Carpenter Technology Corp. (CRS - Free Report) has entered into a multi-level agreement with United Technologies Corporation (UTC) to supply the latter’s Pratt & Whitney Division with superalloy powders. The market reacted positively to the news and Carpenter’s shares rose as much as 3.3% following the announcement.
Carpenter is planning to build a superalloy powder facility which is expected to take about 18 months to construct at an expected cost of $20 million. Carpenter will supply Pratt & Whitney with superalloy powder for up to 20 years following the qualification of the facility by the latter.
Moreover, UTC’s aerospace business units (Pratt & Whitney, Pratt & Whitney Canada Corp, UTC Aerospace Systems and Sikorsky Aircraft Corporation) have agreed to buy alloy steel bar/billet, nickel superalloy billet, stainless bar/billet, and strip laminate products from Carpenter for a period of ten years. Carpenter presently supplies UTC’s aerospace businesses with a part of their overall demand for nickel, stainless and strip laminate products.
Carpenter expects that the deal will enable a yield over $600 million in sales over the term of the agreement, and should lead to further increase in sales. The company’s entry into the aerospace market segment reflects its confidence in superalloy powder demand for additional applications such as those used in energy and additive manufacturing.
Carpenter, a prominent player in the specialty steel industry along with Allegheny Technologies Inc. (ATI - Free Report) , Haynes International, Inc. (HAYN - Free Report) and RTI International Metals, Inc. , is a leader in the development, manufacture and distribution of cast/wrought and powder metal stainless steels and specialty alloys.
Carpenter's broad product portfolio includes high temperature (iron-nickel-cobalt base), stainless, superior corrosion resistant, controlled expansion alloys, ultra high-strength and implantable alloys, tool and die steels, and other specialty metals as well as cast/wrought titanium alloys.
Carpenter currently retains a Zacks Rank #3 (Hold).