Financial Data and Key Metrics Changes - For Q4 FY 2025, Carpenter Technology generated $151 million in adjusted operating income, a 21% increase from FY 2024 and a 10% increase from the previous quarter [6][15][25] - The adjusted operating margin for the SAO segment reached 30.5%, up from 25.2% a year ago and 29.1% in the prior quarter [6][7][41] - The company reported $201.3 million in adjusted free cash flow for the quarter, contributing to a total of $287.5 million for the fiscal year [7][20][26] Business Line Data and Key Metrics Changes - The SAO segment achieved $167 million in operating income, a 19% year-over-year increase and a 10% sequential increase [7][17] - PEP segment net sales were $97.1 million, down 5% year-over-year but operating income improved to $11.7 million from $10.6 million a year ago [18][19] - Sales in the aerospace and defense market increased 3% sequentially and 2% year-over-year, with engine sales up 5% sequentially [8][9] Market Data and Key Metrics Changes - Sales in the energy end-use market increased 27% sequentially and 22% year-over-year, driven by demand from power generation customers [12][13] - Medical sales were up 6% sequentially but down 16% compared to the record prior year fourth quarter [11] Company Strategy and Development Direction - Carpenter Technology aims to achieve $660 million to $700 million in adjusted operating income for FY 2026, representing a 26% to 33% increase over FY 2025 [32][41] - The company is focused on expanding its brownfield capacity, with a $400 million project underway to enhance production capabilities [22][38] - The strategic focus remains on high-margin markets such as aerospace, medical, and energy, with a commitment to innovation and customer solutions [33][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand across aerospace and defense, medical, and energy markets, anticipating continued growth [13][34] - The company highlighted the importance of maintaining operational efficiency through preventive maintenance to support long-term growth [29][72] - Management noted that the supply-demand imbalance in the industry remains favorable, supporting pricing power [49][50] Other Important Information - The company ended the fiscal year with $664.4 million in total liquidity, including $315.5 million in cash [22][23] - The effective tax rate for Q4 was 19.7%, lower than anticipated due to discrete tax benefits [16] Q&A Session Summary Question: Lead times and pricing expectations - Management indicated that lead times for jet engines remain extended and pricing actions are expected to continue as a tailwind due to a significant supply-demand gap [47][49][51] Question: Initial EBIT guidance for FY 2026 - Management confirmed that the EBIT guidance was approached conservatively, ensuring a realistic target based on internal assessments [56] Question: Orders supporting aerospace and defense volume acceleration - Management noted aggressive pulls on the defense side and positive discussions with aerospace customers, indicating a potential reacceleration in volumes [58][62] Question: Urgent requests in defense versus regular orders - Management explained that defense orders are historically uneven and dependent on various factors, but recent clarity in the defense budget suggests elevated order levels [69][70] Question: Power generation revenue growth - Management confirmed significant year-over-year growth in power generation revenues, highlighting its strategic importance [65][75] Question: Further mix gains in FY 2026 - Management expects continued growth in aerospace and medical markets, with a strong focus on innovation to drive mix improvements [81][86]