Carpenter technology reports fourth quarter results
August 1, 2012
Carpenter Technology Corporation (NYSE:CRS) has reported fourth quarter net income attributable to Carpenter of $40.8 million (quarter ended June 30, 2012). Excluding surcharge revenue, net sales were $506.7 million, up 44% from a year ago on 31% higher volume.
The company’s Specialty Alloy Operations (SAO) segment sales without surcharge increased 18% on 10% higher volume, while the Performance Engineered Products (PEP) segment sales (which includes the Dynamet, Carpenter Powder Products and Amega West businesses) without surcharge increased 15% on 5% lower volume compared with the fiscal year 2011 fourth quarter.
Gross profit was $120.6 million compared with $77.0 million in the fiscal year 2011 fourth quarter. The higher gross profit was driven by improvement in SAO due to increased volume and a higher profit per pound from an improved product mix and higher prices, and the inclusion of Latrobe.
Operating income for the fourth quarter was $66.5 million compared with $35.0 million a year earlier. Latrobe accounted for $17.0 million of operating income, before being reduced by inventory fair value cost adjustments of $8.7 million. Excluding surcharge revenue and pension earnings, interest and deferrals (EID), operating margin was 14.0% compared to 12.4% in the fiscal year 2011 fourth quarter
Breakdown of net sales at Carpenter
“We had a very strong finish to an excellent year,” stated William A. Wulfsohn, President and Chief Executive Officer. “We exceeded our financial goals. These results were driven by solid execution of our strategies to grow premium product output while improving productivity, mix and pricing. For the year, the legacy Carpenter business saw a 68% increase in operating income, excluding pension EID. SAO average profit per pound improved by $0.44 over the course of the year, and we reduced our manufacturing cost per ton for the third straight year. We also shipped 4,500 additional premium tons this year and expect to ship about 4,000 additional premium tons over each of the next two years.“
“A highlight of the year was our acquisition of Latrobe Specialty Metals. The integration process is going extremely well, and we are even more excited about the strategic value and synergies from this transaction. As we expected, the acquisition has been immediately accretive to earnings per share, excluding acquisition related costs. We remain confident that we will achieve at least $25 million of net pre-tax synergies by year three.
“Our order backlog remains strong, and we are moving forward to add capacity to support our customers’ demand. Along with our actions to increase near term capacity in Reading and Latrobe by roughly 4,000 premium tons over each of the next two years, we are expanding our Dynamet Titanium wire capacity. In addition, we have started construction of our new $500 million state of the art premium products facility in Alabama. When completed in April, 2014, this facility will provide the capacity needed to support industry demand through the remainder of the decade and enable Carpenter to significantly reduce lead times. All of these actions support our customers’ growth needs and will have a positive impact on the size, scope and profitability of our business for years to come” added Wulfsohn.
Posted by: Paul Whittaker, Editor ipmd.net, [email protected]
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