CARPENTER TECHNOLOGY CORP (CRS)

Carpenter Technology Corporation, founded in 1889, manufactures, fabricates and distributes specialty metals. The company describes itself as a recognized leader in high-performance specialty alloy-based materials and process solutions for critical applications. It has become a pioneer in premium specialty alloys, including titanium, nickel and cobalt, as well as alloys engineered for additive manufacturing and soft magnetics applications. It has also expanded its additive manufacturing capabilities to offer an end-to-end solution for materials innovation and parts production.

Carpenter reports two segments. Specialty Alloys Operations (SAO) comprises the major premium alloy and stainless steel manufacturing operations, run at mills primarily in Reading and Latrobe, Pennsylvania and surrounding areas, as well as South Carolina and Alabama. Its assets are managed in an integrated manner to optimize efficiency and profitability. Performance Engineered Products (PEP) comprises the company's differentiated operations: the Dynamet titanium business, the Carpenter Additive business (which absorbed Carpenter Powder Products effective July 1, 2020), and the Latrobe and Mexico distribution businesses. The Amega West business was part of PEP until it was divested in the first quarter of fiscal 2021. PEP businesses are managed with an entrepreneurial structure intended to respond quickly to market dynamics.

The company serves the aerospace, defense, medical, transportation, energy, industrial and consumer end-use markets. It is not dependent on any single customer. No customer accounted for 10 percent or more of net sales in fiscal 2022 or 2021, while Howmet Aerospace accounted for about 10 percent in fiscal 2020. Sales outside the United States, including exports, were $656.4 million in fiscal 2022. Backlog excluding surcharge was about $1,539.3 million at June 30, 2022, up from $529.3 million a year earlier, reflecting demand growth across key end-use markets as the recovery from COVID-19 continues. Sales are seasonal, with the first two fiscal quarters typically the lowest because of plant vacation and maintenance shutdowns.

Carpenter depends on raw materials including nickel, cobalt, chromium, manganese, molybdenum, titanium, iron and alloy-bearing scrap, many from international sources that could face supply interruptions. It uses consigned inventory arrangements, long-term supplier relationships, pricing surcharges, indexing mechanisms, base price adjustments and forward contracts to manage price volatility. Competition is intense: fewer than ten companies produce similar high-value products, particularly in aerospace, defense and energy, where material qualification and complex specifications create barriers to entry. For other products, competitors include several dozen smaller producers and converters, several hundred independent distributors and numerous foreign producers. The company owns U.S. and international patents but is not materially dependent on any single one, and it spent $20.4 million on research and development in fiscal 2022. At June 30, 2022, it had about 4,100 employees, some covered by collective bargaining agreements, and it is subject to extensive environmental regulation.