Carpenter Technology (CRS) Q4 2023 earnings summary

Executive summary

• FY23 returned to profitability, exceeding the pre-pandemic FY19 profitability run-rate goal in Q4; higher demand, productivity, improved mix and price increases drove the recovery.

• Record backlog reached $2,123.3M at June 30, 2023, excluding surcharges; substantially all expected to ship in FY24 and FY25.

Financial highlights

• FY23 net sales were $2,550.3M, up 39% YoY; excluding surcharge revenue, sales rose 32% on 14% higher volume.

• FY23 operating income was $133.1M versus an operating loss of $24.9M in FY22; net income was $56.4M versus a $49.1M loss, and diluted EPS was $1.14 versus a $1.01 loss.

• Q4 FY23 net sales were $758.1M, gross profit $119.0M, operating income $62.9M and net income $38.4M.

• FY23 gross profit was $337.3M, or 13.2% of sales; adjusted gross margin excluding surcharges was 18.3%, versus 9.9% in FY22 excluding surcharges and employee retention credits.

Outlook and guidance

• The FY27 objective is to double operating income versus FY19; momentum was expected to continue into FY24 amid strong demand and productivity gains.

• FY24 capital expenditures were projected at $125M–$130M; domestic environmental capital projects include an estimated $2.2M in FY24.

• Current estimates indicate approximately $153.5M of domestic qualified pension contributions over five years, including $11.5M expected in FY24.