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Carpenter Technology Reports First Quarter Results
11/02/2010 - Carpenter Technology Corp. reported net income of $7.6 million, or $0.17 per share, for the quarter ended September 30, 2010. This compares to a net loss of $9.3 million, or negative $0.21 per share, for the same quarter a year ago. Net sales for the first quarter were $351.7 million, up 50% from the prior year.
Carpenter Technology Corp. reported net income of $7.6 million, or $0.17 per share, for the quarter ended September 30, 2010. This compares to a net loss of $9.3 million, or negative $0.21 per share, for the same quarter a year ago.
Net sales for the first quarter were $351.7 million, up 50% from the prior year. Excluding surcharge revenue, net sales were $263.7 million, a 40% increase from a year ago. Total pounds sold in the first quarter were 39% higher than the fiscal year 2010 first quarter. Sequentially, net sales excluding surcharge decreased 2% on 7% lower volume as a result of typical seasonal effects in the summer quarter.
Gross profit was $49.8 million compared with $19.2 million last year. The company notes that the higher gross profit in this year’s first quarter was driven by significantly higher volumes and better overall cost performance, partially offset by a slightly weaker product mix. The overall mix results are comprised of strong margins in the Premium Alloy Operations (PAO) segment, more than offset by low margins in the Advanced Metals Operations (AMO) segment as a result of taking on increased volumes over the last year in lower value applications within automotive and other markets.
Operating income for the first quarter was $14.1 million compared with a loss of $13.3 million a year ago and income of $10.2 million in the fiscal year 2010 fourth quarter. Excluding surcharge revenue and pension earnings, interest and deferrals (EID), operating margin was 8.7% for the quarter compared to a negative 2.0% in the fiscal year 2010 first quarter.
Executive remarks – “Strong revenue and volume growth contributed to a significant increase in operating margin and profitability over the prior year,” said William A. Wulfsohn, President and Chief Executive Officer. “We also maintained a consistent operating margin compared to our recent fourth quarter on slightly lower, seasonally adjusted volumes, which was in line with our expectations.
“Demand in our key end markets continues to strengthen. In addition to ongoing strong demand for materials used in aerospace engines, we have seen a significant pick-up in our energy business. This includes increased demand for materials used in power generation and our expanded participation in oil and gas applications. We still expect aerospace fastener demand will increase in the second half of the fiscal year.
“The increase in order activity is creating tight capacity and longer customer lead times,” Wulfsohn continued. “Our inventory levels are also running higher due to strong customer demand for our premium products. We are hiring and training employees to expand available production. We are also taking pricing actions and making mix management decisions to improve our profitability and create additional flex capacity for attractive incremental volume.
“Overall, the year is shaping up as we expected. We expect our financial performance will improve over the balance of the year behind higher volumes, an increasingly favorable product mix, our continued cost focus, and the impact of pricing actions. We also plan to be active in pursuing growth strategies that improve our position in the marketplace.”
Carpenter Technology produces and distributes specialty alloys, including stainless steels, titanium alloys, and superalloys.
