PHILADELPHIA, PA — Carpenter Technology Corporation (NYSE: CRS) announced financial results for the fiscal fourth quarter and year ended June 30, 2021. For the quarter, the Company reported a net loss of $57.1 million, or $1.18 loss per diluted share. Excluding special items, adjusted loss per diluted share was $0.28 for the quarter.
“Our fourth quarter results finished ahead of our expectations as overall end-use market conditions showed further signs of recovery. We continued to actively manage our business,” said Tony R. Thene, President and CEO of Carpenter Technology. “We generated $43 million in free cash flow in the quarter and finished the fiscal year with $582 million in total liquidity, including $287 million of cash on hand.”
“Fiscal year 2021 has been a challenging yet successful year for Carpenter Technology. Over the past year we executed various portfolio initiatives and targeted cost reductions, further implemented the Carpenter Operating Model to secure notable productivity gains and generated over $130 million of free cash flow. We also expanded and further strengthened key customer relationships and added additional qualifications for our Athens facility. Our efforts will prove critical to our position as demand conditions across our end-use markets are strengthening and we believe the beginning of a broad-based recovery is taking shape. We remain a critical solutions provider for our customers and have successfully deepened our relationships during the downturn. The long-term outlook for our end-use markets remains attractive and we are well positioned given our mission-critical solutions coupled with leading capabilities and established supply chain position.”
“Looking ahead, our focus is centered on capitalizing on emerging opportunities across our end-use markets as conditions further improve. We are a leaner and more flexible company and remain a critical solutions provider across our end-use markets. Our strong position in our core business is supported by our capabilities in key emerging areas including electrification and additive manufacturing that further support our long-term growth profile.”
|($ in millions except per share amounts)||Q4||Q4|
|Net Sales Excluding Surcharge (a)||$||348.1||$||375.9||$||1,252.8||$||1,828.7|
|Operating (Loss) Income||$||(70.7||)||$||(148.2||)||$||(248.6||)||$||25.3|
|Adjusted Operating (Loss) Income Excluding Special Items (a)||$||(12.5||)||$||(8.9||)||$||(105.5||)||$||166.9|
|Net (Loss) Income||$||(57.1||)||$||(118.4||)||$||(229.6||)||$||1.5|
|(Loss) Earnings per Share||$||(1.18||)||$||(2.46||)||$||(4.76||)||$||0.02|
|Adjusted (Loss) Earnings Per Share (a)||$||(0.28||)||$||(0.16||)||$||(2.01||)||$||2.36|
|Cash Provided from Operating Activities||$||74.5||$||136.9||$||250.0||$||231.8|
|Free Cash Flow (a)||$||42.6||$||99.8||$||132.0||$||21.8|
(a) Non-GAAP financial measures explained in the attached tables
Net sales for the fourth quarter of fiscal year 2021 were $421.6 million compared with $437.3 million in the fourth quarter of fiscal year 2020, a decrease of $15.7 million (negative 3.6 percent), on flat volume. Net sales excluding surcharge were $348.1 million, a decrease of $27.8 million (negative 7.4 percent) from the same period a year ago.
Operating loss was $70.7 million compared to operating loss of $148.2 million in the prior year period. Adjusted operating loss excluding special items was $12.5 million in the recent fourth quarter compared to an adjusted operating loss of $8.9 million a year ago.
Special items excluded from adjusted operating loss in the current quarter totaled $58.2 million. This includes non-cash LIFO decrement charges totaling $52.2 million, of which $47.9 million is included in the Specialty Alloys Operations (“SAO”) segment operating loss and $4.3 million is included in the Performance Engineered Products (“PEP”) segment operating loss in the fourth quarter of fiscal year 2021. The LIFO decrement charges are non-cash charges associated with reducing inventory and liquidating LIFO layers that have historical costs in excess of the current year inventory costs. The special items in the current quarter also include $1.6 million of inventory write-downs from restructuring, $1.5 million in restructuring and asset impairment charges associated with executing against plans to streamline the Company’s Additive business units, and $2.9 million ($2.1 million included in SAO segment, $0.8 million included in PEP segment) of costs associated with COVID-19. The COVID-19 costs in both periods principally consist of direct incremental operating costs including outside services to execute enhanced cleaning protocols, additional personal protective equipment, isolation pay for production employees potentially exposed to COVID-19 and various operating supplies necessary to maintain the operations while keeping employees safe against possible exposure in the Company’s facilities.
Cash provided from operating activities in the fourth quarter of fiscal year 2021 was $74.5 million, compared to $136.9 million in the same quarter last year. Free cash flow in the fourth quarter of fiscal year 2021 was $42.6 million, compared to $99.8 million in the same quarter last year. The decrease in operating cash flow primarily reflects the impact of lower earnings after non-cash adjustments to net income relative to the same quarter a year ago. This was partially offset by lower capital expenditures of $22.1 million in the fourth quarter of fiscal year 2021 compared to $27.4 million in the same quarter last year.
Total liquidity, including cash and available credit facility borrowings, was $582.0 million at the end of the fourth quarter of fiscal year 2021. This consisted of $287.4 million of cash and $294.6 million of available borrowings under the Company’s credit facility.
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