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Carpenter Technology (CRS) Sees Wider Q2 Loss Due to Press Outage
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Carpenter Technology Corporation (CRS - Free Report) recently announced that a mechanical failure at its 4500-ton press at its Reading, PA facility has led to an unplanned outage. Repairs are expected to take 45-60 days. The company has pulled forward certain maintenance activities, which had been planned for the balance of the year, to be carried out during this outage. Citing the outage, cost inflation pressures and labor shortages, the company anticipates adjusted loss per share in the second quarter of fiscal 2022 in the range of 60 cents to 65 cents. It is expected to come in much wider than the adjusted loss per share of 28 cents in first-quarter fiscal 2022 and the adjusted loss per share of 61 cents in second-quarter 2021. The company’s shares fell 6.19% in a day to close at $28.65 on Dec 20.
The press is a piece of highly specialized equipment that plays a key role in the production of materials for Aerospace and a few other end-market applications. Considering the growing demand in these markets, the company is taking the necessary steps to bring the press back online as fast as possible and ensure its continuous operation. The company also stated that due to its decision to carry out certain maintenance activities now, it will save 14 days of planned maintenance downtime for the press for the balance of the current fiscal year. Carpenter Technology is also closely working with affected customers to minimize the impact to their operations.
Due to the impact associated with the press outage, cost inflation pressures, labor shortages and the ongoing challenges from COVID-19 isolations across certain key work centers, Carpenter Technology currently expects its Specialty Alloys (“SAO”) segment to deliver an operating loss of $20 million to $22 million in the second quarter of fiscal year 2022. The company had earlier provided a range of operating loss of $2 million to operating income of $2 million for the segment for the quarter.
The company stated that its Performance Engineered Products (“PEP”) segment continues to benefit from improving demand conditions and is expected to generate operating income in the range of $1 million to $2 million in the second quarter of fiscal year 2022. Carpenter Technology had earlier stated that the segment’s operating income is likely be in line with the first quarter of 2022, which was $0.6 million.
Based on its preliminary estimation, Carpenter Technology currently expects overall adjusted operating loss to be $32-$35 million.
However, the company remains upbeat about the rising demand trend across its end-use markets. Order booking rates continue to increase from year-ago levels, which is driving backlog growth. Its commercial backlog is currently up 25% sequentially and 90% year over year that bodes well for the forthcoming quarters.
The company’s financial position remains strong, which provides it the strategic flexibility to strengthen its long-term growth profile by investing in emerging technologies like additive manufacturing and soft magnetics while providing direct returns to shareholders through quarterly dividends. As electric vehicle demand continues to grow and program activity increases for electrifying short-range air travel, the company is increasing investments in motor technology and soft magnetic solutions.
Price Performance
Image Source: Zacks Investment Research
Carpenter Technology’s shares have declined 1.6% year-to-date against the industry's growth of 5.3%.
Zacks Rank & Stocks to Consider
Carpenter Technology currently carries a Zacks Rank #3 (Hold).
Olin has an expected earnings growth rate of around 740% for the current fiscal year. The Zacks Consensus Estimate for current-year earnings has been revised upward by 20.5% in the past 60 days.
Olin’s shares have soared 115% so far this year. The company has a long-term earnings growth of 56%.
Bunge has a trailing four-quarter earnings surprise of 105.7%, on average. The company has an estimated earnings growth rate of around 45% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 36%.
Bunge’s shares have appreciated 31% year-to-date. It has a long-term earnings growth of 6.7%.
Univar has an expected earnings growth rate of 55.2% for the current year. The Zacks Consensus Estimate for the current year has been revised upward by 9% over the past 60 days.
Univar beat the Zacks Consensus Estimate for earnings in each of the four trailing quarters, the average surprise being 24.1%. UNVR’s shares have rallied 38% so far this year.
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Carpenter Technology (CRS) Sees Wider Q2 Loss Due to Press Outage
Carpenter Technology Corporation (CRS - Free Report) recently announced that a mechanical failure at its 4500-ton press at its Reading, PA facility has led to an unplanned outage. Repairs are expected to take 45-60 days. The company has pulled forward certain maintenance activities, which had been planned for the balance of the year, to be carried out during this outage. Citing the outage, cost inflation pressures and labor shortages, the company anticipates adjusted loss per share in the second quarter of fiscal 2022 in the range of 60 cents to 65 cents. It is expected to come in much wider than the adjusted loss per share of 28 cents in first-quarter fiscal 2022 and the adjusted loss per share of 61 cents in second-quarter 2021. The company’s shares fell 6.19% in a day to close at $28.65 on Dec 20.
The press is a piece of highly specialized equipment that plays a key role in the production of materials for Aerospace and a few other end-market applications. Considering the growing demand in these markets, the company is taking the necessary steps to bring the press back online as fast as possible and ensure its continuous operation. The company also stated that due to its decision to carry out certain maintenance activities now, it will save 14 days of planned maintenance downtime for the press for the balance of the current fiscal year. Carpenter Technology is also closely working with affected customers to minimize the impact to their operations.
Due to the impact associated with the press outage, cost inflation pressures, labor shortages and the ongoing challenges from COVID-19 isolations across certain key work centers, Carpenter Technology currently expects its Specialty Alloys (“SAO”) segment to deliver an operating loss of $20 million to $22 million in the second quarter of fiscal year 2022. The company had earlier provided a range of operating loss of $2 million to operating income of $2 million for the segment for the quarter.
The company stated that its Performance Engineered Products (“PEP”) segment continues to benefit from improving demand conditions and is expected to generate operating income in the range of $1 million to $2 million in the second quarter of fiscal year 2022. Carpenter Technology had earlier stated that the segment’s operating income is likely be in line with the first quarter of 2022, which was $0.6 million.
Based on its preliminary estimation, Carpenter Technology currently expects overall adjusted operating loss to be $32-$35 million.
However, the company remains upbeat about the rising demand trend across its end-use markets. Order booking rates continue to increase from year-ago levels, which is driving backlog growth. Its commercial backlog is currently up 25% sequentially and 90% year over year that bodes well for the forthcoming quarters.
The company’s financial position remains strong, which provides it the strategic flexibility to strengthen its long-term growth profile by investing in emerging technologies like additive manufacturing and soft magnetics while providing direct returns to shareholders through quarterly dividends. As electric vehicle demand continues to grow and program activity increases for electrifying short-range air travel, the company is increasing investments in motor technology and soft magnetic solutions.
Price Performance
Carpenter Technology’s shares have declined 1.6% year-to-date against the industry's growth of 5.3%.
Zacks Rank & Stocks to Consider
Carpenter Technology currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Olin Corporation (OLN - Free Report) , Bunge Limited (BG - Free Report) and Univar Solutions Inc. . While OLN and BG flaunt a Zacks Rank #1 (Strong Buy), UNVR carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Olin has an expected earnings growth rate of around 740% for the current fiscal year. The Zacks Consensus Estimate for current-year earnings has been revised upward by 20.5% in the past 60 days.
Olin’s shares have soared 115% so far this year. The company has a long-term earnings growth of 56%.
Bunge has a trailing four-quarter earnings surprise of 105.7%, on average. The company has an estimated earnings growth rate of around 45% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 36%.
Bunge’s shares have appreciated 31% year-to-date. It has a long-term earnings growth of 6.7%.
Univar has an expected earnings growth rate of 55.2% for the current year. The Zacks Consensus Estimate for the current year has been revised upward by 9% over the past 60 days.
Univar beat the Zacks Consensus Estimate for earnings in each of the four trailing quarters, the average surprise being 24.1%. UNVR’s shares have rallied 38% so far this year.