Carpenter Technology Files Q1 FY25 10-Q

TL;DR

**CRS Q1 FY25 10-Q filed. Financials and biz updates out.**

AI Summary

Carpenter Technology Corp. filed its 10-Q for the period ending September 30, 2024. The filing details financial performance and operational updates for the first quarter of fiscal year 2025. Key financial data and business segment information are presented, reflecting the company's ongoing activities in the specialty materials sector.

Why It Matters

This filing provides investors with the latest financial snapshot of Carpenter Technology, crucial for understanding the company's performance and outlook in the specialty materials market.

Risk Assessment

Risk Level: medium — The filing is a standard quarterly report, but the specialty materials sector can be subject to economic cycles and raw material price volatility.

Key Players & Entities

• CARPENTER TECHNOLOGY CORP (company) — Filer of the 10-Q
• 20240930 (date) — End of the reporting period
• 20241024 (date) — Filing date
• 0000017843 (company) — Central Index Key for Carpenter Technology Corp.

FAQ

Key Financial Figures

• $5 — ction 12(b) of the Act: Common Stock, $5 Par Value CRS New York Stock Exchange

Filing Documents

• crs-20240930.htm (10-Q) — 1250KB
• crs-ex31ax2024930.htm (EX-31.A) — 11KB
• crs-ex31bx2024930.htm (EX-31.B) — 11KB
• crs-ex32x2024930.htm (EX-32) — 7KB
• 0000017843-24-000017.txt ( ) — 6962KB
• crs-20240930.xsd (EX-101.SCH) — 38KB
• crs-20240930_cal.xml (EX-101.CAL) — 65KB
• crs-20240930_def.xml (EX-101.DEF) — 163KB
• crs-20240930_lab.xml (EX-101.LAB) — 545KB
• crs-20240930_pre.xml (EX-101.PRE) — 381KB
• crs-20240930_htm.xml (XML) — 1157KB

Financial Statements

Financial Statements Consolidated Balance Sheets (unaudited) as of September 30 , 2024 and June 30, 2 024 2 Consolidated Statements of Operations (unaudited) for the Three Months Ended September 3 0 , 2024 and 2023 3 Consolidated Statements of Comprehensive Income (unaudited) for the Three Months Ended September 30 , 2024 and 2023 4 Consolidated Statements of Cash Flows (unaudited) for the Three Months End ed September 30 , 2024 and 2023 5 Consolidated Statements of Changes in Equity (unaudited) for the Three Months Ended September 30 , 2024 and 2023 6

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 7 Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 3

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 40 Item 4

Controls and Procedures

Controls and Procedures 41 PART II OTHER INFORMATION Item 1

Legal Proceedings

Legal Proceedings 41 Item 1A

Risk Factors

Risk Factors 41 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 42 Item 5 Other Information 42 Item 6 Exhibits 43 SIGNATURE 44 1 Table of Contents

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements CARPENTER TECHNOLOGY CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) ($ in millions, except share data) September 30, 2024 June 30, 2024 ASSETS Current assets: Cash and cash equivalents $ 150.2 $ 199.1 Accounts receivable, net 569.2 562.6 Inventories 749.4 735.4 Other current assets 91.5 94.1 Total current assets 1,560.3 1,591.2 Property, plant, equipment and software, net 1,329.9 1,335.2 Goodwill 227.3 227.3 Other intangibles, net 13.8 15.2 Deferred income taxes 7.6 7.5 Other assets 116.1 115.3 Total assets $ 3,255.0 $ 3,291.7 LIABILITIES Current liabilities: Accounts payable $ 273.3 $ 263.9 Accrued liabilities 132.9 202.4 Total current liabilities 406.2 466.3 Long-term debt 694.5 694.2 Accrued pension liabilities 201.3 207.6 Accrued postretirement benefits 21.8 21.1 Deferred income taxes 171.3 174.1 Other liabilities 99.6 99.6 Total liabilities 1,594.7 1,662.9 Contingencies and commitments (see Note 10) STOCKHOLDERS' EQUITY Common stock — authorized 100,000,000 shares; issued 57,043,722 shares at September 30, 2024 and 56,978,663 shares at June 30, 2024; outstanding 49,842,234 shares at September 30, 2024 and 49,776,955 shares at June 30, 2024 285.2 284.9 Capital in excess of par value 342.6 352.6 Reinvested earnings 1,449.2 1,374.5 Common stock in treasury ( 7,201,488 shares and 7,201,708 shares at September 30, 2024 and June 30, 2024, respectively), at cost ( 325.6 ) ( 289.3 ) Accumulated other comprehensive loss ( 91.1 ) ( 93.9 ) Total stockholders' equity 1,660.3 1,628.8 Total liabilities and stockholders' equity $ 3,255.0 $ 3,291.7 See accompanying notes to consolidated financial statements. 2 Table of Contents CARPENTER TECHNOLOGY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended September 30, ($ in millions, except per share data) 2024 2023 Net sales $ 717.6 $ 651.9 Cost of sales 541.3 527.8 Gross profit 176.3 124.1 Selling, genera

