Financial Data and Key Metrics Changes - The company reported record operating income of $155 million for the second quarter, a 31% increase compared to the same quarter of fiscal year 2025 [4][15] - Adjusted operating margin for the SAO segment reached 33.1%, up from 28.3% a year ago and 32% in the prior quarter [6][17] - Adjusted earnings per diluted share was $2.33 for the quarter, excluding the impact of debt refinancing [15][16] Business Line Data and Key Metrics Changes - SAO segment net sales excluding surcharge were $527.3 million, up 10% year-over-year, while PEP segment net sales were $77.2 million, down 11% sequentially and down 10% year-over-year [16][18] - SAO reported operating income of $174.6 million, a 29% increase year-over-year, while PEP reported operating income of $6.9 million [7][18] Market Data and Key Metrics Changes - Sales in the aerospace and defense end-use market were down 1% sequentially but up 15% year-over-year, with aerospace engine materials order intake up 30% sequentially [9][10] - Medical end-use market sales were down 7% sequentially and 22% year-over-year, primarily due to specific titanium product demand [11] - Energy end-use market sales were down 10% sequentially but up 19% year-over-year, driven by power generation demand [12] Company Strategy and Development Direction - The company is focused on capital allocation towards growth projects and returning cash to shareholders through share repurchases and dividends [20][21] - A brownfield capacity expansion project is underway, aimed at increasing production capacity for nickel-based superalloys [30][36] - The company anticipates continued strong demand in aerospace and defense markets, with a focus on securing long-term agreements with customers [32][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing strength of the aerospace demand environment, citing significant increases in order intake and production rates [23][25] - The company raised its fiscal year 2026 operating income guidance to $680 million-$700 million, reflecting a 30%-33% increase over the previous fiscal year [34][37] - Management noted that pricing actions will continue to be a positive tailwind due to supply-demand imbalances in the nickel-based superalloy market [33] Other Important Information - The company generated $132.2 million in cash from operating activities and expects to generate at least $280 million of adjusted free cash flow in fiscal year 2026 [20][22] - Total liquidity was reported at $730.8 million, including $231.9 million in cash [22] Q&A Session Summary Question: How broad-based is the participation of airframe customers in ordering? - Management noted increased activity across all aerospace sub-markets, with significant sequential increases in engine orders and structural customer orders coming off the sidelines [41][42] Question: What visibility is there regarding the defense sub-market orders? - Management indicated that there is pent-up demand from the defense sub-market due to previous government shutdowns, and orders are expected to come back rapidly [43][44] Question: Is pricing still trending higher? - Management confirmed that pricing remains strong, with no discounts on premium aerospace products, and expects continued upward pricing trends [45][48] Question: How did engine and fastener sales trend during the quarter? - Sales were relatively flat quarter-over-quarter, but year-over-year sales showed substantial increases across all aerospace sub-markets [83][84] Question: What is the outlook for the additive business? - Management sees potential for growth in the additive business, with improved adoption rates and increased activity from large customers [86][88]

Financial Data and Key Metrics Changes - The company reported record operating income of $155 million for Q2 FY2026, a 31% increase compared to Q2 FY2025, and slightly up from the previous quarter [5][15] - Adjusted operating margin for the SAO segment reached 33.1%, up from 28.3% a year ago and 32% in the prior quarter [6][18] - Adjusted earnings per diluted share was $2.33 for the quarter, excluding the impact of debt refinancing [16][17] Business Line Data and Key Metrics Changes - SAO segment net sales excluding surcharge were $527.3 million, up 10% year-over-year and down 1% sequentially [17][18] - PEP segment net sales excluding surcharge were $77.2 million, down 11% sequentially and down 10% year-over-year, primarily due to lower demand for titanium products [19][20] Market Data and Key Metrics Changes - Sales in the aerospace and defense in-use market were down 1% sequentially but up 15% year-over-year, with aerospace engine materials order intake up 30% sequentially [10][11] - Medical in-use market sales were down 7% sequentially and 22% year-over-year, but orthopedic and dental sub-markets remained strong [12] - Energy in-use market sales were down 10% sequentially but up 19% year-over-year, driven by power generation demand [13] Company Strategy and Development Direction - The company is focused on expanding its capacity for nickel-based superalloys, with a brownfield capacity expansion project underway [30][36] - The company aims to maintain a balanced capital allocation approach, investing in growth projects while returning cash to shareholders through dividends and share repurchases [22][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing strength of the aerospace demand environment, citing significant increases in order intake and build rates [24][26] - The company raised its operating income guidance for FY2026 to $680 million-$700 million, reflecting a 30%-33% increase over FY2025 [34] Other Important Information - The company generated $132.2 million in cash from operating activities and expects to generate at least $280 million of adjusted free cash flow in FY2026 [21][22] - The company completed a refinancing of its long-term debt, extending maturity to 2034 and reducing interest rates [23] Q&A Session Summary Question: How broad-based is the participation of airframe customers in ordering? - Management noted increased activity across all aerospace sub-markets, with significant orders from structural customers returning after previous hesitations due to Boeing's issues [39][40] Question: What visibility is there regarding the defense sub-market orders? - Management indicated that there is pent-up demand from the defense sub-market due to the government shutdown, and orders are expected to pick up rapidly [40] Question: Is pricing still trending higher? - Management confirmed that pricing remains strong, with no discounts on premium aerospace products, and expects continued upward pricing trends due to supply-demand imbalances [42][43] Question: How did engine and fastener sales trend during the quarter? - Sales were relatively flat quarter-over-quarter, but year-over-year sales showed substantial increases across all aerospace sub-markets [51] Question: What is the outlook for the additive business? - Management sees potential for growth in the additive business, with increased adoption and activity from large customers [53]

