Core Insights - Carpenter Technology Corporation (CRS) reported adjusted earnings of $2.43 per share for Q1 fiscal 2026, exceeding the Zacks Consensus Estimate of $2.13 and up from $1.73 in the same quarter last year, driven by product mix improvements and operational efficiencies [1][8] - Net revenues increased by 2.2% year-over-year to $734 million, surpassing the Zacks Consensus Estimate of $729 million [2][8] - The company expects operating income for fiscal 2026 to be between $660 million and $700 million, indicating a 30% year-over-year growth at the midpoint [9] Financial Performance - The cost of goods sold decreased by 4.4% year-over-year to $517 million, while gross profit rose by 22.7% to $216 million, resulting in a gross margin of 29.5%, up from 24.6% in the prior year [4][8] - Adjusted operating income reached a record $153 million, compared to $117 million in the previous year, with an adjusted operating margin of 20.9% versus 16.3% [4][8] Segment Performance - Specialty Alloys Operations segment reported sales of $660 million, slightly up from $645 million year-over-year, but below the estimated $688 million [5] - Performance Engineered Products segment saw a 7.1% decline in net sales to $94 million, missing the estimate of $104 million, although operating profit increased by 28.8% year-over-year [6] Market Trends - Aerospace and Defense end-use market revenues increased by 11% year-over-year, while Energy end-market revenues rose by 7.9% [3] - Medical end-use market revenues decreased by 16.1%, Distribution markets fell by 16%, and Transportation end-use market revenues dropped by 15.2% [3] Cash Flow and Balance Sheet - Cash and cash equivalents at the end of Q1 fiscal 2026 were $208 million, down from $315.5 million at the end of fiscal 2025, with long-term debt slightly increasing to $695.7 million [7] Share Price Performance - Carpenter Technology's shares have increased by 93.9% over the past year, outperforming the industry's growth of 70% [10]

Financial Performance - Carpenter Technology reported record quarterly operating income of $153.3 million, a 31% increase year-over-year[2] - Earnings per diluted share for the quarter were $2.43, compared to $1.67 in the same quarter last year[9] - Net income for the three months ended September 30, 2025, was $122.5 million, up from $84.8 million in the same period of 2024, representing a 44.4% increase[21] - Operating income for the consolidated entity rose to $153.3 million, compared to $113.6 million in the previous year, marking a 35% increase[25] - Adjusted earnings for the three months ended September 30, 2024, were reported at $104.7 million, with an adjusted earnings per diluted share of $1.73[34] - The company reported a net income of $84.8 million for the quarter, adjusted for special items[34] Sales and Revenue - Consolidated net sales for the same period were $733.7 million, compared to $717.6 million in 2024, reflecting a 2.8% growth[25] - Specialty Alloys Operations net sales were $659.6 million, an increase from $645.1 million in the prior year, while Performance Engineered Products net sales decreased to $93.6 million from $100.8 million[25] - The aerospace and defense sector saw net sales of $388.3 million, up from $349.9 million, while the medical sector decreased to $61.6 million from $73.4 million[38] - Surcharge revenue for the three months ended September 30, 2024, was $130.6 million, down from $140.2 million in the previous year[38] Operational Highlights - The Specialty Alloys Operations segment achieved operating income of $170.7 million, up 27% year-over-year, with an adjusted operating margin of 32.0%, up from 26.3%[2] - Bookings for the Aerospace and Defense end-use market increased by 23% sequentially, reflecting strong demand[4] - Adjusted operating margin excluding surcharge revenue improved to 25.4% from 20.3% year-over-year[31] Cash Flow and Liquidity - Projected adjusted free cash flow for FY2026 is between $240 million and $280 million, net of $175 million to $185 million in capital expenditures related to brownfield expansion[5] - The company generated $39.2 million in net cash operating activities, with adjusted free cash flow reflecting a significant investment in capital equipment and acquisitions[36] - The adjusted free cash flow for the period was $13.3 million, reflecting a strategic focus on cash generation[36] - Total liquidity at the end of Q1 FY2026 was $556.9 million, consisting of $208 million in cash and $348.9 million in available borrowings[12] Capital Expenditures and Investments - Capital expenditures for Q1 FY2026 were $42.6 million, up from $26.9 million in the same quarter last year, primarily due to brownfield expansion[10] - The company plans to utilize excess cash for investments, acquisitions, and a share repurchase program of up to $400 million[36] Shareholder Returns - The company executed $49.1 million in share repurchases during the quarter, with $249 million remaining under the authorized repurchase program[11] - The company paid dividends of $10.1 million and repurchased treasury stock worth $49.1 million during the quarter[21] Balance Sheet - Cash and cash equivalents at the end of the period were $208.0 million, down from $315.5 million at the beginning of the year[23] - Total assets decreased to $3,402.2 million from $3,486.8 million in the previous quarter[23] - Total liabilities reduced to $1,491.0 million from $1,599.8 million, indicating a decrease in financial obligations[23]

Financial Performance - Net sales for the three months ended September 30, 2025, increased to $733.7 million, up from $717.6 million in the same period of 2024, representing a growth of 2.9%[12] - Gross profit for the same period rose to $216.4 million, compared to $176.3 million in 2024, reflecting an increase of 22.8%[12] - Operating income improved to $153.3 million, a significant increase from $113.6 million year-over-year, marking a growth of 35%[12] - Net income for the quarter was $122.5 million, compared to $84.8 million in 2024, which is an increase of 44.4%[12] - Basic earnings per share increased to $2.45, up from $1.69 in the prior year, representing a growth of 45.1%[12] Assets and Liabilities - Total assets decreased to $3,402.2 million as of September 30, 2025, down from $3,486.8 million at June 30, 2025, a decline of 2.4%[9] - Total liabilities decreased to $1,491.0 million from $1,599.8 million, reflecting a reduction of 6.8%[9] - Cash and cash equivalents at the end of the period were $208.0 million, down from $315.5 million at the beginning of the year, a decrease of 34.1%[17] - Total inventories as of September 30, 2025, decreased to $778.5 million from $793.8 million as of June 30, 2025, a reduction of 1.9%[47] - The Company had total debt of $695.7 million as of September 30, 2025, slightly increasing from $695.4 million as of June 30, 2025[57] Cash Flow and Dividends - The company reported net cash provided from operating activities of $39.2 million, slightly down from $40.2 million in the same quarter of 2024[17] - The company paid dividends totaling $10.1 million during the quarter, consistent with the previous year[17] - Cash dividends declared were $10.1 million, with a common stock dividend of $0.20 per share[39] Equity and Comprehensive Income - Total equity as of September 30, 2025, was $1,911.2 million, compared to $1,660.3 million at September 30, 2024, reflecting a year-over-year increase of 15.1%[39] - The company reported a total other comprehensive income of $0.2 million for Q3 2025, compared to $2.8 million in Q3 2024[15] - The total accumulated other comprehensive loss was $(67.7) million as of September 30, 2025[39] Segment Performance - The Specialty Alloys Operations (SAO) segment reported external sales of $656.1 million for the three months ended September 30, 2025, compared to $641.6 million in 2024, reflecting an increase of about 2.3%[100] - The Performance Engineered Products (PEP) segment achieved external sales of $77.6 million for the three months ended September 30, 2025, up from $76.0 million in 2024, marking a growth of approximately 2.1%[100] - Aerospace and Defense revenue increased to $470.9 million in Q3 2025, up from $437.4 million in Q3 2024, representing a growth of 7.4%[42] Tax and Other Expenses - The effective tax rate for the three months ended September 30, 2025, was 15.4%, compared to 16.1% for the same period in 2024[88] - Income tax expense for the three months ended September 30, 2025, was $22.3 million, up from $16.3 million in 2024[88] - Other (income) expense, net for the three months ended September 30, 2025, was $(3.0) million, a decrease from $0.1 million in 2024[86] Environmental and Derivative Instruments - Environmental remediation liabilities as of September 30, 2025, and June 30, 2025, were both $17.4 million[60] - The fair value of derivative financial instruments as of September 30, 2025, included assets of $0.5 million and liabilities of $1.8 million[66] - The company has not adjusted the liability for environmental remediation costs during the three months ended September 30, 2025[60] Stock and Shareholder Activities - The Company purchased 200,000 shares of its common stock for an aggregate of $49.1 million during the three months ended September 30, 2025, leaving $249.0 million available for future purchases[63] - The Company expects to make $17.6 million in required cash pension contributions during the remainder of fiscal year 2026[50] Compliance and Credit Facility - The Company was in compliance with all covenants of the Credit Facility as of September 30, 2025[56] - As of September 30, 2025, the Company had $348.9 million available under its Credit Facility, with $1.1 million of issued letters of credit[54]

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Core Insights - Carpenter Technology (CRS) reported revenue of $733.7 million for the quarter ended September 2025, marking a year-over-year increase of 2.2% and an EPS of $2.43 compared to $1.73 a year ago, indicating strong financial performance [1] - The reported revenue exceeded the Zacks Consensus Estimate of $729.14 million by 0.63%, while the EPS surpassed the consensus estimate of $2.13 by 14.08% [1] Financial Performance Metrics - Carpenter's shares have returned +4.9% over the past month, outperforming the Zacks S&P 500 composite's +0.2% change, with a current Zacks Rank of 3 (Hold) suggesting potential alignment with broader market performance [3] - Volumes Sold in Pounds for Specialty Alloys Operations were 44.75 million, slightly below the estimated 44.94 million [4] - Total Volumes Sold in Pounds were 46.42 million, compared to the average estimate of 46.7 million [4] - Net Sales in the End-Use Market Excluding Surcharge Revenue totaled $603.1 million, exceeding the estimate of $595.69 million and reflecting a +4.5% change year-over-year [4] - Surcharge revenue was reported at $130.6 million, lower than the estimated $137.58 million, representing a -6.9% change year-over-year [4] - Operating Income for Specialty Alloys Operations was $170.7 million, surpassing the average estimate of $163.59 million [4]

Financial Data and Key Metrics Changes - The company achieved record earnings with adjusted operating income of $153 million, a 31% increase year-over-year compared to $117.2 million in Q1 FY2025 [4][15] - Adjusted operating margin for the SAO segment reached 32%, up from 26.3% a year ago and 30.5% in the prior quarter [5][17] - Earnings per diluted share was $2.43 for the quarter, marking another record for profitability [16] Business Line Data and Key Metrics Changes - SAO segment net sales excluding surcharge were $533.9 million, up 5% year-over-year but down 3% sequentially [17] - PEP segment net sales were $87.2 million, down 10% sequentially and down 6% year-over-year [19] - Aerospace and defense sales were up 1% sequentially and 11% year-over-year, with bookings accelerating by 23% over the previous quarter [9][12] Market Data and Key Metrics Changes - The aerospace supply chain is experiencing strengthening demand, particularly in the engine submarket, which saw a 14% sequential increase in sales [9][12] - Medical market sales were down 20% sequentially and 16% year-over-year, primarily due to volatility in medical distribution [10] - Energy market sales were down 5% sequentially but up 8% year-over-year, driven by increasing demand for power generation [11] Company Strategy and Development Direction - The company is focused on expanding profitability and margins, particularly in the SAO segment, which is expected to continue driving growth [17][20] - The Brownfield expansion project is underway, with construction activities on schedule and on budget, expected to accelerate in the second half of FY2026 [21][22] - The company is committed to a balanced capital allocation approach, focusing on growth investments and returning cash to shareholders through dividends and share repurchases [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the high end of the fiscal year 2026 operating income guidance of $660 million to $700 million, driven by increased volume, pricing actions, and productivity [36][37] - The aerospace market is expected to see significant demand growth, with management advising customers to place orders now to avoid being last in line [33][34] - The company anticipates continued favorable pricing trends due to supply-demand imbalances in nickel-based super alloys [28][29] Other Important Information - The effective tax rate for the quarter was 15.4%, lower than anticipated, with expectations for the full fiscal year 2026 to be between 21%-23% [16] - The company generated $39.2 million in cash from operating activities but had negative adjusted free cash flow of $3.4 million due to capital expenditures [21][23] - The company repurchased $49.1 million of shares during the quarter, with a cumulative total of $151 million under its $400 million stock buyback authorization [22][23] Q&A Session Summary Question: What has happened with jet engine alloy lead times? - Lead times remain extended, with expectations for further increases in orders following recent positive news from Boeing [48][50] Question: How did fastener demand trends track in the quarter? - Fastener sales were down 7% sequentially but up 40% year-over-year, with strong order intake expected for calendar year 2026 [54][55] Question: Can you speak to the duration of the new LTAs? - The five new LTAs range from two to five years, with expectations that contract lengths will remain consistent with current levels [62] Question: What is the outlook for defense demand? - The company is seeing strong demand across various defense segments, with a focus on increasing performance through innovative alloys [65] Question: Are customers receptive to increasing order intake? - Customers are very receptive to increasing order intake, with a notable sequential increase in aerospace bookings [71][72] Question: What is the expected timeline for the Brownfield expansion project? - Construction is expected to be complete by late fiscal 2027 or early fiscal 2028, with current activities focused on site preparation [90]

Financial Data and Key Metrics Changes - The company achieved record earnings with adjusted operating income of $153 million, a 31% increase year-over-year compared to $117.2 million in Q1 FY2025 [4][15] - Adjusted operating margin for the SAO segment reached 32%, up from 26.3% a year ago and 30.5% in the previous quarter [5][6] - Earnings per diluted share was $2.43 for the quarter, marking another record for profitability [16] Business Line Data and Key Metrics Changes - SAO segment net sales excluding surcharge were $533.9 million, up 5% year-over-year but down 3% sequentially [17] - PEP segment net sales excluding surcharge were $87.2 million, down 10% sequentially and down 6% year-over-year [19] - Aerospace and defense sales were up 1% sequentially and 11% year-over-year, with engine submarket sales up 14% sequentially [9][88] Market Data and Key Metrics Changes - Aerospace and defense bookings accelerated by 23% over the previous quarter, indicating strengthening market demand [7][30] - Medical market sales were down 20% sequentially and 16% year-over-year, primarily due to volatility in medical distribution [10] - Energy market sales were down 5% sequentially but up 8% year-over-year, driven by increasing demand for power generation [11] Company Strategy and Development Direction - The company is focused on expanding profitability and margins through productivity improvements and pricing actions, particularly in the aerospace and defense sectors [12][39] - The Brownfield expansion project is underway, with construction activities on schedule and on budget, expected to accelerate in the second half of FY2026 [21][22] - The company maintains a balanced capital allocation approach, focusing on growth investments and returning cash to shareholders through dividends and share repurchases [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the high end of the fiscal year 2026 operating income guidance of $660 million to $700 million, driven by increased volume and pricing actions [36][37] - The aerospace market is expected to see significant demand growth, with OEMs ramping up production rates, which will positively impact the company's order intake [30][34] - Management noted that the pricing environment for nickel-based super alloys remains favorable, with expectations for continued price increases due to supply-demand imbalances [26][28] Other Important Information - The company generated $39.2 million in cash from operating activities but had negative adjusted free cash flow of $3.4 million due to capital expenditures [21] - The liquidity position is strong, with $556.9 million available, including $208 million in cash [23] Q&A Session Summary Question: What has happened to jet engine alloy lead times? - Lead times remain extended, with expectations for further increases in orders following positive news from Boeing [48][50] Question: Can you elaborate on the duration of the new LTAs? - The new LTAs range from two to five years, with expectations that contract lengths will remain consistent with current levels [62] Question: How are fastener demand trends tracking? - Fastener sales were down 7% sequentially but up 40% year-over-year, with strong order intake expected for calendar year 2026 [55] Question: Is there line of sight to another quarter of sequential A&D growth? - Continued growth in order intake is anticipated, although specific percentages cannot be guaranteed [80] Question: What is the outlook for the Brownfield expansion project? - Construction is expected to be complete by late FY2027 or early FY2028, with current activities focused on site preparation [90]

Financial Data and Key Metrics Changes - The company reported record earnings with adjusted operating income of $153 million, a 31% increase year-over-year compared to $117.2 million in Q1 FY2025 [4][14] - Adjusted operating margin for the SAO segment reached 32%, up from 26.3% a year ago and 30.5% in the previous quarter [5][16] - Earnings per diluted share was $2.43 for the quarter, marking another record for profitability [15] Business Line Data and Key Metrics Changes - SAO segment net sales excluding surcharge were $533.9 million, up 5% year-over-year but down 3% sequentially [16] - PEP segment net sales excluding surcharge were $87.2 million, down 10% sequentially and down 6% year-over-year [18] - Aerospace and defense sales were up 1% sequentially and 11% year-over-year, with bookings accelerating by 23% over the previous quarter [9][12] Market Data and Key Metrics Changes - The aerospace supply chain is experiencing strengthening demand, particularly in the engine submarket, which saw a 14% sequential increase in sales [9][32] - Medical market sales were down 20% sequentially and 16% year-over-year, primarily due to volatility in medical distribution [10] - Energy market sales were down 5% sequentially but up 8% year-over-year, driven by increasing demand for power generation [11] Company Strategy and Development Direction - The company is focused on expanding profitability and margins through productivity improvements and pricing actions, particularly in the aerospace and defense sectors [5][12] - The Brownfield expansion project is underway, with construction activities on schedule and on budget, expected to accelerate in the second half of FY2026 [20][21] - The company aims to maintain a balanced capital allocation approach, investing in growth while returning cash to shareholders through dividends and share repurchases [22][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the high end of the earnings guidance for FY2026, projecting operating income of $660 million to $700 million, a 26% to 33% increase over FY2025 [35][36] - The aerospace market is expected to see significant demand growth, with management noting a positive outlook from customers regarding order intake [30][34] - The company anticipates continued pricing power due to a supply-demand imbalance in nickel-based super alloys [26][39] Other Important Information - The company generated $39.2 million in cash from operating activities but reported negative adjusted free cash flow of $3.4 million due to capital expenditures [20] - Liquidity as of the latest quarter was $556.9 million, with a net debt to EBITDA ratio well below one [23] Q&A Session Summary Question: What has happened with jet engine alloy lead times? - Lead times remain extended, with expectations for further increases in orders following positive news from Boeing [44] Question: Can you elaborate on the duration of the new LTAs? - The five new LTAs range from two to five years, with expectations that contract lengths will remain consistent with current levels [52] Question: How are fastener demand trends tracking? - Fastener sales were down 7% sequentially but up 40% year-over-year, with strong order intake expected for calendar year 2026 [48] Question: Is there line of sight to another quarter of sequential A&D growth? - Continued growth in order intake is expected over the next several quarters [63] Question: What is the outlook for the Brownfield expansion project? - Construction is expected to be complete by late FY2027 or early FY2028, with current activities focused on site preparation [70]

Financial Data and Key Metrics Changes - The company reported record earnings with adjusted operating income of $153 million, a 31% increase year-over-year compared to $117.2 million in the same quarter of 2025 [5][17] - Adjusted operating margin for the SAO segment reached 32%, up from 26.3% a year ago and 30.5% in the prior quarter, marking the fifteenth consecutive quarter of margin expansion [6][21] - Earnings per diluted share was $2.43 for the quarter, representing a record quarter for profitability [20] Business Line Data and Key Metrics Changes - SAO segment net sales excluding surcharge were $533.9 million, up 5% year-over-year but down 3% sequentially due to planned maintenance [20] - PEP segment net sales excluding surcharge were $87.2 million, down 10% sequentially and down 6% year-over-year, with operating income of $9.4 million [23][24] - Aerospace and defense sales were up 1% sequentially and 11% year-over-year, with bookings accelerating by 23% sequentially [11][12] Market Data and Key Metrics Changes - The aerospace supply chain is experiencing strengthening demand, particularly in the engine submarket, which saw a 14% sequential increase in sales [11][41] - Medical end-use market sales were down 20% sequentially and 16% year-over-year, primarily due to volatility in medical distribution [12][13] - Energy end-use market sales were down 5% sequentially but up 8% year-over-year, with order intake increasing by 41% in the quarter [14] Company Strategy and Development Direction - The company is focused on expanding profitability and margins through productivity improvements and pricing actions, particularly in the SAO segment [22][48] - The brownfield expansion project is underway, with construction activities on schedule and expected to accelerate in the second half of fiscal year 2026 [26][27] - The company aims to maintain a balanced capital allocation approach, investing in growth while returning cash to shareholders through stock buybacks and dividends [49] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the full-year earnings guidance, projecting operating income of $660 million to $700 million for fiscal year 2026, representing a 26% to 33% increase over the previous year [46] - The aerospace market is expected to see significant demand increases, driven by higher build rates from OEMs like Boeing and Airbus [48][49] - Management noted that the pricing environment for nickel-based superalloys remains favorable due to supply-demand imbalances [35][36] Other Important Information - The effective tax rate for the quarter was 15.4%, lower than anticipated, with expectations for the full fiscal year to be between 21% to 23% [19] - The company generated $39.2 million in cash from operating activities but reported negative adjusted free cash flow of $3.4 million due to capital expenditures [26][28] Q&A Session Summary Question: What has happened to jet engine alloy lead times? - Lead times remain extended, with expectations for them to push out again due to recent positive developments in the Boeing supply chain [57] Question: How are fastener demand trends tracking? - Fastener sales were down 7% sequentially but up 40% year-over-year, with strong order intake expected for calendar year 2026 [63] Question: Can you elaborate on the duration of the new LTAs? - The five new LTAs range from two to five years, with expectations that contract lengths will remain consistent with current levels [68] Question: What is the outlook for defense demand? - The company is seeing strong demand across various defense segments, with a focus on increasing performance through innovative alloys [74] Question: Is there an expectation for continued growth in aerospace bookings? - Management anticipates continued growth in aerospace bookings, with a strong upward trend expected over the next several quarters [90]

Core Insights - Carpenter Technology reported a significant increase in fiscal 2026 Q1 earnings, with profit growing 40% to $2.43 per share and sales reaching $733.7 million, up 2% year-over-year [1]. Financial Performance - Fiscal 2026 Q1 profit increased by 40% to $2.43 per share [1] - Sales totaled $733.7 million, reflecting a 2% increase compared to the previous year [1] Market Position - Carpenter Technology's stock experienced a notable rise following the earnings report, indicating strong market performance [1]. - The company has achieved a Relative Strength Rating upgrade, suggesting improving technical performance [2]. Industry Recognition - Carpenter Technology's Composite Rating has climbed to 96, indicating a strong position within the industry [4].