01—Abstract
Summary
Summary of the 10-K filed August 11, 2017. Cited figures are marked; the original filing is the authoritative source.
Carpenter Technology Corporation (CRS) is a leading producer and distributor of specialty alloys and advanced materials serving critical applications in aerospace, defense, medical, energy, and transportation markets.
In fiscal year 2017, the company reported net sales of $1.798 billiona, a slight decrease of 1% from the prior year. While overall sales saw a modest decline, the company demonstrated resilience with a focus on operational improvements and strategic investments, including the acquisition of titanium powder technology and progress in implementing the Carpenter Operating Model. The company navigated market fluctuations by leveraging its diversified end-use markets and strong customer relationships, particularly in the aerospace and defense sector, which remained its largest revenue driver.
Financially, CRS reported improved net income of $47.0 million in FY2017 compared to $11.3 millionb in FY2016, driven by operational cost efficiencies and stronger demand in the latter half of the year, offsetting challenges experienced earlier. The company also took steps to strengthen its financial position by refinancing its credit facility and proactively managing its pension liabilities. Despite some market softness, particularly in the transportation and industrial sectors, Carpenter Technology's commitment to innovation, such as its focus on additive manufacturing, and its strategic market positioning suggest a focus on long-term growth and value creation for shareholders.
02—Key points
Key Highlights
- Carpenter Technology operates in two main segments: Specialty Alloys Operations (SAO) and Performance Engineered Products (PEP).
- Net sales for fiscal year 2017 were $1.798 billion, a 1% decrease compared to fiscal year 2016.
- Net income significantly improved to $47.0 million in FY2017 from $11.3 million in FY2016, reflecting operational efficiencies and recovering market conditions.
- Aerospace and Defense remains the largest end-use market, accounting for 54% of net sales.
- The company acquired titanium powder technology from Puris LLC in February 2017, strengthening its position in additive manufacturing.
- Carpenter Technology has a long history of paying quarterly cash dividends, maintaining them at $0.18 per share for FY2017.
- The company's sales backlog increased to $438 million as of June 30, 2017, up from $306 million in the prior year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Carpenter Technology Corp kept $0.03.
- Revenue$1.80B100.0%
- Cost of revenue−$1.50B83.3%
- Gross profit$300.8M16.7%
- Operating costs−$179.3M10.0%
- Operating income$121.5M6.8%
- Interest, other & tax−$74.5M4.1%
- Net income$47.0M2.6%
Where FY2017 revenue went
$1.80B- Cost of revenue: $1.50B, 83% of revenue
- Net income: $47.0M, 2.6% of revenue
- R&D: $16.9M, 0.9% of revenue
- SG&A: $176.1M, 9.8% of revenue
- Interest, other & tax: $74.5M, 4.1% of revenue
Kept 2.6% as net incomeNet income $47.0M · 2.6%R&D $16.9M · 0.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed August 11, 2017Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $1.80B$1.81B | −0.9% |
| Cost of Revenue | $1.50B$1.53B | −2.5% |
| Gross Profit | $300.80M$255.90M | +17.5% |
| R&D Expenses | $16.90M$16.30M | +3.7% |
| SG&A Expenses | $176.10M$173.80M | +1.3% |
| Operating Income | $121.50M$51.60M | +135.5% |
| Interest Expense | $29.80M$28.00M | +6.4% |
| Net Income | $47.00M$11.30M | +315.9% |
| EPS (Basic) | $0.99$0.23 | +330.4% |
| EPS (Diluted) | $0.99$0.23 | +330.4% |
| Shares Outstanding (Basic) | 47.00M48.10M | −2.3% |
| Shares Outstanding (Diluted) | 47.10M48.20M | −2.3% |
05—Questions
Frequently Asked Questions
What are Carpenter Technology's primary business segments?
Carpenter Technology operates through two reportable business segments: Specialty Alloys Operations (SAO), which comprises its major premium alloy and stainless steel manufacturing operations, and Performance Engineered Products (PEP), which includes its differentiated operations like titanium alloys, powder products, and distribution businesses.
How did Carpenter Technology perform financially in fiscal year 2017?
In fiscal year 2017, Carpenter Technology reported net sales of $1.798 billion, a slight decrease of 1% from the previous year. Net income saw a significant improvement, rising to $47.0 million from $11.3 million in fiscal year 2016. This improvement was driven by operational cost efficiencies and a recovery in market conditions, particularly in the latter half of the fiscal year.
What are the key end-use markets for Carpenter Technology's products?
Carpenter Technology's high-performance materials are integral to critical applications in several key end-use markets, including Aerospace and Defense, Energy, Transportation, Medical, and Industrial and Consumer sectors. Aerospace and Defense is consistently its largest market.
What is the company's strategy regarding innovation and future growth?
Carpenter Technology is investing in new technologies and capabilities to strengthen its solutions portfolio. This includes a focus on advanced process solutions, superalloy and titanium powder technologies, and additive manufacturing (3D printing). The acquisition of titanium powder technology in FY2017 is a key example of this strategy.
06—Continue