Carpenter Technology Reports Second Quarter Financial Results.Business Editors WYOMISSING, Pa.--(BUSINESS WIRE)--Jan. 22, 2002 Carpenter Technology (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 ): -- Earnings in Line with December Projection -- Expected Fiscal Year Cash Flow will Lower Debt $30-40 Million -- Continuing High Volume of Low-Priced Stainless Imports and Soft Demand Pressure Profits -- Economic Downturn Expected to Impact Second Half Results -- Working Capital Improvements and Cost Reduction Efforts Continue 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:CRS) today reported lower second quarter results as expected and is continuing to improve cash flow and pay down debt. 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 for the second fiscal quarter ended December December: see month. 31, 2001, were $248 million compared with $289 million for last year's second quarter. The comparisons to the prior year are before the effects from the adoption of the Securities and Exchange Commission's Staff Accounting Bulletin, Revenue Recognition in Financial Statements (SAB SAB Spontaneous abortion. See Abortion. 101), which was adopted effective July July: see month. 1, 2000. Net income for the second quarter was $3.5 million or $.14 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with $13.3 million or $.57 per diluted share for the year-ago quarter, before the SAB 101 effects. Net income for the most recent second quarter was within the range of Carpenter's December announcement of $.10 to $.15 per diluted share. Including the effects of SAB 101 on last year's second quarter, revenue was $292 million and net income was $13.4 million or $.58 per diluted share. The second quarter of fiscal year 2002 reflects approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3.5 million, or the equivalent of $.09 per diluted share, received from U.S. Customs under the "Continued Dumping dumping, selling goods at less than the normal price, usually as exports in international trade. It may be done by a producer, a group of producers, or a nation. and Subsidy subsidy, financial assistance granted by a government or philanthropic foundation to a person or association for the purpose of promoting an enterprise considered beneficial to the public welfare. Offset Act of 2000." Net income also reflects $.03 per diluted share of tax benefits associated with a change in estimate relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. of certain tax assets. Effective July 1, 2001, Carpenter adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ," and therefore there is no goodwill amortization in fiscal 2002. The second quarter of fiscal 2001 included $1.6 million of goodwill amortization. Free cash flow, defined as net cash before financing activities but after dividends, was $12.2 million in the second quarter versus a use of cash of $6.6 million a year ago. "The continued negative effect of unfairly traded stainless imports and the sustained downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in the U.S. manufacturing sector significantly impacted our business during the quarter," said Dennis Dennis is a male first name derived from the Greco-Roman name Dionysius meaning "servant of Dionysus", the Thracian god of wine, which is ultimately derived from the Greek Dios (Διος, "of Zeus") combined with Nysos or Nysa (Νυσα), where the M. Draeger, chairman, president and chief executive officer. "Our stainless bar and coil volumes were especially affected by the high level of imports, combined with reduced purchasing activity by industrial and consumer customers, who lowered inventories and scheduled extended downtime The time during which a computer is not functioning due to hardware, operating system or application program failure. in December." Given the serious injury caused Carpenter by stainless imports, the company was pleased by the U.S. Commerce Department's recent determination of the final dumping duty margins in a pending stainless bar antidumping an·ti·dump·ing adj. Intended to discourage importation and sale of foreign-made goods at prices substantially below domestic prices for the same items. trade case. The International Trade Commission will determine the injurious in·ju·ri·ous adj. 1. Causing or tending to cause injury; harmful: eating habits that are injurious to one's health. 2. effect of stainless bar imports during 2001 and earlier when it makes its final injury determination on February February: see month. 20. The company also is hopeful that President Bush will announce a strong remedy The manner in which a right is enforced or satisfied by a court when some harm or injury, recognized by society as a wrongful act, is inflicted upon an individual. The law of remedies is concerned with the character and extent of relief to which an individual who has brought for stainless products when he makes his Section 201 steel case remedy determination in early March. The decline in Carpenter's stainless shipments was partially offset by increased shipments to the aerospace and power generation markets for high-temperature alloys This is a list of alloys for which an article exists in Wikipedia (or is proposed but not yet written). They are grouped by base metal, in order of increasing atomic number. Within these headings they are in no particular order. . These higher value products helped boost international sales, which increased 22 percent in the second quarter from a year ago. International sales accounted for 26 percent of total sales in the second quarter, up from 19 percent a year ago. First half results Net sales for the first six months of the current fiscal year were $499 million compared with last year's level of $566 million, before the SAB 101 effects. Net income was $9 million, or $.38 per diluted share, compared with $24 million or $1.05 per diluted share last year, before the SAB 101 effects. Including the effects of SAB 101 on the results of the first six months of last year, revenue was $585 million and net income was $29 million or $1.24 per diluted share, before the cumulative effect of accounting change. For the six-month period, the