Losses continue for Carpenter Technology amid pandemic | Business News | wfmz.com – WFMZ Allentown

Mostly sunny with a few high clouds late in the day..
Increasing clouds.
Updated: October 28, 2021 @ 10:33 pm

WFMZ.com Reporter
PHILADELPHIA — Results are decidedly mixed at Carpenter Technology, which has most of its manufacturing facilities in Berks County. The company is still operating at a loss in its first quarter of fiscal 2022. Compared to the previous fiscal year’s first quarter, the company showed growth in three of its five end-user markets, but sequentially, four out of the five end-user markets are down, compared to fourth-quarter fiscal 2021.
Aerospace and defense, the company’s largest market, showed declines since both last quarter and the year-ago quarter. The energy end-user market showed 21% growth since the last quarte, but it declined 24% compared to the first quarter of fiscal 2021.
In sum, sales, excluding raw material surcharges, were up 2% year-over-year but down 10% sequentially. The company said it believes that removing the gains from raw material surcharges from operating margins provides a more consistent basis for comparing results of operations from period to period.
To be fair, Carpenter was hit hard by the continuing effects of the pandemic. Within the specialty alloys operating segment, the company reported short-term operational delays, including COVID-19 isolations at key work centers, supply chain disruptions around the world, and hiring challenges in a difficult labor environment.
Running a cyclical manufacturing company like Carpenter requires patience and careful planning, completely unlike fast-paced, high flying technology companies.
The vast majority of employees can’t work from home. They must be in the factories producing. That increases COVID-19 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.
With all those problems, the market seemed to find Carpenter’s performance acceptable, and its stock was up over 4% in late-morning trading.
“Demand patterns across our end-use markets continue to improve as our backlog finished up 25% sequentially and 49% year-over-year,” said Tony R. Thene, Carpenter’s president and CEO. “We continue to see signs of a broad-based recovery taking hold across the aerospace supply chain with an acceleration of demand conditions expected in calendar year 2022.”
Net sales for the first quarter of fiscal year 2022 were $387.6 million, compared with $353.3 million in the first quarter of fiscal year 2021, an increase of $34.3 million or 9.7%, on 2% lower volume. Net sales, excluding surcharge, were $312.9 million, an increase of $5.7 million from the same period a year ago.
The operating loss was $19.1 million, compared to the operating loss of $48.8 million in the prior year. Adjusted operating loss, excluding special items, was $17.5 million in the recent first quarter compared to an adjusted operating loss of $30.9 million a year ago. The company said year-over-year improvement in operating performance is largely due to higher sales in the current quarter, while the first quarter of last year included negative profitability impacts of lower activity levels and targeted inventory reductions.
Inventories during the recent quarter rose as operational activity levels increased to address improving demand as well as the impacts of operational delays associated with COVID-19 isolations at key work centers and of labor shortages.
Total liquidity, including cash and available credit facility borrowings, was $507.8 million at the end of the first quarter of fiscal year 2022. That consisted of $213.2 million of cash and $294.6 million of available borrowings under the company’s credit facility
Carpenter has two reportable segments, specialty alloys operations (SAO) and performance engineered products (PEP).
The SAO segment is comprised of Carpenter’s major premium alloy and stainless-steel manufacturing operations. That includes operations performed at mills primarily in Reading and Latrobe and surrounding areas as well as South Carolina and Alabama.
The SAO segment had net sales, excluding surcharge, of $258.2 million, compared to $254.8 million in the same period of 2021. The SAO operating loss was $5.9 million, compared to an operating loss of $18.6 million in 2021.
“Our performance engineered products segment finished ahead of our expectations,” Thene said, “driven primarily by strong demand for our titanium fasteners in the aerospace and defense end-use market.”
The PEP segment is comprised of the company’s differentiated operations. That segment includes the Dynamet titanium business, the Carpenter additive business, and the Latrobe and Mexico distribution businesses. The Amega West business was also part of the PEP segment, however, the business was divested during the quarter ended Sept. 30, 2020.
The PEP segment recorded net sales, excluding surcharge, of $73.6 million compared to $61.2 million in the same period of 2021. PEP operating loss was $0.6 million, compared to an operating loss of $3.6 million in 2021.
By end-use markets, net sales, excluding surcharge in the quarter, were $134.9 million for aerospace and defense; $37.1 million for medical; $31.4 million for transportation; $16.3 million for energy; $66.3 million for industrial and consumer; and $27 million for distribution.
“Looking ahead, we plan to continue navigating near-term challenges and partnering with our customers during the recovery,” commented Thene. “We are well positioned for growth in our core business with a strong financial position, including $508 million in total liquidity, and a positive long-term outlook for our end-use markets. Our soft magnetics and additive manufacturing capabilities provide additional opportunities for long-term growth and to deliver increasing returns to our shareholders.”
WFMZ.com Reporter
Email notifications are only sent once a day, and only if there are new matching items.
If you know of local business openings or closings, please notify us here.
· Bitty & Beau’s Coffee to hold grand opening on Saturday, Nov. 6 at 10 a.m., at 74 W. Broad Street in Bethlehem
· American Family Care opens urgent care center in the County Line Plaza, off of Route 113 near Souderton, Bucks County
· Charming Charlie, a women’s contemporary fashion and accessories retailer, will return to the Outlets at Wind Creek.
· All Weather Selvedge Denim Co. (AW) opens at The Promenade Shops at Saucon Valley in suite 608, next to Evolve Salon & Spa.
· PrimoHoagies, the casual restaurant known for its gourmet hoagies, plans to open two restaurants in Stroudsburg.
· Laura McLain, executive director of the Slate Belt Chamber of Commerce, will retire at the end of 2021 after 21+ years of service.
· Thomas Ripsam has been named the new CEO of Martin Guitar. He succeeds longtime Chairman and CEO Christian Frederick Martin IV.
. Owners of Tucker Silk Mill to open wine bar and garden in down Easton in early 2022. Kabinett will have a mostly Australian and German wine list, with light fare, and an outdoor patio overlooking the Delaware River.
Get up-to-the-minute news sent straight to your device.