PITTSBURGH Carpenter Technology Corp. said it will face headwinds in the coming quarter despite positive signs in the aerospace and defense industries and the North American auto sector.
The Wyomissing, Pa.-based specialty metals and stainless steel producer said build rates in the commercial aerospace sector continue to show strength and demand is growing for materials used for structural applications, while demand from North American automakers has offset a continued weak appetite in Europe for heavy-duty equipment.
The energy sector is less rosy, however, given slow orders for gas turbines and low growth in the North American drill rig count, the company said.
Overall, Carpenter Technology expects a seasonal decline in earnings in the coming quarter on par with the same period last year. "This quarter is going to be a tough one on the cash side, but things will then get a lot better with it in the rear-view mirror," president and chief executive officer William A. Wulfsohn said during an earnings conference call July 30. "We enter fiscal 2014 optimistic about the year, although shorter lead times and low nickel prices provide less visibility about underlying demand."
The company posted net income of $40.9 million in its fiscal fourth quarter ended June 30, marginally higher than a year earlier despite a 5-percent decline in sales to $611.8 million. The quarterly results were partially driven by restructuring, including a 3-percent reduction in its salaried work force.
"We finished the fiscal year with a solid fourth quarter in a challenging environment," Wulfsohn said. It was the companys second-best quarter in the past five years.
The company noted that its forge finishing expansion project in Reading, Pa., and greenfield facility in Athens, Ala., are both on time and under budget. "Athens is a game changer for us in terms of potential," Wulfsohn said. The new facility is expected to begin shipping in 2014 (amm.com, Feb. 7, 2012).
Wulfsohn said the company has backpedaled on an earlier announcement and has decided to not sell its distribution business (amm.com, Aug. 28). He said the company buys and sells businesses with discipline and has decided not to sell it at this time.