Carpenter Technology Corporation announced Wednesday restructuring actions to reduce fixed overhead costs and position the company to drive long-term, profitable growth. The actions are precipitated by the company’s desire to improve operating cost performance and the current weakness in the oil and gas market.
Carpenter’s Chairman, President and Chief Executive Officer Gregory A. Pratt stated, “We are confident in the technology, manufacturing capabilities, customer connections and employee dedication within our Company. We are clearly disappointed with our performance over the last several quarters and are taking decisive actions to return to the level of operational and financial performance we are capable of achieving, and which we and our shareholders expect and deserve.”
Expected to yield approximately $30 million of annual fixed overhead cost savings, the restructuring plan includes reducing the company’s salaried positions by approximately 200 or 10 percent of the total salaried workforce. In addition, the restructuring plan includes the elimination of approximately 60 outsourced positions as well as other non-labor related costs. The company expects to record a pre-tax charge of approximately $11 million in the third quarter of fiscal year 2015 (Q3 FY15) as a result of implementing this plan.
In connection with the company’s ongoing strategic planning, Carpenter has exited the ultra-fine grain materials development program. The company will record a pre-tax charge of approximately $13 million in Q3 FY15 that reflects the cost to exit a licensing agreement as well as the associated non-cash asset impairment charges.