution | 21.8 | 29.2 | 49.2 | 61.3 | ||||||||||||
Total net sales excluding surcharge revenue | 485.3 | 420.8 | 978.1 | 796.5 | ||||||||||||
Surcharge revenue | 138.9 | 158.3 | 298.0 | 305.5 | ||||||||||||
Total net sales | $ | 624.2 | $ | 579.1 | $ | 1,276.1 | $ | 1,102.0 |
Investor Inquiries: +1 610-208-2061 jhuyette@cartech.com | Media Inquiries: +1 610-208-2278 hbeardsley@cartech.com |
Source:
2024 GlobeNewswire, Inc., source