Carpenter Tech, Rolls-Royce in Supply Pact - Analyst Blog
May 01 2013 - 1:15PM
Zacks
Specialty alloy maker Carpenter Technology
Corp. (CRS) has landed a supply deal with Rolls-Royce,
which will provide the latter with advanced technology materials
used to make jet engine components.
The five-year agreement, which runs through 2017, is worth roughly
$75 million. The materials, to be supplied under the contract, will
be utilized on existing and future Rolls-Royce engine platforms in
applications including rings, blades, vanes, and airfoils.
Rolls-Royce will be responsible for generating demand for the
materials in the UK and the U.S. These materials will be made at
Carpenter’s Reading, Pa., and Athens, Ala., specialty steelmaking
plants.
Carpenter, which is among the leading players in the specialty
steel industry along with Allegheny Technologies
Inc. (ATI), Haynes International, Inc.
(HAYN) and RTI International (RTI), recently
reported adjusted earnings (barring one-time items) of 69 cents per
share for third-quarter fiscal 2013 (ended Mar 31, 2013), missing
the Zacks Consensus Estimate by 7 cents.
Profit, as reported, was essentially flat year over year at $32.9
million or 62 cents a share. Contributions of the Latrobe Specialty
Steel unit, which Carpenter bought in Feb 2012, were neutralized by
lower earnings in the Specialty Alloy Operations (SAO) division due
to weak mix and increased customer deferrals.
Carpenter raked in net sales of $581.4 million in the quarter, up
roughly 8% year over year. However, it missed the Zacks Consensus
Estimate of $636 million.
Sales were boosted by double-digit gains across the aerospace and
defense and energy markets. Growth in aerospace and defense was
aided by higher aircraft build rates while energy sales were driven
by a rise in ultra-premium materials sales. However, lower titanium
prices and high OEM inventories hurt sales in the medical
market.
Carpenter continues to sees a double-digit year over year expansion
in adjusted operating income for fiscal 2013. However, it noted
that achieving this target will be difficult if the fourth quarter
experiences similar in-quarter mix and deferrals as witnessed in
the third quarter.
Carpenter currently retains a Zacks Rank #5 (Strong Sell).
ALLEGHENY TECH (ATI): Free Stock Analysis Report
CARPENTER TECH (CRS): Free Stock Analysis Report
HAYNES INTL INC (HAYN): Free Stock Analysis Report
RTI INTL METALS (RTI): Free Stock Analysis Report
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