01—Abstract
Summary
Summary of the 10-Q filed April 29, 2021. Cited figures are marked; the original filing is the authoritative source.
Carpenter Technology Corporation (CRS) reported a challenging third quarter for fiscal year 2021, marked by a net loss of $40.5 milliona, or $0.84 per diluted share, a significant decline from the $39.9 million net income in the prior year period.
This downturn was primarily attributed to the ongoing impacts of the COVID-19 pandemic, which led to a 40% decrease in net sales, particularly affecting the Aerospace and Defense and Medical end-use markets. Restructuring and asset impairment charges, totaling $5.0 millionb in the quarter, further impacted profitability, with specific actions taken within the Additive business. Despite the near-term headwinds, the company highlighted its strong liquidity position with $244.2 million in cash and cash equivalents and an undrawn $294.6 million credit facility, indicating financial resilience.
Management expressed optimism about an improving market outlook for the remainder of calendar year 2021, supported by recent contract extensions and signs of recovery in key sectors. The company continues to focus on strategic investments in areas like additive manufacturing and electrification to drive long-term growth.
02—Key points
Key Highlights
- Net sales decreased by 40% to $351.9 million in the three months ended March 31, 2021, compared to $585.4 million in the prior year period, largely due to COVID-19 impacts.
- The company reported a net loss of $40.5 million ($0.84 per diluted share) for the quarter, a significant shift from a net income of $39.9 million ($0.82 per diluted share) in the same period last year.
- Significant revenue declines were observed in key end-use markets, with Aerospace and Defense down 54% and Medical down 34%, reflecting the economic fallout from the pandemic.
- Operating loss was $40.0 million, compared to an operating income of $58.7 million in the prior year quarter, impacted by lower volumes and restructuring charges.
- Restructuring and asset impairment charges amounted to $5.0 million, primarily related to actions within the Additive business.
- The company maintained a strong liquidity position with $244.2 million in cash and cash equivalents and $294.6 million available under its credit facility as of March 31, 2021.
- Despite current challenges, management anticipates improving end-use market conditions throughout calendar year 2021.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2021, Carpenter Technology Corp lost $0.12.
- Revenue$351.9M100.0%
- Cost of revenue−$339.1M96.4%
- Gross profit$12.8M3.6%
- Operating costs−$52.8M15.0%
- Operating income−$40.0M11.4%
- Interest, other & tax−$500,0000.1%
- Net income−$40.5M11.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2021filed April 29, 2021Financial Statements
Q3 FY2021 against Q3 FY2020
| Line item | Q3 FY2021Q3 FY2020 | Change |
|---|---|---|
| Revenue | $351.90M$585.40M | −39.9% |
| Cost of Revenue | $336.50M$475.90M | −29.3% |
| Gross Profit | $12.80M$109.50M | −88.3% |
| SG&A Expenses | $47.80M$50.80M | −5.9% |
| Operating Income | -$40.00M$58.70M | −168.1% |
| Interest Expense | $8.90M$4.90M | +81.6% |
| Net Income | -$40.50M$39.90M | −201.5% |
| EPS (Basic) | $-0.84$0.82 | −202.4% |
| EPS (Diluted) | $-0.84$0.82 | −202.4% |
| Shares Outstanding (Basic) | 48.30M48.10M | +0.4% |
| Shares Outstanding (Diluted) | 48.30M48.30M | 0.0% |
05—Questions
Frequently Asked Questions
What were the primary drivers of the financial decline in this quarter?
The primary driver of the financial decline was the significant impact of the COVID-19 pandemic, which led to a 40% decrease in net sales, particularly affecting the Aerospace and Defense and Medical end-use markets. Additionally, restructuring and asset impairment charges contributed to the net loss.
How has the company managed its liquidity amid these challenging conditions?
The company maintained a strong liquidity position, ending the quarter with $244.2 million in cash and cash equivalents. It also had $294.6 million in available borrowing capacity under its credit facility, providing ample financial resources to navigate the current economic environment.
What is the outlook for Carpenter Technology for the remainder of the fiscal year?
Management is optimistic about the outlook, anticipating improving end-use market conditions throughout calendar year 2021. They highlighted recent contract extensions and signs of recovery in key sectors, supported by long-term demand for their specialized material solutions.
Were there any significant non-recurring charges impacting the results?
Yes, the company incurred $5.0 million in restructuring and asset impairment charges during the quarter, primarily related to actions taken within its Additive business. Additionally, a $52.8 million goodwill impairment charge was recorded in the prior quarter (ended December 31, 2020) for the Additive reporting unit.
06—Continue