Carpenter Technology Corporation, Philadelphia, Pennsylvania, USA, has reported its financial results for the fiscal second quarter ended December 31, 2019. For the quarter, the company reported a net income of $38.8 million.
Net sales for the second quarter of the fiscal year 2020 were $573 million, compared with $556.5 million in the second quarter of the fiscal year 2019, an increase of $16.5 million (3%) on 7% lower volume. Net sales excluding surcharge were $471.2 million, an increase of $21.8 million (5%) from the same period a year ago. Operating income was $55 million compared to $55.4 million for the same period last year. Carpenter Technology states that these results primarily reflect a stronger product mix across all end-use markets, partially offset by higher spending in key growth areas.
Cash provided from operating activities in the second quarter of the fiscal year 2020 was $21.8 million, compared to $37.8 million in the same quarter last year. The decrease in operating cash flow primarily reflects additional working capital investments partially offset by higher income levels. Free cash flow in the second quarter of the fiscal year 2020 was negative $34.5 million, compared to negative $90.9 million in the same quarter last year.
The company states that the improvement in free cash flow was primarily due to its acquisition of LPW Technology Ltd. (LPW) in the second quarter last year, which was partially offset in the current quarter by higher capital expenditures and additional working capital investments. Capital expenditures were $46.7 million in the second quarter of the fiscal year 2020, compared to $40.1 million in the same quarter last year.
“Our second-quarter results reflect a continuation of our consistent year-over-year earnings growth, backlog expansion and record operating performance at SAO,” stated Tony Thene, Carpenter Technology’s President and CEO. “Operating income at SAO reached its highest level on record as we continue to drive a richer product mix by prioritising higher-value solutions across our end-use markets. In addition, customer activity at our Athens facility remains high and we received four Vendor Approved Process (VAP) approvals this quarter.”
Thene added, “The second quarter marked our twelfth consecutive quarter of year-over-year sales growth and backlog growth. We generated double-digit year-over-year revenue growth in the Aerospace and Defense end-use market as our leading solutions, sub-market diversity and participation on practically all major industry platforms continue to drive strong performance. In addition, sales in the Medical end-use market increased double-digits compared to last year as demand for our high-value solutions remains high.”