January 29, 2026 CARPENTER TECHNOLOGY CORPORATION 2 nd Quarter Fiscal Year 2026 Earnings Call © 2025 CRS Holdings, LLC. All rights reserved. Cautionary Statement Forward-looking statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected, anticipated or implied. The most significant of these uncertaint ...

Core Insights - Carpenter Technology Corporation reported a record operating income of $155.2 million for the second fiscal quarter of 2026, representing a 31% increase year-over-year [2][5][6] - The Specialty Alloys Operations (SAO) segment achieved an operating income of $174.6 million, with adjusted operating margins expanding to 33.1%, up from 28.3% in the same quarter last year [5][6][29] - The company has raised its operating income guidance for fiscal year 2026 to a range of $680 million to $700 million, indicating a 30% to 33% increase over fiscal year 2025 [5][6][7] Financial Performance - For the second quarter of fiscal year 2026, net sales reached $728.0 million, an increase of 8% from $676.9 million in the same quarter of fiscal year 2025 [8][9] - Adjusted earnings per diluted share for the quarter were reported at $2.33, compared to $1.66 in the prior year [9][38] - Cash provided from operating activities was $132.2 million, significantly higher than $67.9 million in the same quarter last year [10][44] Segment Performance - The SAO segment's operating income increased by 29% year-over-year, contributing significantly to the overall performance [6][29] - Bookings for Commercial Aerospace increased by 23% sequentially, reflecting strong demand in the Aerospace and Defense end-use market [5][6][29] - The Performance Engineered Products segment reported an operating income of $6.9 million, slightly down from $7.0 million in the previous year [29] Cash Flow and Capital Allocation - The company executed $32.1 million in share repurchases during the quarter as part of a $400 million repurchase program [7][11] - Adjusted free cash flow for the quarter was $85.9 million, up from $38.6 million in the same quarter last year [10][44] - Total liquidity at the end of the quarter was $730.8 million, consisting of $231.9 million in cash and $498.9 million in available borrowings [12]

Market Performance - U.S. stocks closed mostly lower on Friday, with the Dow Jones index falling approximately 0.2% during the session [1] - The S&P 500 decreased by 0.4% and the Dow lost 0.3% over the previous week, while the Nasdaq declined by 0.7% [1] - The Dow Jones closed at 49,359.33, down around 83 points, while the S&P 500 fell to 6,940.01 and the Nasdaq Composite slipped to 23,515.39 [1] Analyst Ratings and Insights - Benzinga's Analyst Ratings API provides high-quality stock ratings through partnerships with major sell-side banks, offering daily updates on ratings changes [3] - Analyst insights from Benzinga Pro subscribers have been shown to serve as effective trading indicators, potentially outperforming the stock market [3] - Benzinga allows users to access the latest analyst ratings, sorted by analyst accuracy, highlighting the most recent stock picks from top analysts [4] Notable Analyst Ratings - John Todaro from Stifel maintained a Buy rating on nLIGHT Inc (NASDAQ:LASR) and raised the price target from $40 to $45, anticipating a 3% upside [6] - An analyst from Freedom Capital Markets initiated coverage on Unity Software Inc (NYSE:U) with a Buy rating and a price target of $52, expecting a 27% upside [6] - UBS maintained a Buy rating on Kinross Gold Corp (NYSE:KGC) and increased the price target from $33 to $37.5, projecting an 11% gain [6] - Needham maintained a Buy rating on Hut 8 Corp (NASDAQ:HUT) with a price target of $60, expecting a 1% gain [6] - Philip Gibbs from Keybanc maintained an Overweight rating on ATI Inc (NYSE:ATI) and raised the price target from $120 to $132, forecasting a 6% increase [7]

Company Overview - ATI Inc. is a U.S. specialty materials company that focuses on high-performance metals for aerospace, defense, energy, and industrial markets [2]. Analyst Background - The analysis is conducted by Dhierin-Perkash Bechai, an aerospace, defense, and airline analyst with a background in aerospace engineering [2]. - The analyst runs The Aerospace Forum, which aims to discover investment opportunities in the aerospace, defense, and airline industries [2]. Investment Insights - The investing ideas provided by the analyst are driven by data-informed analysis, offering context to developments in the aerospace and defense industries [2]. - The investing group also provides direct access to data analytics monitors, enhancing the investment research process [2].

