After Years of Struggle, Carpenter Returns a Profit | Top Stories
PHILADELPHIA, Pa. — For the first time since the pandemic began, Carpenter Technology reported net profit for the quarter. Promises of a turnaround for the company, which has extensive manufacturing operations in Berks County, appear to be coming to fruition.
Although Carpenter posted a net loss for the fiscal year, it narrowed significantly to -$49.1 million in fiscal 2022 from -$229.6 million in fiscal 2021. Wall Street was happy and Carpenter’s stock was up nearly 3% by mid-afternoon Thursday.
Growth in the Aerospace & Defense, Medical & Industrial, and Consumer Goods end-use markets were the main drivers of sales in the quarter. All of the company’s end-use markets increased sales year-over-year.
“Our fourth quarter results marked a successful year-end and puts us on a solid footing to accelerate growth in fiscal 2023,” said Tony Thene, president and chief executive officer of Carpenter Technology, in a statement. “The quarter saw us return to positive EPS as the Specialty Alloy Operations (SAO) and Performance Engineered Products (PEP) segments exceeded our expectations.”
Speaking to analysts on a webcast, Thene said, “Demand conditions in end-use markets remain strong and strong bookings drove backlog growth of 29% sequentially and 191 % year-on-year. We continue to capture market share and price gains through contract negotiations; base prices have recently increased by 12% to 15% on a transactional basis.
“SAO segment operating results were driven by higher shipment volumes to meet market demand. The PEP segment continues to post positive operating profit and growth, largely driven by the market medical end use.
Fourth-quarter operating profit results were driven by double-digit sequential revenue growth in the aerospace and defense and medical end-use markets, the company said. According to Thene, “Fiscal 2022 proved to be a challenging but successful year. We navigated through an unplanned outage of our reading press, ongoing COVID-19-related isolations, a challenging hiring environment, and other supply chain challenges, but by addressing each of them, I believe we emerge stronger and well positioned for growth.
Net sales for the fourth quarter of Fiscal 2022 were $563.8 million, compared to $421.6 million in the fourth quarter of Fiscal 2021, an increase of $142.2 million , or 34%, on a volume increase of 8%. Net sales excluding surcharge were $403.2 million, an increase of $55.1 million or 16% over the same period a year ago.
Operating profit for the fourth quarter was $24.6 million, compared to an operating loss of $70.7 million in the same period a year earlier. Adjusted to exclude special items, operating profit was $14.9 million last fourth quarter, compared to an adjusted operating loss of $12.5 million in the same period a year ago. year. The improvement in operating profit was primarily the result of increased shipments as activity levels continued to increase to respond to improved market conditions in key end-use markets compared to to the period of the previous year.
Earnings per share for the fourth quarter of fiscal 2022 was $0.05 per share, or $0.00 per share excluding special items, compared to a loss of $1.18 per share, or a loss of 0. $28 per share excluding special items, in the fourth quarter of the prior year. trimester. The increase in adjusted earnings per share is the result of higher operating profit partially offset by higher interest expense. Special items in the current quarter include $0.6 million of COVID-19-related costs, a $2.4 million charge related to a historical environmental obligation and $6.0 million of extinguishment costs debt related to the company’s recent bond refinancing, offset by a benefit of $12.7 million related to employee retention credits to be claimed against certain employment taxes.
Cash flow from operating activities was $106.9 million, compared to $74.5 million in the same quarter last year. Capital expenditures were $32.8 million in the fourth quarter of fiscal 2022, compared to $22.1 million in the same quarter last year.
Total liquidity, including cash and free balance, was $448.3 million at the end of fiscal 2022. This was $154.2 million in cash and $294. $1 million of borrowings available under the Company’s credit facility.
Carpenter has two segments to showcase, Specialty Alloys Operations (SAO) and Performance Engineered Products (PEP). The SAO segment includes Carpenter’s primary alloy and premium stainless steel manufacturing businesses. This includes operations performed at plants primarily in Reading and Latrobe, Pennsylvania and surrounding areas, as well as South Carolina and Alabama.
The SAO segment reported net sales, excluding surcharge, of $327.2 million, compared to $289.9 million for the same period of fiscal 2021. SAO operating profit was $30.0 million dollars, compared to an operating loss of $47.3 million in 2021.
The PEP segment includes the Company’s differentiated operations. This segment includes Dynamet’s titanium business, the Carpenter Additive business, and the Latrobe and Mexico distribution businesses.
The PEP segment recorded net sales, excluding surcharge. of $92.9 million compared to $75.6 million for the same period of 2021. PEP’s operating profit was $10.3 million compared to an operating loss of $2.3 million in 2021.
By end-use markets, non-surcharge net sales in the quarter were $178.5 million for Aerospace & Defense; $53.7 million for medical; $32.9 million for transport; $21.0 million for energy; $82.4 million for industry and consumption; and $34.7 million for distribution.
“We anticipate continued growth in our end-use markets, particularly in aerospace, defense and medical applications, where customers continue to reach pre-pandemic levels. To capitalize on demand in our core business, we are focused on realizing additional productivity and capacity gains through the Carpenter operating model,” said Thene.
“Furthermore, our strong position in our core business is supported by our capabilities in key emerging areas, including electrification and additive manufacturing, which further support our long-term growth profile. We believe that continued execution of our strategy will result in long-term sustainable value creation for our customers and shareholders.
Carpenter Technology Corporation (NYSE:CRS) produces high-performance specialty alloy materials and process solutions for the aerospace, defense, medical, transportation, energy, industrial and industrial markets. industry and consumer electronics. Founded in 1889, Carpenter Technology has evolved into a pioneer in high-end specialty alloys including titanium, nickel and cobalt, as well as alloys specifically designed for additive manufacturing (AM) processes and soft magnetic applications .