01—Abstract
Summary
Summary of the 10-K filed August 23, 2013. Cited figures are marked; the original filing is the authoritative source.
Carpenter Technology Corporation (CRS) reported strong financial performance for the fiscal year ended June 30, 2013.
The company saw a significant increase in net sales, driven by the full-year inclusion of the Latrobe acquisition and robust demand in the aerospace and defense sector. Despite some headwinds in industrial and consumer, and medical markets due to customer destocking and falling titanium prices, the company demonstrated operational improvements and enhanced liquidity through credit facility expansion. Key initiatives for the year included progress on the new Athens, Alabama facility, which remains on time and under budget, positioning the company for future growth in premium products.
Management highlighted improved operational execution and strategic contract wins. The company maintained its long-standing dividend payout, underscoring a commitment to shareholder returns. Looking ahead, Carpenter Technology continues to focus on expanding its capabilities and market presence in key growth areas.
02—Key points
Key Highlights
- Net sales increased by 12% to $2.27 billion, primarily driven by the Latrobe acquisition and strong aerospace demand.
- Aerospace and defense segment sales grew by 18% (24% excluding surcharges), indicating strong demand for premium products.
- The company is investing heavily in a new $500 million manufacturing facility in Athens, Alabama, expected to be operational by April 2014.
- Operational execution improved, with cost per ton reduction in Specialty Alloys Operations for the fourth consecutive year.
- Liquidity was enhanced by expanding the revolving credit facility to $500 million.
- The company maintained its quarterly dividend of $0.18 per share, continuing over 100 years of dividend payments.
- Net income increased to $146.1 million ($2.73 per diluted share) from $121.2 million ($2.53 per diluted share) in the prior year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Carpenter Technology Corp kept $0.06.
- Revenue$2.27B100.0%
- Cost of revenue−$1.84B80.9%
- Gross profit$433.5M19.1%
- Operating costs−$200.8M8.8%
- Operating income$232.7M10.2%
- Interest, other & tax−$86.6M3.8%
- Net income$146.1M6.4%
Where FY2013 revenue went
$2.27B- Cost of revenue: $1.84B, 81% of revenue
- Net income: $146.1M, 6.4% of revenue
- R&D: $19.4M, 0.9% of revenue
- SG&A: $200.8M, 8.8% of revenue
- Interest, other & tax: $86.6M, 3.8% of revenue
Kept 6.4% as net incomeNet income $146.1M · 6.4%R&D $19.4M · 0.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed August 23, 2013Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $2.27B$2.03B | +12.0% |
| Cost of Revenue | $1.84B$1.64B | +12.2% |
| Gross Profit | $433.50M$391.00M | +10.9% |
| R&D Expenses | $19.40M$20.50M | −5.4% |
| SG&A Expenses | $200.80M$169.20M | +18.7% |
| Operating Income | $232.70M$210.10M | +10.8% |
| Interest Expense | $21.00M$23.80M | −11.8% |
| Net Income | $146.10M$121.20M | +20.5% |
| EPS (Basic) | $2.75$2.55 | +7.8% |
| EPS (Diluted) | $2.73$2.53 | +7.9% |
| Shares Outstanding (Basic) | 52.90M47.10M | +12.3% |
| Shares Outstanding (Diluted) | 53.20M47.50M | +12.0% |
05—Questions
Frequently Asked Questions
What was the impact of the Latrobe acquisition on the company's performance?
The acquisition of Latrobe Specialty Metals, Inc. (Latrobe) in February 2012 had a significant positive impact, contributing $266.1 million to net sales in fiscal year 2013. The integration of Latrobe's operations reportedly exceeded deal economics, and management highlighted operational improvements and cost synergies from the acquisition.
How is the company managing raw material price volatility?
Carpenter Technology utilizes pricing surcharges, indexing mechanisms, base price adjustments, and commodity forward contracts to mitigate the impact of volatile raw material costs. While these measures generally protect gross profit dollars, they can have a dilutive effect on gross margin percentages due to lag effects and the structure of surcharges.
What are the key growth drivers and market trends for Carpenter Technology?
The company's growth is significantly driven by demand in the aerospace and defense sector, which showed strong performance. The energy market also saw increased sales. Management is focused on expanding capabilities in premium products, particularly through the new Athens, Alabama facility, to meet demand in these growing, high-value markets.
What is the company's strategy regarding capital expenditures and R&D?
Carpenter Technology is making substantial capital investments, notably the $500 million state-of-the-art manufacturing facility in Athens, Alabama, to increase premium product capacity. Research and development expenditures were around $19.4 million, reflecting a commitment to innovation and the development of new material solutions.
06—Continue