Carpenter Technology Reports Fiscal Third Quarter Results.* Third quarter net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $510 million * Third quarter net income from continuing operations of $51 million or $1.05 per share * Third quarter net income, including gain from sale of ceramics business, of $120 million, or $2.49 per share WYOMISSING, Pa. -- Carpenter Technology Corporation Carpenter Technology Corporation (NYSE:CRS) is a leading manufacturer and distributor of specialty alloys, including stainless steel and titanium, and various engineered products made from metallic and ceramic materials. (NYSE NYSE See: New York Stock Exchange :CRS CRS Course CRS Certified Residential Specialist (real estate certification) CRS Central Reservation System CRS Can't Remember Stuff (polite form) CRS Cost Reduction Strategy CRS Consumer Relations Specialist ) today reported net income from continuing operations of $50.8 million or $1.05 per diluted share for the fiscal third quarter ended March 31, 2008. This compared with record net income from continuing operations a year earlier of $64.3 million or $1.22 per diluted share. The third quarter 2008 results reflected reduced demand in Carpenter's economically sensitive industrial, automotive and consumer end-use markets, combined with higher operating costs operating costs npl → gastos mpl operacionales . Demand in the global energy and aerospace markets was strong in the third quarter. Including results of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , and the net gain on the sale of Carpenter's ceramics business, net income was $120.0 million or $2.49 per diluted share. For the third quarter a year earlier, Carpenter reported net income of $66.6 million or $1.27 per share. Financial highlights from the third quarter include: [TABLE OMITTED] (a)non-GAAP financial measure that is explained in the attached tables Third Quarter - Operating Summary "Our third quarter financial results fell short of our original expectations due to reduced demand in our economically sensitive markets, and higher operating costs," said Anne Stevens, chairman, president and chief executive officer. "However, we have good overall top-line momentum on the business moving forward, and we achieved record sales this quarter in the energy and aerospace markets as a result of strong demand, particularly in international markets. Based on current conditions, fourth quarter sales and earnings should be at or above this quarter's performance. We expect our full year financial results to be at record levels for the fourth consecutive year." Net sales from continuing operations of $509.8 million were 1 percent lower than a year ago. Adjusted for surcharge An overcharge or additional cost. A surcharge is an added liability imposed on something that is already due, such as a tax on tax. It also refers to the penalty a court can impose on a fiduciary for breaching a duty. revenue, sales from continuing operations were essentially flat with a year ago Overall, pounds shipped were 7 percent below an exceptionally strong third quarter a year ago. The Premium Alloys Operations generated a 12 percent increase in pounds shipped due largely to strong demand from the global energy and aerospace markets. This was more than offset by a 9 percent decline in pounds shipped by the Advanced Metals Operations, due principally to lower demand related to the current weakness in the domestic industrial base. Sales to the aerospace market were a record $210.6 million, an increase of 11 percent compared with the prior year's third quarter. Adjusted for surcharge revenue, aerospace sales grew 6 percent year-over-year. The increase was largely driven by higher sales of specialty alloys used in jet engines and fasteners fasteners In construction, connectors between structural members. Bolted connections are used when it is necessary to fasten two elements tightly together, especially to resist shear and bending, as in column and beam connections. , as well as titanium coil used in fasteners. Energy market sales, which include oil and gas and power generation, increased 25 percent from a year ago to $57.9 million. Excluding surcharge revenue, sales improved by 38 percent. The improvement resulted from strong demand for specialty alloys used in the manufacture of industrial gas turbines and increased global sales of high-strength corrosion resistant materials to the oil and gas market. Medical market sales were $35.5 million, an increase of 6 percent compared with the third quarter a year earlier. Excluding surcharge revenue, sales grew 3 percent. Sales to the industrial market were $104.7 million or 19 percent lower than last year's third quarter. Adjusted for surcharge revenue, sales decreased 16 percent. The decrease reflected lower demand primarily for materials used in the manufacture of capital goods Capital Goods Any goods used by an organization to produce other goods. Notes: Examples of capital goods include office buildings, equipment, and machinery. See also: Capital Expenditure, Disinvestment Capital goods and valves and fittings. Automotive