Carpenter Technology (CRS) Reports Q3 Loss, Shares Down

Zacks Equity Research
·5-min read

Carpenter Technology Corporation’s CRS share prices declined 6% since the company reported adjusted loss per share of 54 cents in third-quarter fiscal 2021 (ended Mar 31, 2021). The figure is narrower than the Zacks Consensus Estimate of loss per share of 58 cents. Lower volume amid the pandemic led to the dismal results. The company had reported adjusted earnings per share of 82 cents in the year-ago quarter.

Including one-time items, the company reported loss per share of 84 cents against the year-ago quarter’s earnings per share of 82 cents.

Net sales plunged 66.2% year over year to $352 million in the reported quarter. The figure also missed the Zacks Consensus Estimate of $365 million. Volumes were down 33% on a year-over-year basis in the quarter.

The company witnessed a year-over-year revenue decline of 53.2% in the Aerospace and Defense end-use market. Revenues in the Energy end-market slumped 38% year on year. Revenues in Medical end-use markets fell 55% year over year to $31 million. Revenues in the distribution and industrial end-use markets went down 9.8% and 17.6% year over year, respectively. However, Transportation end-use market sales climbed 3.6% year over year to $29 million.

Operational Results

Cost of goods sold in third-quarter fiscal 2021 was down 29.2% year over year to $337 million. Adjusted gross profit plummeted 86% year over year to $15.4 million. Adjusted operating loss in the reported quarter was $29.7 million, against the operating income of $58.7 million in the prior-year quarter.

Carpenter Technology Corporation Price, Consensus and EPS Surprise

Carpenter Technology Corporation Price, Consensus and EPS Surprise
Carpenter Technology Corporation Price, Consensus and EPS Surprise

Carpenter Technology Corporation price-consensus-eps-surprise-chart | Carpenter Technology Corporation Quote

Segment Performance

The Specialty Alloys Operations (SAO) segment reported sales of $299.6 million, reflecting a year-over-year decline of 38.6%. The segment sold 37,260 pounds, 37% lower than the prior-year quarter. It reported an operating loss of $9.9 million against an operating profit of $76.4 million in the prior-year quarter.

The Performance Engineered Products’ (PEP) net sales plunged 39.4% year over year to $66 million in the fiscal third quarter. The segment sold 2,026 pounds, 36.7% lower than the year-ago quarter figure. The segment reported an operating loss of $3.3 million compared with the $0.3 million seen in the prior-year quarter.

Financials

Carpenter Technology ended third-quarter fiscal 2021 with cash and cash equivalents of $244 million compared with the $193 million at end of fiscal 2020. Long-term debt was $694 million at the end of the reported quarter compared with $552 million as of fiscal 2020 end. Cash flow from operating activities was $175 million in the nine-month period ended Mar 31, 2021 compared $95 million in the prior-year comparable period.

Free cash flow in the nine-month period ended Mar 31, 2021 was $89 million against an outflow of $78 million in the year-ago period.

Outlook

Carpenter Technology expects to benefit from recovery in its end-use markets in fiscal 2021. The company has started to witness demand recovery in the Aerospace and Defense end-use market. Moreover, solid demand in the Transportation end-use market and improving demand scenario in the Medical end-use market will stoke growth. In fact, the company recently completed multiple contract extensions in the Medical, Transportation and Aerospace and Defense end-use markets. These will also act as a catalyst. Carpenter Technology’s investment in additive manufacturing and electrification capabilities will strengthen the company’s growth prospects in the near term.

Price Performance

Carpenter Technology’s shares have gained 99.3% over the past year compared with the industry's growth of 116.9%.



Zacks Rank & Stocks to Consider

Carpenter Technology currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials space include ArcelorMittal MT, Celanese Corporation CE and Dow Inc. DOW. All of these stocks flaunt a Zacks Rank #1 (Strong Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

ArcelorMittal has a projected earnings growth rate of 984.7% for the current fiscal. The company’s shares have soared nearly 179% in the past year.

Celanese has an expected earnings growth rate of 68.3% for the current fiscal. The company’s shares have rallied around 90% in the past year.

Dow has a projected earnings growth rate of 261.6% for the current fiscal year. The company’s shares have gained roughly 75% in a year’s time.

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