PHILADELPHIA, Oct. 24, 2024 (GLOBE NEWSWIRE) — Carpenter Technology Corporation (NYSE: CRS) today announced financial results for the fiscal first quarter ended September 30, 2024. For the quarter, the Company reported operating income of $113.6 million and earnings per diluted share of $1.67. Excluding the special item discussed below, adjusted operating income was $117.2 million and adjusted earnings per diluted share was $1.73 for the current quarter.
First Quarter Fiscal Year 2025 Highlights
- Delivered $117.2 million of adjusted operating income, up 70 percent year-over-year and a record first quarter result
- Realized adjusted earnings per diluted share of $1.73
- Exceeded expectations in Specialty Alloys Operations (“SAO”) segment with operating income of $134.5 million, up 66 percent year-over-year
- Delivered adjusted operating margin of 26.3 percent in the SAO segment, up from 19.4 percent in the first quarter of the previous year
- Generated $40.2 million of cash from operating activities, $13.3 million of adjusted free cash flow
- Executed $32.1 million in share repurchases against $400.0 million recent repurchase authorization
Fiscal Year 2025 Outlook
- Expect operating income to be at the high end of the previously provided range of $460 million to $500 million
- Project $250 million to $300 million in adjusted free cash flow, which represents approximately 85 percent conversion rate
- For the second quarter of fiscal year 2025, anticipate between $116 million and $123 million in operating income
- Well-positioned for continued growth beyond fiscal year 2025 with strong market demand outlook for our broad portfolio of specialized solutions, increasing productivity, optimizing product mix and pricing actions
“In the first quarter of fiscal year 2025, we delivered the most profitable first quarter in Carpenter Technology’s history” said Tony R. Thene, President and CEO of Carpenter Technology.
“We continue to drive earnings momentum through improved productivity, product mix optimization and pricing actions. Notably, the SAO segment exceeded expectations with $134.5 million in operating income and with adjusted operating margin of 26.3 percent, up from 19.4 percent the first quarter a year ago. This marks the eleventh quarter in a row with increasing adjusted operating margins in SAO.”
“We are delivering record profits while navigating near-term commercial Aerospace supply chain uncertainty. Given the solid execution of the business, strong market position and unique manufacturing capabilities, we have the confidence to guide to the high end of the previously disclosed operating income range of $460 million to $500 million for the full fiscal year.”
“We also expect to generate $250 million to $300 million in adjusted free cash flow in fiscal year 2025. With a strong balance sheet and anticipated adjusted free cash flow, we will continue to take a balanced approach to capital allocation: sustaining our current asset base to achieve our targets, investing in incremental growth initiatives, and returning cash to shareholders.”
“Carpenter Technology continues to exceed performance and outlook expectations. Having just completed a historic fiscal year 2024 and a strong start with our first quarter results, we are well positioned to achieve our accelerated goals and believe our earnings growth journey will extend far beyond fiscal year 2025.”
Financial Highlights
| Q1 | Q4 | Q1 | ||||||||
| ($ in millions, except per share amounts) | FY2025 | FY2024 | FY2024 | |||||||
| Net sales | $ | 717.6 | $ | 798.7 | $ | 651.9 | ||||
| Net sales excluding surcharge (a) | $ | 577.4 | $ | 635.8 | $ | 492.8 | ||||
| Operating income | $ | 113.6 | $ | 108.3 | $ | 69.0 | ||||
| Adjusted operating income excluding special item (a) | $ | 117.2 | $ | 125.2 | $ | 69.0 | ||||
| Net income | $ | 84.8 | $ | 93.6 | $ | 43.9 | ||||
| Earnings per diluted share | $ | 1.67 | $ | 1.85 | $ | 0.88 | ||||
| Adjusted earnings per diluted share (a) | $ | 1.73 | $ | 1.82 | $ | 0.88 | ||||
| Net cash provided from operating activities | $ | 40.2 | $ | 169.5 | $ | 7.4 | ||||
| Adjusted free cash flow (a) | $ | 13.3 | $ | 142.4 | $ | (14.6 | ) | |||
| (a) Non-GAAP financial measures explained in the attached tables | ||||||||||
Net sales for the first quarter of fiscal year 2025 were $717.6 million, compared with $651.9 million in the first quarter of fiscal year 2024, an increase of $65.7 million (or 10 percent), on a 3 percent increase in shipment volume. Net sales excluding surcharge were $577.4 million for the current quarter, an increase of $84.6 million (or 17 percent) from the same period a year ago.
Operating income was $113.6 million compared to operating income of $69.0 million in the prior year period. Adjusted operating income excluding the special item was $117.2 million in the first quarter of fiscal year 2025. Earnings per diluted share in the first quarter of fiscal year 2025 was $1.67 compared to $0.88 per diluted share in the prior year first quarter. Excluding the special item, adjusted earnings per diluted share in the first quarter of fiscal year 2025 was $1.73. These results primarily reflect an ongoing improvement in product mix with a shift in capacity to more complex, higher value materials as well as pricing actions and expanding operating efficiencies compared to the prior year period.
Cash provided from operating activities in the first quarter of fiscal year 2025 was $40.2 million compared to $7.4 million in the same quarter last year. Adjusted free cash flow in the first quarter of fiscal year 2025 was $13.3 million, compared to negative $14.6 million in the same quarter last year. The improvement in operating cash flow and adjusted free cash flow in the first quarter of fiscal year 2025 reflects improved earnings partially offset by higher pension contributions and capital expenditures compared to the prior year period. Capital expenditures in the first quarter of fiscal year 2025 were $26.9 million, compared to $22.0 million in the same quarter last year.
Total liquidity, including cash and available revolver balance, was $499.1 million at the end of the first quarter of fiscal year 2025. This consisted of $150.2 million of cash and $348.9 million of available borrowings under the Company’s credit facility.
Share Repurchase Program
During the three months ended September 30, 2024, the Company purchased 230,000 shares of its common stock on the open market for an aggregate of $32.1 million. In July 2024, Carpenter Technology’s Board of Directors authorized a share repurchase program up to $400.0 million of its outstanding common stock. The shares may be repurchased in the open market or in privately negotiated transactions. Under the terms of the share repurchase program, the Company may repurchase shares from time to time, in amounts, at prices, and at such times as the Company deems appropriate, subject to market conditions, legal requirements and other considerations. There is no stated expiration for the share repurchase program. The Company is not obligated to repurchase any specific number of shares or to do so at any particular time, and the share repurchase program may be suspended, modified or terminated at any time without prior notice. As of September 30, 2024, $367.9 million remains available for future purchases.
Special Item
During the quarter ended September 30, 2024, the Company recorded pre-tax restructuring and asset impairment charges of $3.6 million as a result of actions taken to streamline operations in the Carpenter Additive business.
About Carpenter Technology
Carpenter Technology Corporation is a recognized leader in high-performance specialty alloy materials and process solutions for critical applications in the aerospace and defense, medical, energy, transportation, and industrial and consumer markets. Founded in 1889, Carpenter Technology has evolved to become a pioneer in premium specialty alloys including nickel, cobalt, and titanium and material process capabilities that solve our customers’ current and future material challenges. More information about Carpenter Technology can be found at https://www.carpentertechnology.com.
