NEW YORK — Carpenter Technology Corp. expects operating earnings to grow by 30 percent, or $70 million, in fiscal 2013, excluding pension expenses and costs related to the acquisition of Latrobe Specialty Metals Inc., as the company’s end markets remain favorable.
"We’ve expanded long-term agreements and implemented pricing mechanisms and hedging policies to offset lower nickel prices," president and chief executive officer William Wulfsohn said during the company’s earnings conference call Tuesday. He added that demand for the company’s high-value products should hold up well relative to more commoditized products like flat-rolled stainless.
Wyomissing, Pa.-based Carpenter posted net income of $121.2 million for its fiscal year ended June 30, up 70.7 percent from the previous year, on sales that climbed 21.1 percent to nearly $2.03 billion.
Carpenter sold 235.5 million pounds during the fiscal year, up 8.6 percent from 216.8 million pounds, with Latrobe adding 23 million pounds since the $558-million acquisition was completed in February. "We’ve owned Latrobe for four months, and the results have been strong," Wulfsohn said.
Capacity expansions at Latrobe and at the company’s Reading, Pa., facility will allow Carpenter to ship an additional 4,000 tons of premium alloys in fiscal 2013 and 2014 while it builds its $500-million premium alloy facility in Alabama.
"We’re quoting out into the first calendar quarter of 2013," Wulfsohn said of lead times for premium products.
Carpenter will spend about $350 million on capital projects in 2013, much of it going to the new facility. "The (Alabama) project is on schedule and on budget," Wulfsohn said.
Fiscal fourth-quarter aerospace sales grew 49 percent to $293.9 million from the same period last year on increasing build rates and historically high titanium fastener demand.
Energy market growth in the quarter was more tepid, growing 13 percent to $79.2 million, with weakness in gas turbine shipments offsetting solid demand from the offshore drilling market. "In the short term, it’s a little bit weaker, but the fundamentals ... are likely to drive a higher demand rate over time," Wulfsohn said.
Distributor shipments also were softer, with industrial and consumer shipments in the fiscal fourth quarter rising only 3 percent to $139 million. "A limited area of weakness is around the small percentage of business that we do through distributors," Wulfsohn said, but he noted that the majority of Carpenter’s sales are to long-term customers, negating opportunistic buying.