Carpenter to close plants, exit oil and gas
Carpenter Technology intends to close two domestic powder metal production facilities and exit its downstream oil and gas business to preserve liquidity during the Covid-19 pandemic, the company said in an earnings report.
The specialty metals producer will close its Woonsocket, Rhode Island, and Bruceton Mills, West Virginia, powder metal production facilities and exit its Amega West oil and gas business in Houston by Tuesday June 30, Carpenter Technology director of internal communications Heather Beardsley told Fastmarkets.
The restructuring, approved on April 29, will impact about 220 employees, according to a Form 10-Q filed with the US Securities and Exchange Commission (SEC) on April 30. This will result in restructuring charges of $80-100 million before taxes in the fiscal fourth quarter ending June 30, 2020, it added.
But this is expected to save $15-20 million annually based on current run rates for these businesses, the company said in its earnings report for the fiscal third quarter ended March 31.
“These strategic actions were taken to drive long-term, profitable growth in light of both the current weakness in the oil and gas sub-market and the economic uncertainties resulting from the Covid-19 pandemic,” Carpenter Technology said in the SEC filing.
The company has initiated other cost-saving actions, including “implementing temporary furloughs for certain production and maintenance employees across facilities based on planned production scheduling, implementing a global hiring freeze and reducing planned capital expenditures for fiscal year 2021 by approximately 25-30% from fiscal year 2020,” it said in the earnings report.
“The company also initiated actions to reduce working capital levels, principally inventory, to align with anticipated customer demand and expects that working capital represents a significant opportunity for cash generation in the near term,” the company added.
Carpenter Technology operates four locations in the United States, including production facilities in Reading and Latrobe, Pennsylvania, and in Tanner, Alabama; and its headquarters in Philadelphia. Its Amega West business manufactures and services complex machine components for the oil and gas market via 11 locations in the United States, Canada, Singapore and United Arab Emirates, according to its website.