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Carpenter to Build Facility Focused on Premium Products
WYOMISSING, Pa., Aug 24, 2011 (BUSINESS WIRE) --
Carpenter Technology Corporation (NYSE: CRS) announced today that it will construct a new 400,000 square foot state-of-the-art manufacturing facility in response to strong customer demand for premium products primarily in the fast-growing aerospace and energy industries. The new facility will ultimately be capable of producing approximately 27,000 tons per year of additional premium product and is part of Carpenter's ongoing commitment to expand capacity, reduce lead times, and improve customer service.
"Earlier this year, we outlined a corporate strategy centered on optimizing our core business, accelerating growth with acquisitions, and investing in technology and capacity," said William A. Wulfsohn, President & CEO. "Our new facility will play a key supporting role in each of these areas. The core business will be strengthened with increased premium capacity to support expanded long-term customer agreements and with more efficient operations utilizing advanced technology. This investment will also enable Carpenter to support the increased demand related to the Latrobe (pending), Amega West, and Oilfield Alloys acquisitions. Finally, this expansion will support increased demand expected from the sales of new technologies we plan to commercialize over the coming years."
The facility will be built on one of several 200+ acre greenfield sites currently under consideration and will cost approximately $500 million. The new facility will include remelting, forge, and associated finishing and testing capabilities.
The project will be financed over a multi-year period. Guidance provided by the Company for fiscal 2012 capital spending of about $200 million remains unchanged. Much of the funding for this project in future years will come from operating cash flow. Note that steps taken earlier this summer have improved the Company's capital structure. Carpenter's liquidity position was improved with excess funds from a 10-year bond offering and a renewed and up-sized $350 million five-year revolving credit facility.
David L. Strobel, Senior Vice President - Global Operations, sees this initiative as Carpenter's next step in advancing the company's leadership in the production of premium alloys. "The new facility will play a key role in further developing our capabilities in the production of our premium products, primarily serving the aerospace and energy markets. This facility will deploy the latest technology, and coupled with our strong experience and know-how, will serve both Carpenter and our customers well into the future. We are excited to build this into our strong list of capabilities."
The facility is expected to be operational in approximately 30 months.
About Carpenter Technology
Carpenter Technology produces and distributes conventional and powder metal specialty alloys, including stainless steels, titanium alloys, tool steels and superalloys. Information about Carpenter can be found at www.cartech.com.
Except for historical information, all other information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected, anticipated or implied. The most significant of these uncertainties are described in Carpenter's filings with the Securities and Exchange Commission including its annual report on Form 10-K for the year ended June 30, 2010 and the quarterly reports on Form 10-Q for the quarters ended September 30, 2010, December 31, 2010 and March 31, 2011 and the exhibits attached to those filings. They include but are not limited to: 1) the cyclical nature of the specialty materials business and certain end-use markets, including aerospace, industrial, automotive, consumer, medical, and energy, or other influences on Carpenter's business such as new competitors, the consolidation of competitors, customers, and suppliers or the transfer of manufacturing capacity from the United States to foreign countries; 2) the ability of Carpenter to achieve cost savings, productivity improvements or process changes; 3) the ability to recoup increases in the cost of energy, raw materials, freight or other factors; 4) domestic and foreign excess manufacturing capacity for certain metals; 5) fluctuations in currency exchange rates; 6) the degree of success of government trade actions; 7) the valuation of the assets and liabilities in Carpenter's pension trusts and the accounting for pension plans; 8) possible labor disputes or work stoppages; 9) the potential that our customers may substitute alternate materials or adopt different manufacturing practices that replace or limit the suitability of our products; 10) the ability to successfully acquire and integrate acquisitions; 11) the availability of credit facilities to Carpenter, its customers or other members of the supply chain; 12) the ability to obtain energy or raw materials, especially from suppliers located in countries that may be subject to unstable political or economic conditions; 13) our manufacturing processes are dependent upon highly specialized equipment located primarily in one facility in Reading, Pennsylvania for which there may be limited alternatives if there are significant equipment failures or catastrophic event; 14) our future success depends on the continued service and availability of key personnel, including members of our executive management team, management, metallurgists and other skilled personnel and the loss of these key personnel could affect our ability to perform until suitable replacements are found; 15) the capability of the new facility of producing/converting approximately 27,000 tons per year of additional premium product; 16) the ability to strengthen the core business with increased premium capacity to support expanded long-term customer agreements and with more efficient operations utilizing advanced technology; 17) the expectation that this investment will also enable Carpenter to support the increased demand related to acquisitions; 18) this expansion will support increased demand expected from the sales of new technologies we plan to commercialize over the coming years; 19) the approximate cost of $500 million for the new facility; and 20) the expectation that the facility will be operational in approximately 30 months. Any of these factors could have an adverse and/or fluctuating effect on Carpenter's results of operations. The forward-looking statements in this document are intended to be subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Carpenter undertakes no obligation to update or revise any forward-looking statements.
SOURCE: Carpenter Technology Corporation
Carpenter Technology Corporation
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