Carpenter Technology Corporation has announced financial results for the second quarter of its fiscal year 2015 (quarter ended December 31, 2014) recording net sales of $548.4 million, an increase of $44.9 million from the same quarter last year. First half net sales (six months ended December 31, 2014) totalled $1,098.2 million, up from $1,002.1 million in the same period last year.
Operating income for the company was $45.0 million, a decrease of $2.5 million from the second quarter of the prior year. The reduction in operating income versus the prior year was stated as being primarily due to the Reading press outage in November, higher SAO operating costs, and the additional depreciation expense of the Athens facility, which were all partially offset by lower variable compensation expense and a stronger mix of products.
Gregory A Pratt, Carpenter’s Chairman, President and Chief Executive Officer, stated, “Carpenter’s Specialty Alloys Operations (SAO) drove strong year-over-year sales growth in the second fiscal quarter of 2015, and it realised the richer product mix that was evident in the backlog as we exited the first quarter. Operating margins remained below prior year levels due to higher near-term integrated mill operating costs, the Reading press outage and higher depreciation of the Athens facility. Performance Engineered Products (PEP) drove substantial year-over-year financial gains; PEP achieved this through operational improvements and strong end-use market product demand.”
“Looking forward, our current backlog provides us with visibility to a stronger mix as we enter the third fiscal quarter. We continue to expect that SAO volumes will grow sequentially, with overall end-use market demand growth and expanded customer approvals for Athens production. To realise higher profitability on this growth, Carpenter remains focused on driving down operating costs. That said, uncertainty remains over the full impact of lower oil prices. We are already experiencing cancellations and deferrals for oil and gas materials as drilling and completion activity slows. With the majority of our capital plan already spent in the first half of the fiscal year, as well as a continued commitment to reduce inventory from current levels, we expect to drive positive free cash flow in the second half of fiscal year 2015.”