Carpenter Technology reports increase in Q2 sales as demand continues to improve
February 9, 2022
Carpenter Technology Corporation, Philadelphia, Pennsylvania, USA, has announced financial results for its fiscal second quarter ended December 31, 2021. Net sales for the period were $396 million, up from $348.8 million in the second quarter of the fiscal year 2021, an increase of 14% on a 9% increase in shipment volume.
Net sales excluding surcharge were $314.9 million, an increase of $15.5 million (or 5%) from the same period a year ago. The results are said to reflect higher shipments to the medical, transportation, industrial and consumer and distribution end-use markets, partially offset by lower shipments to the aerospace & defence and energy end-use markets.
For the quarter, however, the company reported a net loss of $29.4 million, or $0.61 loss per diluted share. Excluding the special item, adjusted loss per diluted share was $0.58 for the quarter.
“Demand continues to improve as the recovery takes hold across our end-use markets, with our backlog up 35% sequentially and 106% year-over-year,” stated Tony R Thene, president and CEO. “We continue to see signs of the aerospace recovery with lead times increasing despite any near-term uncertainties from the latest wave of COVID-19 cases.”
“Our performance engineered products segment finished ahead of our expectations for the second quarter of fiscal year 2022, driven primarily by strong demand in the medical end-use market,” Thene continued. “Within the specialty alloys operations segment, near-term operational headwinds impacted our performance in the current quarter including production employee COVID-19 isolations, supply chain disruptions, and hiring challenges in a difficult labour environment. In addition, the unplanned outage of the press at our Reading, Pennsylvania, facility limited our ability to meet our production targets in the quarter.”
Operating loss was $31.5 million compared to an operating loss of $89 million in the same period of the prior year (this figure included a goodwill impairment charge of $52.8 million). The improved results reflect higher sales as well as cost-savings actions taken in the fiscal year 2021.
COVID-19 related costs, the special item excluded from adjusted operating loss in the current quarter, totalled $1.7 million. These costs consisted of direct incremental operating costs including outside services to execute enhanced cleaning protocols, additional personal protective equipment, isolation pay for production employees potentially exposed to COVID-19 and various operating supplies necessary to maintain the operations while keeping employees safe against possible exposure in the company’s facilities. Special items in the prior year period included $3.9 million of COVID-19 related costs as well as a $52.8 million goodwill impairment charge.
“We believe the operational challenges are short term in nature and are focusing our efforts on increasing our production rates to keep pace with growing demand,” added Thene. “We are on-track with repairs to the Reading press and expect to have it operational in the current quarter. Looking ahead, we believe that we are well positioned for growth given the increasing demand across our end-use markets, our strong customer relationships, and the role our critical solutions play in the supply chain.”