Benzinga | Dec 20, 2021 10:49AM EST

Carpenter Technology Sees Q2 2022 Adj. Operating Loss $(32)M-$(35)M; Sees Adj. EPS $(0.60)-$(0.65)

Carpenter Technology Corporation (NYSE:CRS) (the "Company") today announced an unplanned outage of its 4500 ton press at its Reading, PA facility due to a mechanical failure. The press is a piece of highly specialized equipment that is critical to producing materials for Aerospace and select other end-market applications. With the majority of the necessary spare parts already on-hand, the repairs are currently expected to take 45 to 60 days to complete. In addition, certain planned maintenance activities for the balance of the year have been pulled forward to be performed during this outage. These activities are expected to eliminate 14 days of planned maintenance downtime for the press for the balance of the current fiscal year.



"The press outage has created some near-term challenges for our business," said Tony R. Thene, President and CEO. "In response, we have moved quickly to address the situation and through careful planning and execution are confident we can rapidly bring the press online and ensure its continuous operation for the anticipated Aerospace ramp and rising demand levels across our other end-use markets. In the meantime, we are working closely with affected customers to minimize the impact to their operations."

Based on the near-term challenges associated with the press outage, in addition to cost inflation pressures, labor shortages and the ongoing challenges from COVID-19 isolations across certain key work centers, the Company currently expects its Specialty Alloys (SAO) segment to deliver an operating loss of $20 to $22 million in the second quarter of fiscal year 2022.

The Company's Performance Engineered Products (PEP) segment continues to benefit from improving demand conditions and is expected to generate operating income in the range of $1 to $2 million in the second quarter of fiscal year 2022.

Based on preliminary estimates subject to finalization, the Company currently expects adjusted operating loss to be in the range of ($32) to ($35) million and adjusted loss per share to be in the range of ($0.60) to ($0.65).

"While the press outage at Reading and macro challenges are headwinds to our near-term outlook, we remain confident in our long-term growth profile given our critical supply chain position and the improving demand patterns across our end-use markets," Mr. Thene added. "Our order booking rates continue to increase compared to last year which is driving further backlog growth. Our commercial backlog is currently up 25% sequentially and 90% compared to the second quarter a year ago. This backlog growth speaks to our strong customer relationships and the highly specialized nature of the solutions we provide and places us on solid ground for accelerated growth over the long-term."