Core Insights - Carpenter Technology Corporation (CRS) is experiencing strong booking growth driven by robust demand, particularly in the Aerospace and Defense sectors, with shares increasing by 74.8% over the past year compared to the industry's 59.9% rise [1] Company Overview - CRS specializes in premium specialty alloys, including titanium alloys, powder metals, stainless steels, alloy steels, and tool steels, serving critical applications across various end-use markets such as Aerospace and Defense, Energy, Transportation, Medical, Industrial, and Consumer and Distribution [2] Financial Estimates - The Zacks Consensus Estimate for CRS' fiscal 2026 earnings is $10.07 per share, reflecting a 34.63% year-over-year increase, with projected revenues of $3.07 billion [3][6] - CRS has consistently beaten earnings estimates in the past four quarters and anticipates an operating income of $660-$700 million for fiscal 2026, indicating approximately 30% year-over-year growth [8] Growth Drivers - The stock price momentum is supported by strong demand in Aerospace and Defense, with significant booking growth and a favorable outlook for end-use markets [4][6] - Positive macroeconomic trends in aerospace production and demand for specialty materials have enhanced earnings, with CRS improving profitability through a focus on higher-value alloys and operational efficiencies [8] Strategic Developments - CRS is enhancing growth prospects through its Carpenter Electrification brands in soft magnetics solutions and has expanded its additive manufacturing capabilities by constructing a technology center in Athens, AL, and acquiring CalRam and Puris [9] Challenges - Labor constraints and supply chain interruptions are ongoing challenges, affecting production schedules and lead times, particularly in the oil and gas submarket due to decreased drilling activity and geopolitical unrest [11] - CRS trades at a forward price-to-sales ratio of 4.86X, significantly above the industry average of 1.48X, indicating potential valuation concerns [12]

Core Viewpoint - Growth investors are increasingly focused on stocks with above-average financial growth, but identifying stocks that can sustain their growth potential is challenging [1] Group 1: Company Overview - Carpenter Technology (CRS) is identified as a promising growth stock, supported by a favorable Growth Score and a top Zacks Rank [2] - The company specializes in stainless steels and special alloys, making it a strong candidate for growth investment [3] Group 2: Earnings Growth - Carpenter's historical EPS growth rate stands at 182.1%, with projected EPS growth of 34.7% for the current year, significantly surpassing the industry average of 21.9% [4] Group 3: Cash Flow Growth - The year-over-year cash flow growth for Carpenter is 33.8%, which is notably higher than the industry average of -25.7% [5] - Over the past 3-5 years, Carpenter's annualized cash flow growth rate has been 14.3%, compared to the industry average of 13.4% [6] Group 4: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Carpenter, with the Zacks Consensus Estimate for the current year increasing by 0.2% over the past month [7] Group 5: Investment Potential - Carpenter has achieved a Growth Score of B and a Zacks Rank of 2, indicating it is a potential outperformer and a solid choice for growth investors [9]

Group 1 - ATI has scheduled a live webcast for its fourth quarter and full year 2025 earnings conference call on February 3, 2026, at 7:30 a.m. CT [1] - The earnings results will be published prior to the call at 6:30 a.m. CT [1] - The conference call will be accessible via ATImaterials.com, where presentation slides will also be available [2] Group 2 - ATI is a global producer of high-performance materials and solutions for aerospace, defense, electronics, medical, and specialty energy markets [3] - The company focuses on solving complex challenges through materials science and partners with customers to enhance their product performance [3] - ATI emphasizes its commitment to innovation and proprietary process technologies to deliver materials for challenging environments [3]

Group 1 - Market momentum may be shifting as investors are sensing the threat of a possible AI bubble and are seeking companies with strong fundamentals over more speculative plays [3] - A new set of upgrades from analysts highlights three companies: Carpenter Technology Corp. (NYSE: CRS), Booking Holdings Inc. (NASDAQ: BKNG), and Allegheny Technologies Inc. (NYSE: ATI), providing a diversified list of names that may withstand market uncertainty [4] - Carpenter Technology focuses on specialty metals used in aerospace, defense, energy, and medical sectors, and has a valuable niche in producing superalloys relied upon by aerospace manufacturing clients [5] Group 2 - Carpenter Technology is exposed to vulnerabilities in the aerospace and defense industries, but benefits when these sectors thrive, with analysts expecting more than 20% upside in the near term due to higher engine production and increased defense demand [6] - Carpenter's first-quarter fiscal 2026 earnings report showed a solid EPS beat by 30 cents, with record adjusted operating income driven by favorable pricing and productivity gains [7] - The company has negotiated multiple long-term agreements with major price increases, locking in its fundamental strength for future quarters, leading to a flurry of analyst upgrades and raised price targets [7] Group 3 - Recent ratings upgrades by analysts indicate strong fundamentals for Carpenter Technology and Allegheny Technologies, both closely tied to the thriving aerospace and defense industries [8] - Booking Holdings has attracted investor attention due to its climbing top and bottom lines despite facing industry headwinds [8]