Carpenter Technology reports 40% decrease in revenues in Q3 2021
Additive division remains key to future growth
Carpenter Technology Corporation (NYSE: CRS) reported a net loss of $40.5 million, or $0.84 loss per diluted share, and a 40% decrease in revenues in Q3 of the current financial year. Excluding special items, the adjusted loss per diluted share was $0.54 for the quarter. The Carpenter Additive division, which has undergone significant cuts, is still seen as key to the company’s future growth.
“Our third-quarter results were in line with our expectations as we continue to weather near-term volume headwinds, as we had anticipated,” said Tony R. Thene, President and CEO of Carpenter Technology. “While current conditions remain challenging, we have recently completed multiple contract extensions in the Medical, Transportation and Aerospace and Defense end-use markets. We remain in close engagement with our customers and during the quarter began to see initial signs of recovery in some areas of our Aerospace and Defense end-use market. In addition, we continued to capitalize on solid demand in the Transportation end-use market and we benefited from signs of improving demand conditions in our Medical end-use market. We finished the quarter in a strong financial position with total liquidity of $538.8 million, including $244.2 million of cash on hand.”
Mr. Thene also highlighted the importance of additive manufacturing: “[…] The long-term outlook across our end-use markets remains strong and we are well-positioned in each with critical material solutions to address our customers’ complex needs. We have deepened our customer relationships and continue to believe we will emerge from the pandemic a stronger company. Our core business is centered on delivering mission-critical material solutions and has been for over 130 years. Our investments in additive manufacturing and electrification capabilities further strengthen our sustainable long-term growth profile.”
Carpenter Technology Corporation is a recognized leader in high-performance specialty alloy-based materials and process solutions for critical applications in the aerospace, defense, transportation, energy, industrial, medical, and consumer electronics markets. Founded in 1889, the company has evolved to become a pioneer in premium specialty alloys, including titanium, nickel, and cobalt, as well as alloys specifically engineered for additive manufacturing processes and soft magnetics applications. Like other major metal materials manufacturers, Carpenter Technology has expanded its AM capabilities to provide a complete “end-to-end” solution to accelerate materials innovation and streamline parts production.
Net sales for the third quarter of fiscal year 2021 were $351.9 million compared with $585.4 million in the third quarter of fiscal year 2020, a decrease of $233.5 million (-40%), on 39% lower volume. Net sales excluding surcharge were $298.1 million, a decrease of $196.9 million (-40%) from the same period a year ago.
Operating loss was $40.0 million compared to operating income of $58.7 million in the prior-year period. Adjusted operating loss excluding special items was $29.7 million in the recent third quarter. Special items excluded from adjusted operating loss in the current quarter include restructuring and asset impairment charges, including inventory write-downs, of $7.6 million related to ongoing actions to reduce cost and narrow focus for the Additive business and $2.7 million of costs associated with COVID-19.
WIth respect to the AM division, 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. The PEP segment is comprised of the Company’s differentiated operations. This segment includes the Carpenter Additive business, the Dynamet titanium business and the Latrobe and Mexico distribution businesses.
Effective July 1, 2020, the Company’s Carpenter Powder Products business was merged into the Carpenter Additive business. The businesses in the PEP segment are managed with an entrepreneurial structure to promote flexibility and agility to quickly respond to market dynamics. It is our belief this model will ultimately drive overall revenue and profit growth. The pounds sold data above for the PEP segment includes only the Dynamet and Additive businesses.