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal and recurring adjustments, considered necessary for a fair statement of the results are reflected in the interim periods presented. The June 30, 2024, consolidated balance sheet data was derived from audited financial statements, but does not include all of the disclosures required by U.S. GAAP. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in Carpenter Technology's Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (the "2024 Form 10-K"). Operating results for the three months ended September 30, 2024, are not necessarily indicative of the operating results for any future period. As used throughout this report, unless the context requires otherwise, the terms "Carpenter," "Carpenter Technology," the "Company," "Registrant," "Issuer," "we" and "our" refer to Carpenter Technology Corporation. 2. Restructuring and Asset Impairment Charges Restructuring and asset impairment charges for the three months ended September 30, 2024 and 2023 were $ 3.6 million and $ 0.0 million , respectively. During the three months ended September 30, 2024, the Company recorded additional restructuring and asset impairment charges of $ 3.6 million as a result of the prior year actions taken to streamline operations in the Carpenter Additive business in the Performance Engineered Products ("PEP") segment

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 3. Recent Accounting Pronouncements Recently Issued Accounting Pronouncements - Pending Adoption In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The guidance in ASU 2023-07 seeks to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU require a public entity to disclose the following: significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss; an amount for other segment items by reportable segment and a description of its composition; and the title and position of the CODM and how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. This ASU requires public entities to provide all annual disclosures about a reportable segment's profit or loss and assets currently required by Topic 280 in interim periods. ASU 2023-07 clarifies that if the CODM uses more than one measure of a segment's profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. ASU 2023-07 is a requirement for additional disclosure and is not expected to materially impact the consolidated financial statements. In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance in this ASU enhances the transparency and decision functionality of income t

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The Company's standard purchase order or contract sets forth the transaction price for the products and services purchased under that arrangement. Some customer arrangements include variable consideration, such as volume rebates, which generally depend upon the Company's customers meeting specified performance criteria, such as a purchasing level over a period of time. The Company exercises judgment to estimate the most likely amount of variable consideration at each reporting date. Revenue is measured as the amount of consideration the Company expects to receive in exchange for its product. The normal payment terms are 30 days. The Company has elected to use the practical expedient that permits a company to not adjust for the effects of a significant financing component if it expects that at the contract inception, the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Amounts billed to customers for shipping and handling activities to fulfill the Company's promise to transfer the goods are included in revenues and costs incurred by the Company for the delivery of goods are classified as cost of sales in the consolidated statements of operations. Shipping terms may vary for products shipped outside the United States depending on the mode of transportation, the country where the material is shipped and any agreements made with the customers. Contract liabilities are recognized when the Company has received consideration from a customer to transfer goods or services at a future point in time when the Company performs under the purchase order or contract. Contract liabilities were $ 6.0 million and $ 12.3 million at September 30, 2024 and June 30, 2024, respectively, and are included in accrued liabilities on the consolidated balance sheets. Revenue recognized for the three months ended September