and truck market sales declined 14 percent to $55.1 million compared with a year earlier. Excluding surcharge revenue, sales declined 12 percent. The decrease primarily reflected the general slowdown in the domestic automotive industry The automotive industry is the industry involved in the design, development, manufacture, marketing, and sale of motor vehicles. In 2006, more than 69 million motor vehicles, including cars and commercial vehicles were produced worldwide. . Sales to the consumer market were $46.0 million compared with $54.2 million a year earlier, a decline of 15 percent. Excluding surcharge revenue, consumer sales were 4 percent lower. The reduction in sales primarily reflected the negative impact on demand for materials used in the housing sector and the weakening domestic economy. Geographically, sales outside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. were a quarterly record $178.6 million or 18 percent higher than the third quarter a year ago. Sales to Europe were particularly strong, increasing 26 percent over last year's third quarter, driven largely by the aerospace and power generation markets. International sales represented 35 percent of total sales during the recent third quarter. Gross profit for the third quarter was $109.3 million, compared with $122.4 million a year earlier. The lower gross profit primarily reflected reduced volume against a strong year ago period, higher operating costs due to production inefficiencies in the quarter, and investments in our Manufacturing systems to drive long-term operational effectiveness. These expenses were partially offset by continued favorable mix improvement. Gross margin for the third quarter 2008 was 21.4 percent, compared to 23.7 percent in the same quarter a year ago. Adjusted for the dilutive impact of the surcharge revenue, the year-to-year difference in the lag effect in our surcharge mechanism, and other inventory effects, gross margin on a comparable basis would have been an estimated 32.6 percent in the third quarter versus an estimated 34.3 percent in the same quarter a year earlier. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $75.3 million compared with $92.5 million in the 2007 third quarter. The decrease in operating income was the result of the lower gross profit and a $4.1 million increase in selling, general and administrative expenses, primarily from investments to drive future growth initiatives. Adjusted for the lag effect, surcharge revenue and other inventory effects, operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: would have been an estimated 23.1 percent in the third quarter compared to an estimated 25.9 percent in the third quarter of 2007. Other income in the recent third quarter was $3.7 million, compared with other income of $6.0 million in the third quarter of 2007. The decrease was primarily due to reduced interest income from invested cash as a result of lower interest rates. The income tax provision on continuing operations for third quarter 2008 was $23.1 million or 31.3 percent of pre-tax income. The comparable income tax provision for the 2007 third quarter was $28.5 million or 30.7 percent. Net income from continuing operations for the third quarter was $50.8 million or $1.05 per diluted share, compared with net income of $64.3 million or $1.22 per diluted share in the third quarter of 2007. Free cash flow was $162.4 million for the third quarter 2008, and $186.5 million for the nine month period. Excluding cash amounts associated with the acquisition and divestitures in the quarter, free cash flow was $26.0 million for the quarter and $50.1 million for the nine month period. Capital expenditures in the third quarter were $29.9 million, primarily reflecting Carpenter's expansion of its premium melt capacity. The Company reconfirmed its fiscal year 2008 free cash flow of approximately $100 million after capital expenditures of about $125 million. Discontinued Operations On March 31, 2008, Carpenter completed the sale of its ceramics businesses, Certech and Carpenter Advanced Ceramics, to the Morgan Crucible crucible, vessel in which a substance is heated to a high temperature, as for fusing or calcining. The necessary properties of a crucible are that it maintain its mechanical strength and rigidity at high temperatures and that it not react in an undesirable way with Company plc for $144.5 million and paid $1.5 million in expenses related to the sale. Carpenter recorded a pre-tax gain in the quarter of $102.7 million, or $1.43 per share on an after tax basis. Results for the ceramics business for the third quarter were reported as discontinued operations. The income from discontinued operations of $69.2 million for the third quarter 2008 compares with income of $2.3 million for the third quarter of 2007. Details for the quarter and year to date are as follows: [TABLE OMITTED] Share Repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. Program During the third quarter 2008, Carpenter repurchased $25.0 million or 361,300 shares of its common stock under the $250 million share repurchase plan