01—Abstract
Summary
Summary of the 10-Q filed October 27, 2022. Cited figures are marked; the original filing is the authoritative source.
Carpenter Technology Corporation (CRS) reported a net loss of $6.9 milliona, or $0.14 per diluted share, for the three months ended September 30, 2022.
This represents an improvement from the net loss of $14.8 millionb, or $0.31 per diluted share, in the same period of the prior year. The company saw a significant 35% increase in net sales to $522.9 million, driven by strong demand in its key end-use markets, particularly Aerospace and Defense, which increased by 57%. This top-line growth, combined with higher pricing and improved operational efficiencies, led to a substantial improvement in gross profit and a return to operating income of $8.3 million, compared to an operating loss in the prior year.
Despite the overall improvement in profitability and sales, the company experienced a significant increase in cash used for operating activities, primarily due to a substantial build-up in inventory, which rose by $121.2 millionc. This inventory increase is attributed to meeting growing demand.
Consequently, free cash flow was negative $101.3 milliond for the quarter. The company maintained strong liquidity, with $52.6 million in cash and cash equivalents and $298.2 million in available borrowing capacity under its credit facility.
02—Key points
Key Highlights
- Net sales increased by 35% year-over-year to $522.9 million, driven by robust demand across most end-use markets.
- Aerospace and Defense segment was a key growth driver, with net sales increasing by 57% year-over-year.
- Gross profit margin improved significantly to 10.5% from 6.5% in the prior year quarter, reflecting higher prices, improved mix, and operational efficiencies.
- The company returned to operating income of $8.3 million, a substantial improvement from an operating loss of $19.1 million in the prior year quarter.
- Despite revenue growth and improved profitability, the company used $78.0 million in cash for operating activities, largely due to a significant increase in inventory levels.
- Free cash flow was negative $101.3 million, impacted by the inventory build-up and capital expenditures.
- The company maintained a strong liquidity position with $52.6 million in cash and $298.2 million in available credit.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2023, Carpenter Technology Corp lost $0.01.
- Revenue$522.9M100.0%
- Cost of revenue−$468.1M89.5%
- Gross profit$54.8M10.5%
- Operating costs−$46.5M8.9%
- Operating income$8.3M1.6%
- Interest, other & tax−$15.2M2.9%
- Net income−$6.9M1.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2023filed October 27, 2022Financial Statements
Q1 FY2023 against Q1 FY2022
| Line item | Q1 FY2023Q1 FY2022 | Change |
|---|---|---|
| Revenue | $522.90M$387.60M | +34.9% |
| Gross Profit | $54.80M$25.20M | +117.5% |
| SG&A Expenses | $46.50M$44.30M | +5.0% |
| Operating Income | $8.30M-$19.10M | +143.5% |
| Interest Expense | $12.60M$10.20M | +23.5% |
| Net Income | -$6.90M-$14.80M | +53.4% |
| EPS (Basic) | $-0.14$-0.31 | +54.8% |
| EPS (Diluted) | $-0.14$-0.31 | +54.8% |
| Shares Outstanding (Basic) | 48.70M48.50M | +0.4% |
| Shares Outstanding (Diluted) | 48.70M48.50M | +0.4% |
05—Questions
Frequently Asked Questions
What was Carpenter Technology's financial performance in the most recent quarter?
For the three months ended September 30, 2022, Carpenter Technology reported a net loss of $6.9 million, or $0.14 per diluted share, which is an improvement from a net loss of $14.8 million, or $0.31 per diluted share, in the same period last year. Net sales increased significantly by 35% to $522.9 million, driven by strong demand in key markets such as Aerospace and Defense.
What drove the increase in net sales?
The 35% increase in net sales was primarily driven by strong demand across most end-use markets, with the Aerospace and Defense segment showing a notable 57% year-over-year increase. Higher pricing, a stronger product mix, and improved operational efficiencies also contributed to the revenue growth.
What is the company's cash flow situation?
The company used $78.0 million in cash for operating activities during the quarter, a higher outflow than the previous year, primarily due to a significant increase in inventory build-up to meet growing demand. Consequently, free cash flow was negative $101.3 million. However, the company maintains strong liquidity with $52.6 million in cash and $298.2 million in available borrowing capacity.
Are there any significant liabilities or risks the company is facing?
The company is subject to various environmental laws and regulations, with $18.4 million in accrued liabilities for environmental remediation costs. It is also defending against routine claims and legal actions incidental to its business. While management believes these matters will not have a material long-term effect, there's a possibility of material impact in a particular future quarter or year.
06—Continue