10-KPeriod: FY2012

CARPENTER TECHNOLOGY CORP Annual Report, Year Ended Jun 30, 2012

Filed August 22, 2012For Securities:CRS

Summary

Carpenter Technology Corporation (CRS) reported a significant increase in net sales and net income for the fiscal year ended June 30, 2012, compared to the prior year. This growth was largely driven by the acquisition of Latrobe Specialty Metals in February 2012, which expanded the company's manufacturing capacity and product portfolio, particularly in high-demand aerospace and defense, and energy sectors. Excluding surcharge revenues, net sales increased by 27%, reflecting higher volumes and strategic pricing and mix management initiatives. The company is making substantial investments in future growth, notably a new $500 million manufacturing facility in Alabama, expected to be operational by April 2014. This investment, alongside the Latrobe acquisition, signals a strategic focus on premium products and increased capacity to meet growing customer demand. Despite these investments and some acquisition-related costs, the company demonstrated improved operating income and a stronger financial position, while also continuing its long history of paying quarterly dividends.

Financial Highlights

53 data points
Beta

Revenue

$2.03B

19.3% Gross Margin

Net Income

$121.20M

6.0% Net Margin

EPS (Diluted)

$2.53

Total Assets

$2.63B

Cash & Equivalents

$211.00M

Free Cash Flow

$146.20M

Financial Statements
Beta
Revenue$2.03B
Cost of Revenue$1.64B
Gross Profit$391.00M
R&D Expenses$20.50M
SG&A Expenses$169.20M
Operating Income$210.10M
Interest Expense$23.80M
Net Income$121.20M
EPS (Basic)$2.55
EPS (Diluted)$2.53
Shares Outstanding (Basic)47.10M
Shares Outstanding (Diluted)47.50M

Key Highlights

  • 1Net sales increased by 21% to $2,028.7 million in fiscal year 2012, with a 27% increase when excluding surcharge revenues, driven by higher volumes and strategic initiatives.
  • 2The company completed the acquisition of Latrobe Specialty Metals, Inc. (Latrobe) in February 2012, significantly expanding its manufacturing capacity and product offerings.
  • 3Construction began on a new $500 million state-of-the-art manufacturing facility in Alabama, expected to be operational by April 2014, to support premium product growth.
  • 4Net income attributable to Carpenter increased to $121.2 million in fiscal year 2012, a substantial improvement from $71.0 million in fiscal year 2011.
  • 5Diluted earnings per share rose to $2.53 in fiscal year 2012, up from $1.59 in fiscal year 2011.
  • 6Operating income increased to $210.1 million in fiscal year 2012, more than double the $96.4 million reported in fiscal year 2011.
  • 7The company maintained its commitment to shareholders by paying a quarterly cash dividend of $0.18 per common share.

Frequently Asked Questions

The primary drivers were a significant increase in net sales, particularly in the aerospace, defense, and energy markets, and improved operating income. The acquisition of Latrobe Specialty Metals was a key factor in expanding capacity and market reach, complementing strong organic growth fueled by pricing and product mix management.

The new facility represents a major strategic investment of $500 million to enhance production capacity for premium products. Expected to be operational by April 2014, it is designed to meet strong customer demand, particularly from the aerospace, defense, and energy industries, and is intended to drive long-term growth and competitiveness.

The Latrobe acquisition, completed in February 2012, significantly boosted net sales and operating income. It contributed to increased production capacity and a more favorable product mix. While there were acquisition-related costs and inventory fair value adjustments, the deal was accretive to earnings, excluding these one-time impacts, and is expected to deliver substantial strategic value and synergies.

Carpenter Technology has substantial pension and postretirement benefit obligations. In fiscal year 2012, the company contributed $30 million to its U.S. pension plans and anticipated contributing another $82 million in fiscal year 2013. Management is actively managing these obligations and exploring options to address funding impacts, acknowledging the significant cash contributions expected over the next five years.