company generated $18.5 million of free cash flow versus $2.0 million for the same period a year ago. Debt refinancing Refinancing An extension and/or increase in amount of existing debt. strategy As part of an ongoing strategy to enhance liquidity, during the second quarter Carpenter entered into a $125 million, five-year unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility and a $75 million, unsecured 364-day credit facility. The company also entered into a $75 million receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed purchase agreement. The initial funding under the receivables purchase agreement of $45 million had the effect of reducing receivables and short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. on the balance sheet. These facilities refinanced certain maturing commitments and will provide sufficient liquidity for the company's anticipated needs. At the end of the second quarter, total debt and amounts outstanding under the receivables purchase facility, aggregating $507 million, was $69 million lower than a year ago. Second half outlook Despite some recent positive economic data, the company is cautious about the balance of its fiscal year, as it has not yet experienced an increase in order activity. Carpenter also is beginning to see the expected slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in order activity for its aerospace related business. The economic slowdown, coupled with ongoing inventory reductions by customers, is expected to continue to impact shipments. Uncertainties about the timing of a recovery, the level of stainless imports, and the depth of decline in the aerospace business make it difficult to estimate the potential volume impact on Carpenter in the second half of fiscal 2002. The company will continue to focus aggressively on working capital management. Although improving cash flow, the expected reduction in Carpenter's inventories will further negatively impact earnings performance. Accordingly the company expects that results in the second half of fiscal 2002 will be lower than the first half and below break even. As a result, Carpenter could be marginally mar·gin·al adj. 1. Of, relating to, located at, or constituting a margin, a border, or an edge: the marginal strip of beach; a marginal issue that had no bearing on the election results. 2. profitable for the fiscal year. Carpenter anticipates that its fiscal year 2002 free cash flow (after dividends) will be $30 - $40 million and be used to pay down debt. The company also expects to exceed its $20 million cost reduction goal. "We are maintaining our cash flow generating capabilities during a challenging economic period by aggressively focusing on cost reductions, limiting capital expenditures, streamlining operations, reducing working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. and enhancing our liquidity," Draeger said. "Our company fundamentals remain sound, and I'm I'm Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in confident that the actions we have recently put in place will pay back considerably when the economy rebounds." Carpenter plans to broadcast a conference call and webcast on Tuesday Tuesday: see week. , January January: see month. 22, at 10 a.m., EST EST electroshock therapy. EST abbr. electroshock therapy , to discuss its results of operations for the quarter ended December 31 and current business conditions. The webcast is available at www.vcall.com. Please call 610-208-2024 for the conference call telephone number and passcode. A replay of the conference call will be available at www.vcall.com and by calling 1-888-566-0488 (international call 1-402-998-0652). The passcode for the replay is "1201." The telephone replay will be available until January 25. Carpenter Technology produces and distributes specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. metals, 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 , superalloys, powder powder, any mass of fine particles or dust prepared by various mechanical means, e.g., grinding of solid substances, or by chemical means, e.g., precipitation from solutions. In a special sense, the word is applied to powdered propellant explosives, e.g. and various engineered products. Information about Carpenter can be found on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.cartech.com, with selected products sold online at www.carpenterdirect.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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. . The most significant of these uncertainties are described in Carpenter's 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. , its Form 10-Q Form 10-Q See 10-Q. for its first fiscal quarter, Carpenter's most recently filed S-4 Registration Statement and the exhibits attached to those filings, and include (but are not limited to): 1) a high level of stainless imports, unfair trade practices of foreign producers, and worldwide excess capacity for certain alloys that Carpenter produces; 2) 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, automotive and consumer durables Consumer durables Consumer products that are expected to last three years or more, such as an automobile or a home appliance. consumer durables See durable goods. , all of which are subject to changes in general economic and financial market conditions; 3) the ability of Carpenter to recoup recoup To sell an asset at a price sufficient to recover the original outlay or to offset a previous loss. increased costs of fuel, such as natural gas, and raw materials, such as nickel nickel, metallic chemical element; symbol Ni; at. no. 28; at. wt. 58.69; m.p. about 1,453°C;; b.p. about 2,732°C;; sp. gr. 8.902 at 25°C;; valence 0, +1, +2, +3, or +4. , through increased prices and surcharges; 4) fluctuations in currency exchange rates, resulting in increased competition and downward pricing pressure on Carpenter products; and 5) fluctuations in stock markets which could impact the valuation of the assets in Carpenter's pension trusts and the accounting for pension assets. Carpenter undertakes no obligation to update or revise any forward-looking statements.
