Carpenter Selling Distribution Biz - Analyst Blog
August 31 2012 - 6:45AM
Zacks
Carpenter Technology
Corporation (CRS) is divesting two of its distribution
businesses to focus more on manufacturing and selling its core
specialty alloy products for high-growth markets.
The Pennsylvania-based company
said that it has commenced a process to sell its Latrobe Specialty
Steel Distribution (LSSD) and Mexican distribution business “Aceros
Fortuna”. KeyBanc Capital Markets Inc. is assisting the company in
selling these businesses.
The company acquired LSSD
following its takeover of high-performance materials maker Latrobe
Specialty Steel in February 2012 for roughly $558 million. LSSD,
which logged sales of $113 million in fiscal 2012, offers a vast
range of quality steels and value-added services to customers in
North America through six distribution centers across the U.S. and
Canada.
Aceros Fortuna, which Carpenter
bought in 1994, distributes alloyed, stainless and tool steels,
specialty alloys and industrial products in Mexico and Brazil. The
entity, which had sales of $42 million in fiscal 2012, has eight
distribution and sales offices in Mexico.
The divestiture reflects
Carpenter’s sustained commitment in growing its specialty alloy
business. The company plans to reinvest the proceeds from a sale in
its premium product businesses. Carpenter noted that it will
continue to service sales of its special alloy products in Mexico
and South America by retaining selected warehouses and
employees.
Carpenter makes specialty alloys,
including stainless steels, titanium alloys and superalloys
primarily for the aerospace and energy industries. It is a major
player in the metallurgy industry along with Allegheny
Technologies Inc. (ATI).
Carpenter, on July 31, reported
its fourth-quarter fiscal 2012 (ended June 30) results. Its profit,
as reported, surged 60% year over year to $40.8 million or 77 cents
per share. Legacy Carpenter earnings (excluding Latrobe-related
income and share dilution) were 80 cents a share. By that measure,
it beat the Zacks Consensus Estimate of 78 cents.
Revenues surged 33% year over
year to $643.7 million, beating the Zacks Consensus Estimate of
$633 million. Sales were boosted by solid growth in the Aerospace
& Defense division. Revenues from this segment spiked 49% on
the back of strong demand for engine materials and higher airplane
build rates.
Carpenter expects a 30% rise in
its operating income, excluding pension expenses and costs related
to Latrobe acquisition, in fiscal 2013. The company said that its
business remains resilient to the global economic slowdown and it
is well placed to expand its share in the aerospace
market.
Carpenter currently retains a
Zacks #3 Rank, which translates into a short-term Hold
rating.
ALLEGHENY TECH (ATI): Free Stock Analysis Report
CARPENTER TECH (CRS): Free Stock Analysis Report
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