Carpenter Technology Updates Outlook Reflecting Increased Nickel Costs.Business Editors WYOMISSING, Pa.--(BUSINESS WIRE)--March 21, 2000 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 updated its outlook for the third fiscal quarter (ending March 31, 2000) and the fiscal year ending June 30, 2000. Carpenter reported that diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of will be approximately $.50 per share for the third fiscal quarter. On January 20, Carpenter had said that it expected diluted earnings per share 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 for the third quarter to be in line with analysts' consensus estimate of $.69 per diluted share. For the fiscal year ended June 30, 2000, diluted earnings per share are expected to be lower than current consensus estimates of $2.45 per share by $.20 to $.30 per share. Robert W. Cardy, chairman and chief executive officer, said, "Business conditions have improved over the quarter ended December 31, 1999. Capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. , shipping volumes and pricing are more favorable. However, the improvements have not offset rapidly increasing nickel costs, due to the 60-day lag in the nickel surcharge pricing formula." The change in the expectations resulted principally from continuing increases in nickel costs that are charged against income when the nickel is received, under the last-in, first-out (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 ) method of accounting. During the quarter ending March 31, 2000, nickel costs are expected to have increased approximately 30 percent. Carpenter's pricing policy is to recover the nickel cost increases through a surcharge that is added to customer prices, but there is approximately a 60-day lag between the incurrence of nickel costs and the resulting surcharge to customers. Consequently, much of the higher nickel costs incurred during the quarter ending March 31 will be reflected in surcharges in the quarter ending June 30. Within the fourth quarter, we estimate that nickel costs will remain at a high level and the higher costs, due to LIFO accounting and the surcharge lag, will have an unfavorable impact on the fourth quarter. During the quarter ending March 31, 2000, Carpenter will substantially complete two large capital projects - a new 4,500-ton press and modernization of its strip product processing facility. Because cash requirements for capital expenditures will decrease with the completion of these projects, cash flow before financing activities is expected to improve and turn positive in the quarter ending June 30. The additional cash will be used primarily to reduce short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. . Carpenter produces and distributes stainless steels, titanium, other specialty alloys and various engineered products. Information about Carpenter can be found on the Internet at www.cartech.com, www.dynamet.com and www.carpenterepg.com. Some of the statements in this news release are forward-looking statements. These statements are based on current expectations that involve a number of risks and uncertainties, which are specified in Carpenter's filings with the Securities and Exchange Commission, including the December 31, 1999, Form 10-Q Form 10-Q See 10-Q. . Actual results could differ materially from those indicated in the forward-looking statements. |
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