Carpenter Technology (CRS) Q4 2022 earnings summary

Executive summary

• FY22 demand strengthened across end markets; sales rose 24% YoY to $1,836.3M, while net loss narrowed to $49.1M from $229.6M in FY21.

• Both segments outperformed expectations in Q4; backlog increased 191% YoY to $1,539.3M, with most orders expected to ship in FY23.

Financial highlights

• FY22 net sales were $1,836.3M, up 24% YoY; excluding surcharge revenue, sales rose 12% on 11% higher volume.

• Gross profit was $149.8M, or 8.2% of sales, versus $1.0M, or 0.1%, in FY21; adjusted gross margin excluding surcharge and special items was 9.9% vs. 4.6%.

• Operating loss was $24.9M vs. $248.6M in FY21; adjusted operating loss excluding surcharge and special items was $34.0M, with adjusted margin of -2.4% vs. -8.4%.

• Net loss was $49.1M, or $1.01 diluted loss per share; adjusted diluted loss per share was $1.06 vs. $2.01 in FY21.

• Q4 FY22 sales were $563.8M, gross profit $72.0M, operating income $24.6M and net income $2.6M.

Outlook and guidance

• FY23 growth is expected across end markets, particularly Aerospace, Defense and Medical, as customers continue ramping toward pre-pandemic activity.

• FY23 capital expenditures are expected to be approximately $100M; backlog of $1,539.3M at June 30, 2022 was mostly expected to ship during FY23.

• Operational priorities include productivity and capacity gains through the Carpenter Operating Model, with additive manufacturing and electrification supporting long-term growth.

• Total liquidity of $448.3M was expected to be sufficient for foreseeable cash needs.