PHILADELPHIA, Oct. 22, 2020 (GLOBE NEWSWIRE) -- Carpenter Technology Corporation (NYSE: CRS) today announced financial results for the fiscal first quarter ended September 30, 2020. For the quarter, the Company reported a net loss of $47.1 million, or $0.98 loss per diluted share. Excluding special items, adjusted loss per diluted share was $0.58 for the quarter.
“During the first quarter, we further strengthened our liquidity position through solid operating and free cash flow generation,” said Tony R. Thene, President and CEO of Carpenter Technology. “While our targeted inventory reduction efforts impacted profitability, we believe managing for cash flow in the current environment is prudent and helped us finish the first quarter with over $600 million in total liquidity. As anticipated, our operating results in the quarter were also impacted by lower volume due to challenging conditions in the Aerospace and Defense and Medical end-use markets that continue to be pressured as a result of COVID-19. Our facilities remain operational which speaks to the dedication of all of our employees as well as the benefits of our safety-driven culture and enhanced protocols.”
“Looking ahead, the headwinds from COVID-19 will continue to impact demand levels across our key end-use markets in our upcoming second quarter and we will remain in constant contact with our customers to address their evolving material requirements. Despite the near-term challenges related to COVID-19, the long-term outlook for our end-use markets is solid and we will continue working closely with our customers to strengthen our established supply chain position and extend key strategic supply agreements. We remain a critical solutions provider to customers and are developing stronger relationships as we work together to navigate the current environment. We remain confident that a recovery in demand conditions across our key end-use markets will begin to take shape in our third quarter of fiscal year 2021.”
“Our liquidity position is strong as a result of the actions we have taken since the onset of the pandemic and we will continue to maintain a disciplined approach to reducing costs and increasing cash generation. While we continue to actively manage our business given the current challenges, we are also maintaining a focus on the future and further advancing our position in critical emerging technologies. We recently launched our Carpenter Electrification brand and see a number of attractive growth opportunities for our proprietary soft magnetics solutions across all of our key end-use markets. We believe our soft magnetics and additive manufacturing solutions are pivotal to addressing the future of our industry and best positioning Carpenter Technology for sustainable growth over the long-term.”
Net sales for the first quarter of fiscal year 2021 were $353.3 million compared with $585.4 million in the first quarter of fiscal year 2020, a decrease of $232.1 million (40 percent), on 29 percent lower volume. Net sales excluding surcharge were $307.2 million, a decrease of $179.4 million (37 percent) from the same period a year ago.
Operating loss was $48.8 million compared to operating income of $59.8 million in the prior year period. Adjusted operating loss excluding special items was $30.9 million in the recent first quarter. Special items excluded from adjusted operating loss in the current quarter include restructuring and asset impairment charges totaling $10.0 million primarily associated with recent portfolio actions in the Company’s Additive business unit and $7.9 million of costs associated with COVID-19. These costs principally include 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 to COVID-19 in the Company’s facilities. The COVID-19 costs in the current quarter also include $3.1 million related to costs associated with an aerospace customer bankruptcy as a result of COVID-19.
Cash provided from operating activities in the first quarter of fiscal year 2021 was $88.0 million, compared to $0.7 million in the same quarter last year. Free cash flow in the first quarter of fiscal year 2021 was positive $62.6 million, compared to negative $56.4 million in the same quarter last year. The increases in operating cash flow and free cash flow primarily reflect the impact of inventory reduction in the current quarter partially offset by lower earnings relative to the same quarter a year ago. In addition, capital expenditures were $33.3 million in the first quarter of fiscal year 2021 compared to $47.5 million in the same quarter last year. The Company also completed the divestiture of its Amega West oil and gas business, which resulted in $17.6 million of proceeds in the current quarter’s cash flow results.
In addition to the cash generated from operations, the Company’s liquidity was further enhanced by the bond refinancing completed in the first quarter of fiscal year 2021. The Company issued $400.0 million of senior unsecured notes and used the net proceeds from the offering to repay in full $250.0 million of its 5.200% senior notes due July 2021 with the remaining proceeds available for general corporate purposes. Total liquidity, including cash and available credit facility borrowings, was $612.9 million at the end of the first quarter of fiscal year 2021. This consisted of $218.9 million of cash and $394.0 million of available borrowings under the Company’s credit facility.
About Carpenter Technology
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, medical, energy, industrial, and consumer electronics markets. Founded in 1889, Carpenter Technology has evolved to become a pioneer in premium specialty alloys, including titanium, nickel, and cobalt, as well as alloys specifically engineered for additive manufacturing (AM) processes and soft magnetics applications. Carpenter Technology has expanded its AM capabilities to provide a complete “end-to-end” solution to accelerate materials innovation and streamline parts production. More information about Carpenter Technology can be found at www.carpentertechnology.com.