share repurchase plan A corporation's plan for buying back a predetermined number of its own shares in the open market. Institution of a share repurchase plan derives from management's view that the company has limited outside investment opportunities and that was authorized by the Board of Directors on December 21, 2007. Total repurchases under this program and the previously completed $250 million share repurchase program totaled 4,515,347 shares with an aggregate cost of $279.6 million. The outstanding common stock as of March 31, 2008, was 48,212,367. LIFO (Last In-First Out) A queueing method in which the next item to be retrieved is the item most recently placed in the queue. Contrast with FIFO. LIFO - stack Effects The Company had LIFO income of $8.6 million in the third quarter due primarily to declining nickel prices during the quarter relative to the second quarter of fiscal 2008. In the third quarter a year earlier, the Company had LIFO expense of $56.1 million. This LIFO income/expense is one component of our cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold and does not by itself impact reported profit in the period. Sales Excluding Surcharge This press release includes discussions of net sales as adjusted to exclude the impact of raw material surcharges, which represents a financial measure that has not been determined in accordance with U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). The Company provides this additional financial measure because management believes removing the impact of raw material surcharges from net sales provides a more consistent basis for comparing results of operations from period to period. Conference Call Carpenter will host a conference call and webcast today, April 29th, at 10:00 a.m., ET, to discuss financial results and operations for the fiscal second quarter. Please call 610-208-2800 for details of the conference call. Access to the call will also be made available at Carpenter's web site (www.cartech.com) and through CCBN CCBN Central Coast Bancorp CCBN Charles County Business Network (www.ccbn.com). A replay of the call will be made available at www.cartech.com or at www.ccbn.com. About Carpenter Technology Carpenter produces and distributes specialty alloys, including stainless steels stainless steel: see steel. stainless steel Any of a family of alloy steels usually containing 10–30% chromium. The presence of chromium, together with low carbon content, gives remarkable resistance to corrosion and heat. , titanium alloys Titanium alloys are metallic materials which contain a mixture of titanium and other chemical elements. Such alloys have very high tensile strength and toughness (even at extreme temperatures), light weight, extraordinary corrosion resistance, and ability to withstand extreme , and superalloys, and various engineered products. Information about Carpenter can be found on the Internet at www.cartech.com. Except for historical information, all other information in this news release consists of forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called 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 Carpenter's filings with the Securities and Exchange Commission including its annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended June 30, 2007, its subsequent Forms 10-Q and the exhibits attached to those filings. They include but are not limited to: 1) the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. nature of the specialty materials business and certain end-use markets, including aerospace, industrial, automotive, consumer, medical, and energy, or other influences on Carpenter's business such as new competitors, the consolidation of customers, and suppliers or the transfer of manufacturing capacity from the United States to foreign countries; 2) the ability of Carpenter to achieve cost savings, productivity improvements or process changes; 3) the ability to recoup increases in the cost of energy and raw materials or other factors; 4) domestic and foreign excess manufacturing capacity for certain metals; 5) fluctuations in currency exchange rates; 6) the degree of success of government trade actions; 7) the valuation of the assets and liabilities in Carpenter's pension trusts and the accounting for pension plans; 8) possible labor disputes or work stoppages; 9) the potential that our customers may substitute alternate materials or adopt different manufacturing practices that replace or limit the suitability of our products; 10) the ability to successfully acquire and integrate acquisitions; and 11) the ability of Carpenter to implement and manage material capital expansion projects in a timely and efficient manner. Any of these factors could have an adverse and/or fluctuating effect on Carpenter's results of operations. The forward-looking statements in this document are intended to be subject to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Carpenter undertakes no obligation to update or revise any forward-looking statements. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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