Carpenter Technology, a major manufacturer of magnetic powders and other alloys, reports that revenues sank 40% in its quarter ended September 30 yet amidst an intense period of the Covid-19 pandemic it has managed to maintain a boatload of cash. Looking ahead, the company expects another rough quarter looming then anticipates improvement, banking especially on its new electrification brand and growth in its soft magnetic powders business.
Net sales for the quarter, the first for its 2021 fiscal year, were $353 million compared to $585 million for the same period a year ago, generating a loss of $47 million. Volume was 29% lower. “During the first quarter, we further strengthened our liquidity position through solid operating and free cash flow generation,” said Tony Thene, CEO. The company managed to generate $88 million of operating cash flow during the quarter.
“While our targeted inventory reduction efforts impacted profitability, we believe managing for cash flow in the current environment is prudent and helped us finish the first quarter with over $600 million in total liquidity. As anticipated, our operating results in the quarter were also impacted by lower volume due to challenging conditions in the aerospace and defense and medical end-use markets that continue to be pressured as a result of COVID-19,” said Thene. The headwinds from COVID-19 will continue to impact demand levels across its key end-use markets in the upcoming quarter, he noted. “We remain confident that a recovery in demand conditions across our key end-use markets will begin to take shape in our third quarter of fiscal year 2021.”
“We recently launched our Carpenter Electrification brand and see a number of attractive growth opportunities for our proprietary soft magnetics solutions across all of our key end-use markets. We believe our soft magnetics and additive manufacturing solutions are pivotal to addressing the future of our industry and best positioning Carpenter Technology for sustainable growth over the long-term.”