CONSOLIDATED STATEMENT OF INCOME
(in Millions, Except per Share Data)
Three Months Ended
December 31
-------------------------------------
As Previously
Reported
2001 2000(1) 2000(2)
--------- --------- ---------
NET SALES $ 248.1 $ 292.2 $ 288.7
--------- --------- ---------
COSTS AND EXPENSES:
Cost of sales 201.6 225.8 222.0
Selling and
administrative
expenses 36.1 37.5 38.0
Interest expense 9.1 10.6 10.6
Other income, net (3.3) (.8) (.8)
--------- --------- ---------
243.5 273.1 269.8
--------- --------- ---------
Income before income
taxes 4.6 19.1 18.9
Income taxes 1.1 5.7 5.6
--------- --------- ---------
NET INCOME $ 3.5 $ 13.4 $ 13.3
========= ========= =========
EARNINGS PER COMMON
SHARE:
Basic $ .14 $ .59 $ .58
========= ========= =========
Diluted $ .14 $ .58 $ .57
========= ========= =========
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING
Basic 22.2 22.0 22.0
========= ========= =========
Diluted 23.0 23.0 23.0
========= ========= =========
Cash dividends per
common share $ .33 $ .33 $ .33
========= ========= =========
(1) Restated to reflect the adoption of SAB 101, effective July 1,
2000.
(2) Excludes the impact of adopting SAB 101. This column also
represents our financial results pursuant to SAB 101 on a pro
forma basis as if our current terms of sale (title transfers upon
shipment) were in effect during that period. Prior to April 1,
2001, although risk of loss transferred upon shipment, our terms
of sale provided that legal title transferred only upon payment.
Certain reclassifications of prior years' amounts have been made
to conform with current year's presentation.
CONSOLIDATED STATEMENT OF INCOME
(in Millions, Except per Share Data)
Six Months Ended
December 31
-------------------------------------
As Previously
Reported
2001 2000(1) 2000(2)
--------- --------- ---------
NET SALES $ 499.3 $ 585.3 $ 566.4
--------- --------- ---------
COSTS AND EXPENSES:
Cost of sales 399.9 447.4 434.7
Selling and
administrative
expenses 72.8 75.3 76.3
Interest expense 18.0 21.3 21.3
Other income, net (5.0) (3.0) (3.0)
--------- --------- ---------
485.7 541.0 529.3
--------- --------- ---------
Income before income
taxes and
cumulative effect
of accounting
change 13.6 44.3 37.1
Income taxes 4.2 15.6 12.7
--------- --------- ---------
Income before
cumulative effect
of accounting
change 9.4 28.7 24.4
Cumulative effect of
accounting change -- (14.1) --
--------- --------- ---------
NET INCOME $ 9.4 $ 14.6 $ 24.4
========= ========= =========
EARNINGS PER COMMON
SHARE:
Basic:
Income before
cumulative
effect of
accounting
change $ .38 $ 1.27 $ 1.07
Cumulative
effect of
accounting
change -- (.64) --
--------- --------- ---------
Net income $ .38 $ .63 $ 1.07
========= ========= =========
Diluted:
Income before
cumulative
effect of
accounting
change $ .38 $ 1.24 $ 1.05
Cumulative
effect of
accounting
change -- (.62) --
--------- --------- ---------
Net income $ .38 $ .62 $ 1.05
========= ========= =========
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING
Basic 22.2 22.0 22.0
========= ========= =========
Diluted 23.0 23.0 23.0
========= ========= =========
Cash dividends per
common share $ .66 $ .66 $ .66
========= ========= =========
(1) Restated to reflect the adoption of SAB 101, effective July 1,
2000.
(2) Excludes the impact of adopting SAB 101. This column also
represents our financial results pursuant to SAB 101 on a pro
forma basis as if our current terms of sale (title transfers upon
shipment) were in effect during that period. Prior to April 1,
2001, although risk of loss transferred upon shipment, our terms
of sale provided that legal title transferred only upon payment.
Certain reclassifications of prior years' amounts have been made
to conform with current year's presentation.
PRELIMINARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(in Millions)
Six Months Ended
December 31
-----------------------
2001 2000(1)
-------- --------
OPERATIONS:
Net income $ 9.4 $ 14.6
Cumulative effect of accounting
change -- 14.1
Adjustments to reconcile net
income to net cash provided
from operations:
Depreciation 28.2 27.5
Amortization of intangible
assets 6.4 7.6
Deferred income taxes 1.9 13.7
Net pension credit (8.6) (20.4)
Net loss (gain) on asset
disposals .2 (1.9)
Changes in working capital and
other:
Receivables 85.2 (1.6)
Inventories (14.3) (5.9)
Accounts payable (13.7) (12.4)
Accrued current liabilities 3.8 .7
Other, net (4.1) 1.3
-------- --------
Net cash provided from operations 94.4 37.3
-------- --------
INVESTING ACTIVITIES:
Purchases of plant, equipment
and software (15.9) (27.8)
Proceeds from disposals of
plant and equipment .3 7.9
Proceeds from sale of business .2 --
-------- --------
Net cash used for investing
activities (15.4) (19.9)
-------- --------
NET CASH PROVIDED BEFORE
FINANCING ACTIVITIES 79.0 17.4
-------- --------
FINANCING ACTIVITIES:
Change in short-term debt (145.0) 4.1
Proceeds from issuance of
long-term debt 98.4 --
Payments on long-term debt (15.5) (10.3)
Dividends paid (15.5) (15.4)
Proceeds from issuance of
common stock .3 2.4
-------- --------
Net cash used for financing
activities (77.3) (19.2)
-------- --------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 1.7 (1.8)
Cash and cash equivalents at
beginning of period 7.8 9.5
-------- --------
Cash and cash equivalents at end
of period $ 9.5 $ 7.7
======== ========
(1) Restated to reflect the adoption of SAB 101, effective July 1,
2000.
Certain reclassifications of prior years' amounts have been made
to conform with current year's presentation.
PRELIMINARY
CONSOLIDATED BALANCE SHEET
(in Millions)
December 31 June 30
2001 2001
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 9.5 $ 7.8
Accounts receivable, net 108.6 193.8
Inventories 255.4 241.1
Other current assets 15.7 16.4
-------- --------
Total current assets 389.2 459.1
Property, plant and equipment, net 737.1 752.2
Prepaid pension cost 240.3 225.6
Goodwill, net 158.9 161.7
Trademarks and trade names, net 27.0 27.6
Other assets 64.5 65.3
-------- --------
Total assets $1,617.0 $1,691.5
======== ========
LIABILITIES
Current liabilities:
Short-term debt $ 26.1 $ 170.6
Accounts payable 68.6 82.3
Accrued liabilities 65.7 63.9
Deferred income taxes .3 2.1
Current portion of long-term
debt 10.2 25.2
-------- --------
Total current liabilities 170.9 344.1
Long-term debt, net of current
portion 425.9 326.9
Accrued postretirement benefits 162.6 157.8
Deferred income taxes 178.1 177.8
Other liabilities 35.7 36.3
STOCKHOLDERS' EQUITY
Convertible preferred stock 24.9 25.4
Common stock 116.4 116.3
Capital in excess of par value 196.8 196.7
Reinvested earnings 372.3 378.4
Common stock in treasury, at
cost (38.3) (38.4)
Deferred compensation (12.1) (13.1)
Accumulated other comprehensive
income (loss) (16.2) (16.7)
-------- --------
Total stockholders' equity 643.8 648.6
-------- --------
Total liabilities and
stockholders' equity $1,617.0 $1,691.5
======== ========
Certain reclassifications of prior years' amounts have been made
to conform with current year's presentation.
PRELIMINARY
SEGMENT FINANCIAL DATA
(in Millions)
Three Months Ended Six Months Ended
December 31 December 31
-------------------- -------------------
2001 2000(1) 2001 2000(1)
-------- -------- -------- --------
Net sales:
Specialty Metals $ 215.2 $ 256.1 $ 430.9 $ 512.0
Engineered
Products 33.7 36.8 69.4 74.4
Intersegment (.8) (.7) (1.0) (1.1)
-------- -------- -------- --------
Consolidated
net sales $ 248.1 $ 292.2 $ 499.3 $ 585.3
======== ======== ======== ========
Operating income:
Specialty Metals $ 8.4 $ 20.7 $ 20.7 $ 45.1
Engineered
Products 2.1 2.6 5.9 7.6
Net Pension
Credit 4.4 10.2 8.5 20.3
Corporate Costs (4.5) (4.6) (8.5) (10.4)
-------- -------- -------- --------
Total
operating
income 10.4 28.9 26.6 62.6
Interest expense (9.1) (10.6) (18.0) (21.3)
Other income,
net 3.3 .8 5.0 3.0
-------- -------- -------- --------
Consolidated
income before
income taxes
and
cumulative
effect of
accounting
change $ 4.6 $ 19.1 $ 13.6 $ 44.3
======== ======== ======== ========
Carpenter is organized on a product basis: Specialty Alloys
Operations, Titanium, Carpenter Powder Products and Engineered
Products Group. For segment reporting purposes, Specialty Alloys
Operations, Titanium and Carpenter Powder Products are aggregated into
one reportable segment called Specialty Metals because of the
similarities in products, processes, customers and distribution
methods.
(1) Restated to reflect the adoption of SAB 101, effective July 1,
2000.
Certain reclassifications of prior years' amounts have been made
to conform with current year's presentation.
|
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion