Carpenter Technology Reports First Quarter Fiscal Year 2026 Results

Core Insights - Carpenter Technology Corporation reported record operating income of $153.3 million for the first quarter of fiscal year 2026, marking a 31% increase year-over-year and surpassing the previous record set in the fourth quarter of fiscal year 2025 [4][5][8] - The Specialty Alloys Operations (SAO) segment achieved an adjusted operating margin of 32.0%, up from 26.3% in the same quarter last year, representing the fifteenth consecutive quarterly margin increase [4][5][34] - Demand in the Aerospace and Defense end-use market accelerated, with bookings increasing 23% sequentially, reflecting a strengthening supply chain and higher build rates [4][5][43] Financial Performance - Net sales for Q1 FY2026 were $733.7 million, a 2% increase from $717.6 million in Q1 FY2025, while net sales excluding surcharge were $603.1 million, up 4% year-over-year [7][43] - Operating income for the quarter was $153.3 million, compared to $113.6 million in the prior year, with earnings per diluted share rising to $2.43 from $1.67 [8][18] - The SAO segment generated $170.7 million in operating income, a 27% increase year-over-year, while the Performance Engineered Products segment reported operating income of $9.4 million [5][24] Cash Flow and Capital Allocation - Cash generated from operating activities was $39.2 million, slightly down from $40.2 million in the same quarter last year, while adjusted free cash flow was negative $3.4 million due to increased capital expenditures related to a brownfield expansion project [9][40] - The company executed $49.1 million in share repurchases during the quarter, with a remaining authorization of $249.0 million under its $400.0 million repurchase program [10][41] Outlook - For the second quarter of fiscal year 2026, the company anticipates operating income between $152 million and $156 million, with a full-year outlook of $660 million to $700 million, representing a 26% to 33% increase over fiscal year 2025 [5][6] - The company is committed to achieving an operating income target of $765 million to $800 million for fiscal year 2027, supported by ongoing market dynamics and capacity expansions [6][10]