Carpenter Technology Reports Second Quarter Results
OREANDA-NEWS. Carpenter Technology Corporation (NYSE:CRS) today announced financial results for the quarter ended December 31, 2015.
“Our fiscal 2016 second quarter results reflect our efforts to effectively manage our business despite challenges in some of our key end-use markets,” said Tony Thene, Carpenter’s President and Chief Executive Officer. “Our ongoing focus on driving operational efficiencies and cost management, combined with our stronger product mix, supported operating margin stability even with a decline in volume primarily in our Energy and Industrial and Consumer end-use markets. This approach also enabled us to generate consistent profitability over the last couple of quarters. Further, we continue to benefit from our market and product diversity, as our performance in our Aerospace and Defense, Transportation and Medical end-use markets helped offset our oil and gas exposure. We remain focused on strengthening our strategic position as a preferred solutions provider in the high-end premium alloy markets, while laying the groundwork to support margin growth when volumes begin to recover.”
Mr. Thene added, “Looking ahead, we remain focused on actively managing our business to maximize our results. Given the further worsening of the Energy and Industrial and Consumer end-use markets, we currently expect volumes in the second half of fiscal year 2016 to be up modestly compared to the first half of fiscal year 2016. We also continue to evaluate avenues to drive further operational improvements, while seeking additional volume opportunities and optimizing our product mix. We remain committed to improving our working capital efficiency and maintaining capital spending discipline. We believe these steps, combined with ongoing investment in new technologies, will position us for growth over the longer-term.”
|($ in millions)||Q2||Q2||Q1|
|Net Sales Excluding Surcharge (a)||$||379.4||$||445.7||$||385.1|
|Free Cash Flow (a)||$||1.8||$||(65.5||)||$||6.6|
|(a) non-GAAP financial measure explained in the attached tables|
Net sales for the second quarter of fiscal year 2016 were $443.8 million. Net sales excluding surcharge were $379.4 million, a decrease of $66.3 million (or 15 percent) from the same quarter last year, on 16 percent lower volume.
Operating income was $21.8 million, a decrease of $23.2 million from the second quarter of the prior year. Operating income—excluding pension earnings, interest and deferrals (EID) and special items—was $29.2 million, a decrease of $18.2 million (or 38 percent) from the second quarter of the prior year. These results primarily reflect lower volume, partially offset by an improved product mix and lower operating costs compared to the same period one year ago.
Carpenter reported net income of $11.5 million or $0.23 per diluted share. Excluding special items, earnings per diluted share would have been $0.24 in the current quarter. This compares to a reported net income of $24.1 million or $0.45 per diluted share in the same quarter last year. Excluding a special item, earnings per diluted share would have been $0.48 in the prior year quarter.
The second quarter of fiscal year 2016 results include special items of $0.01 per diluted share consisting of consulting fees and a tax discrete item as a result of a tax law change. The second quarter of fiscal year 2015 results includes a special item of $0.03 per diluted share consisting of a tax discrete item as a result of a tax law change.
Cash provided from operating activities was $30.1 million in the second quarter of fiscal year 2016. This compares to cash provided from operating activities of $12.5 million in the prior year’s second quarter.
Free cash flow in the second quarter of fiscal year 2016 was positive $1.8 million, compared to negative $65.5 million in the same quarter last year. Capital expenditures in the second quarter of fiscal year 2016 were $19.6 million, compared to $68.4 million in the prior year’s second quarter.
For the full year, Carpenter expects inventory to decline in the second half of the fiscal year and finish largely in-line with year-end fiscal 2015 levels. Capital expenditures are expected to be approximately $100 million for year fiscal 2016.
Total liquidity, including cash and available revolver balance, was $474 million at the end of the second quarter. This consisted of $21 million of cash and $453 million of available borrowing under the Company’s credit facility.
About Carpenter Technology
Carpenter produces and distributes premium alloys, including specialty alloys, titanium alloys and powder metals, as well as stainless steels, alloy steels and tool steels.
Carpenter Technology Corp.