Alloy maker Carpenter Technology Corp. (CRS) Tuesday reported a plunge in third quarter profit, as sales dropped sharply reflecting lower demand mainly in energy and aerospace markets, amid declines in the global economy. Carpenter also forecast negative earnings for the fourth quarter, while expecting weakness in the demand to continue.
Third quarter net income for Carpenter Technology plummeted to $13.1 million or $0.30 per share from $120.0 million or $2.49 per share in the prior-year quarter.
Income from continuing operations was $13.1 million or $0.30 per share, compared to $50.5 million or $1.05 per share in the year-ago quarter.
On average, seven analysts polled by Thomson Reuters expected earnings of $0.29 per share. Analysts' estimates typically exclude one-time items.
Net sales for the quarter dropped 35% to $330.0 million from $506.4 million in the same period last year. Four Wall Street analysts expected revenues of $346.02 million for the quarter.
Excluding surcharge, net sales were $266.7 million, down 24% from the year-ago quarter. Sales from Advanced metals operations plunged 37.1% to $227.7 million, while sales of Premium alloys operations dropped 29.0% to $104.2 million from the same quarter a year ago.
Market sale of Aerospace declined 29% to $146.7 million, Industrial dropped 28% to $79.1 million, Energy were down 36% at $35.0 million, Medical decreased 18% to $28.4 million, Consumer plunged 54% to $20.7 million, while Automotive plummeted 63% to $20.1 million from the corresponding quarter a year ago.
Anne Stevens, chairman and chief executive officer said, "Low oil prices have reduced demand in our energy segment, which had been a key growth driver in recent years. Also, demand in aerospace slowed significantly in the quarter."
Excluding surcharge revenue, gross margin was 18.4%, compared with 30.8% last year.
Operating income was $16.1 million, down 78% from $74.7 million in the corresponding quarter last year. Excluding surcharge revenue and the restructuring costs, operating margin was 6.8%, down from 21.2% last year.
For the nine-month period, net income plunged to $68.7 million or $1.56 per share from $233.7 million or $4.72 per share in the year-ago period. Income from continuing operations was $68.7 million or $1.56 per share, compared to $163.0 million or $3.29 per share in the year-earlier period.
Net sales for the period declined to $1.11 billion from $1.40 billion in the year-ago period.
Looking ahead, Carpenter Technology said it expects weaker demand to continue in the fourth quarter and also anticipates negative earnings for the quarter, citing continued negative effects from second half inventory reductions, as well as costs to close the UK facility.
CRS is currently trading at $19.30, up $0.81 or 4.38%, on a volume of 0.61 million shares.
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