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Geographic Location Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 ($ in millions) SAO PEP Intersegment Total SAO PEP Intersegment Total United States $ 373.7 $ 58.3 $ ( 10.9 ) $ 421.1 $ 340.7 $ 58.3 $ ( 5.7 ) $ 393.3 Europe 129.8 16.3 ( 5.8 ) 140.3 94.9 16.8 ( 4.3 ) 107.4 Asia Pacific 94.4 11.7 ( 11.7 ) 94.4 102.7 10.4 ( 10.1 ) 103.0 Mexico 29.1 7.8 — 36.9 14.4 9.8 — 24.2 Canada 10.5 3.8 — 14.3 9.3 4.5 ( 0.1 ) 13.7 Other 7.6 2.9 0.1 10.6 8.1 2.0 0.2 10.3 Total net sales $ 645.1 $ 100.8 $ ( 28.3 ) $ 717.6 $ 570.1 $ 101.8 $ ( 20.0 ) $ 651.9 5. Earnings per Common Share The Company calculates basic and diluted earnings per share using the two class method. Under the two class method, earnings are allocated to common stock and participating securities (non-vested restricted shares and units that receive non-forfeitable dividends) according to their participation rights in dividends and undistributed earnings. The earnings available to each class of stock are divided by the weighted average number of outstanding shares for the period in each class. Diluted earnings per share assumes the issuance of common stock for all potentially dilutive share equivalents outstanding. No awards issued under share-based compensation plans were excluded from the calculations of diluted earnings per share because their effects were anti-dilutive for the three months ended September 30, 2024 and 2023. The calculations of basic and diluted earnings per common share for the three months ended September 30, 2024 and 2023 were as follows: Three Months Ended September 30, (in millions, except per share data) 2024 2023 Net income $ 84.8 $ 43.9 Dividends allocated to participating securities ( 0.1 ) ( 0.1 ) Earnings available for common stockholders used in calculation of basic earnings per common share $ 84.7 $ 43.8 Weighted average number of common shares outstanding, basic 50.1 49.2

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 6. Inventories Inventories consisted of the following components as of September 30, 2024 and June 30, 2024: ($ in millions) September 30, 2024 June 30, 2024 Raw materials and supplies $ 175.8 $ 164.0 Work in process 447.2 430.5 Finished and purchased products 126.4 140.9 Total inventories $ 749.4 $ 735.4 Inventories are valued at the lower of cost or market. Cost for inventories is principally determined using the last-in, first-out ("LIFO") inventory costing method. The Company values other inventory at the lower of cost or net realizable value, determined by the first-in, first-out and average cost methods. As of September 30, 2024 and June 30, 2024, $ 143.0 million and $ 152.2 million of inventory, respectively, was accounted for using a method other than the LIFO inventory costing method. 7. Accrued Liabilities Accrued liabilities consisted of the following as of September 30, 2024 and June 30, 2024: ($ in millions) September 30, 2024 June 30, 2024 Accrued compensation and benefits $ 73.3 $ 121.6 Accrued postretirement benefits 14.4 15.4 Current portion of lease liabilities 8.2 8.8 Accrued interest expense 6.4 18.5 Contract liabilities 6.0 12.3 Accrued taxes 4.9 4.2 Derivative financial instruments 3.5 3.6 Accrued pension liabilities 3.3 3.3 Accrued income taxes 1.3 1.0 Other 11.6 13.7 Total accrued liabilities $ 132.9 $ 202.4 11 Table of Contents CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 8. Pension and Other Postretirement Benefits The components of the net periodic pension expense (income) related to the Company's pension and other postretirement benefits for the three months ended September 30, 2024 and 2023 were as follows: Three Months Ended September 30, 2024 2023 2024 2023 ($ in millions) Pension Plans Other Postretirement Plans Service cost $ 1.9 $ 2.0 $ 0.4 $ 0.4 Interest cost 9.7 11.8 2.5 2.5 Expected return on plan assets ( 7.5 ) ( 10.1 ) ( 2.1 ) ( 1.8 ) Amortization of net loss (gain) 1.9 2.2 ( 1.4 ) ( 0.6 ) Amortization of prior service cost (credits) 0.5 0.5 0.3 ( 1.0 ) Net pension expense (income) $ 6.5 $ 6.4 $ ( 0.3 ) $ ( 0.5 ) During the three months ended September 30, 2024 and 2023, the Company made $ 9.6 million and $ 4.6 million, respectively, of contributions to its qualified defined benefit pension plans. The Company currently expects to make $ 17.0 million of required cash pension contributions to its qualified defined benefit pension plans during the remainder of fiscal year 2025. 9. Debt On April 14, 2023, the Company entered into a Second Amended and Restated Credit Agreement with Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer and the other lenders, agents and arrangers party thereto (the "Credit Facility"). The Credit Facility amended and restated the Company's then existing Amended and Restated Credit Agreement dated as of March 26, 2021, which had been set to expire on March 31, 2024. The Second Amendment extends the maturity to April 12, 2028. The Credit Facility is a secured revolving credit facility with a commitment of $ 350.0 million subject to the right, from time to time, to request an increase of the commitment by the greater of (i) $ 300.0 million or (ii) an amount equal to the consolidated EBITDA; and provides for the issuance of letters of credit subject to a $ 40.0 million sub-limit. T

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