01—Abstract
Summary
Summary of the 10-Q filed April 28, 2022. Cited figures are marked; the original filing is the authoritative source.
Carpenter Technology Corporation (CRS) reported a net loss of $7.5 milliona, or $0.16 per diluted share, for the third quarter of fiscal year 2022, a significant improvement from the $40.5 million net loss reported in the same period last year.
This improvement was driven by a 39% increase in net sales, reaching $489.0 million, compared to $351.9 millionb in the prior year's quarter. The company experienced strong demand across most end-use markets, particularly in Aerospace & Defense, Medical, and Industrial & Consumer sectors. Despite operational challenges such as the Reading press outage and labor shortages, the company saw improved gross margins and a reduction in operating losses year-over-year.
Financially, the company generated $106.5 millionc in cash from operating activities during the quarter, contributing to an increase in cash and cash equivalents to $393.9 million. Long-term debt saw an increase due to the issuance of $300.0 million in Senior Notes due 2030, which were used to repay maturing debt.
The company's liquidity remains robust, with $393.9 milliond in cash and cash equivalents and $294.2 million available under its credit facility. Management is optimistic about continued growth driven by strong demand tailwinds and realized pricing gains.
02—Key points
Key Highlights
- Net sales increased by 39% to $489.0 million in Q3 FY2022, up from $351.9 million in Q3 FY2021.
- Net loss narrowed significantly to $7.5 million ($0.16/share) in Q3 FY2022, compared to a loss of $40.5 million ($0.84/share) in Q3 FY2021.
- Aerospace & Defense sales grew 26% year-over-year, indicating a recovery in this key market.
- Gross margin improved to 8.1% from 3.6% in the prior year quarter, excluding certain items.
- Operating income turned positive at $1.1 million, a significant improvement from an operating loss of $40.0 million in the prior year quarter.
- Cash and cash equivalents increased to $393.9 million at the end of the quarter.
- The company issued $300.0 million in 7.625% Senior Notes due 2030, utilizing the proceeds to repay existing debt.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2022, Carpenter Technology Corp lost $0.02.
- Revenue$489.0M100.0%
- Cost of revenue−$449.5M91.9%
- Gross profit$39.5M8.1%
- Operating costs−$38.4M7.9%
- Operating income$1.1M0.2%
- Interest, other & tax−$8.6M1.8%
- Net income−$7.5M1.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2022filed April 28, 2022Financial Statements
Q3 FY2022 against Q3 FY2021
| Line item | Q3 FY2022Q3 FY2021 | Change |
|---|---|---|
| Revenue | $489.00M$351.90M | +39.0% |
| Gross Profit | $39.50M$12.80M | +208.6% |
| SG&A Expenses | $38.40M$47.80M | −19.7% |
| Operating Income | $1.10M-$40.00M | +102.8% |
| Interest Expense | $11.20M$8.90M | +25.8% |
| Net Income | -$7.50M-$40.50M | +81.5% |
| EPS (Basic) | $-0.16$-0.84 | +81.0% |
| EPS (Diluted) | $-0.16$-0.84 | +81.0% |
| Shares Outstanding (Basic) | 48.60M48.30M | +0.6% |
| Shares Outstanding (Diluted) | 48.60M48.30M | +0.6% |
05—Questions
Frequently Asked Questions
What was Carpenter Technology's financial performance in the third quarter of fiscal year 2022?
In the third quarter of fiscal year 2022, Carpenter Technology reported a net loss of $7.5 million, or $0.16 per diluted share, which is a substantial improvement from a net loss of $40.5 million, or $0.84 per diluted share, in the same period of the prior year. Net sales increased by 39% to $489.0 million. The company also saw an improvement in gross margin and a move from an operating loss to a modest operating income.
What drove the increase in sales for Carpenter Technology?
The increase in sales was primarily driven by a 39% rise in net sales to $489.0 million, fueled by growing demand across most end-use markets. Key contributors included strong performance in Aerospace & Defense, Medical, and Industrial & Consumer sectors. Shipment volumes also increased by 32% compared to the prior year quarter.
How did the company manage its debt and liquidity during the quarter?
Carpenter Technology raised $300.0 million through the issuance of 7.625% Senior Notes due 2030, which were used to repay maturing debt. The company's liquidity remains strong, with $393.9 million in cash and cash equivalents and $294.2 million available under its revolving credit facility, totaling over $688 million. This was deemed sufficient to cover near-term obligations, including the repayment of $300 million in notes in April 2022.
What were the main challenges faced by the company during the quarter?
Despite the positive financial results, the company faced near-term operational challenges, including an outage of the Reading press, labor shortages, and ongoing inflationary pressures on operating costs such as production supplies, freight, and labor. These factors partially offset the gains from improved demand and pricing.
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