NEW YORK Specialty metals
and stainless steel producer Carpenter Technology Corp. blames
increased customer deferrals for lower-than-expected earnings
in its fiscal third quarter.
The Wyomissing, Pa.-based
company recorded net income of $32.9 million for the three
months ended March 31, down slightly from $33 million in the
corresponding quarter of 2012.
Third-quarter net sales totaled
$581.4 million, up 7.7 percent from $539.9 million in the same
comparison, a gain the company attributed to the companys
acquisition of Latrobe Specialty Metals Inc. (
amm.com, April 16, 2012).
However, overall growth was
offset by lower earnings in the companys specialty alloys
operations division as a result of mix degradation and
increased deferrals, among other things, it said.
The third quarter saw a
significant change in market conditions, with a 14-percent
spike in customer deferrals, president and chief executive
officer William A. Wulfsohn said during a conference call with
analysts April 25.
"Increased customer deferrals
during the quarter, combined with low sales to distribution
customers and a weak defense-related mix, resulted in lower
sales and operating income. While the recent pattern of these
deferrals has slowed and order intake has increased, we now
expect our full-year earnings to be lower than previously
forecast," Wulfsohn said. "We are still targeting low
double-digit growth in full-year operating income, on an
adjusted basis versus prior year. However, if the fourth
quarter has similar in-quarter mix and deferrals as we
experienced in the third quarter, we may have difficulty
achieving this target."
Wulfsohn said the company now
has 10,000 tonnes of available capacity to support growth as
demand returns, with the startup of the companys Athens,
Ala., facility in early 2014 also expected to contribute.
He added that while lead times
have dropped significantly, primarily on lower demand, the
company is aiming to maintain these shorter lead times even as
"Weve been trying to improve flow within our
operations to achieve and sustain lower lead times no matter
where we are in the cycle," Wulfsohn said. "Right now
theyre between eight and 14 weeks, but if you go back
one-and-a-half years ago, they were out to six months. Our goal
is to sell an additional 10,000 tons and leverage our Athens
capacity and not extend lead times."