CRS

Carpenter Technology just dropped its Q1 FY2027 scorecard and the share price reaction was brutal. The stock closed on Thursday, then fell about 21% to US$292.26 on Friday, even as the company reported diluted EPS of about US$3.25 and record first quarter operating income of US$196.4 million. Traders focused on the sharp move in the chart. The fundamental picture pointed to thick profitability, with steel and alloys operations posting a 37.7% adjusted operating margin that most industrial businesses would envy. Love Carpenter Technology's fat 37.7% adjusted operating margin but concerned about how violently the price can swing around earnings days? Check out the 30 resilient stocks with low risk scores for a basket of businesses that pair strong fundamentals with calmer trading profiles. - Revenue (Q1 2027 vs Q1 2026): US$798.2 million vs. US$733.7 million (up about 8.8%) - Net Income (Q1 2027 vs Q1 2026): US$162.5 million vs. US$122.5 million (up about 32.7%) - Basic EPS (Q1 2027 vs Q1 2026): US$3.26 vs. US$2.45 (up about 33.5%) - SAO Adjusted Operating Margin (Q1 2027): 37.7% for steel and alloys operations, described by Carpenter Technology as a record level for the segment Earnings tell you how Carpenter Technology performed in the quarter, but investors who care about what they are paying for the business tend to focus on cash flows. Based on Carpenter Technology's cash flows alone, the stock could be a whopping 42% undervalued. The upbeat storyline argues that Carpenter Technology can convert strong aerospace demand and tight superalloy supply into years of higher volumes, rich profitability and efficient capacity additions. "The brownfield capacity expansion project, which management reports is on budget and on schedule, together with identified pockets of unused capacity in certain aerospace submarkets, gives Carpenter Technology room to add tonnage without a new greenfield build." Q1 results align with that goal. Management again described the expansion as on budget and on schedule for an FY2028 start. SAO margins held at a record 37.7% even with extra maintenance, which indicates productivity gains that support the idea of profitable incremental tonnage once that new capacity is available. The price and this Narrative do not agree. → Uncover what this Narrative says Carpenter Technology is actually worth. The key worry is that Carpenter Technology is leaning too hard on one volatile corner of aerospace and power markets. "The focus on nickel based superalloys and industrial gas turbine materials serving growing power needs from data centers increases concentration in a supply chain that can show lumpy ordering patterns, which may lead to greater earnings volatility even as capacity and fixed costs rise." Q1 results do not fully back that concern yet. SAO margins held at 37.7% despite heavier maintenance, and management still points to tight nickel superalloy supply and firm pricing. The share price drop of about 21% in a day shows investors are already treating that concentration risk as real, even though earnings remain strong in this print. Carpenter Technology reports highlight how earnings reactions and share price moves can diverge. The real opportunity sits in finding stocks that could be undervalued before the market closes that gap. - Company 1 - 27% below our estimate - enable high power AI racks to shift from air to closed loop liquid cooling that cuts water use. - Company 2 - 35% below our estimate - expand a consolidated offshore vessel fleet as limited newbuilds and aging laid up ships constrain available capacity. - Company 3 - 24% below our estimate - tie productivity software, cloud infrastructure and AI services into a metered platform capturing enterprise computing spending. That is three of the list. See all 30 potentially undervalued companies → This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include CRS. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Carpenter Technology Corporation CRS emphasized accelerating aerospace demand, stronger pricing opportunities and confidence in its long-term profit targets during its first-quarter fiscal 2027 earnings call. Management maintained its outlook despite planned maintenance downtime and uneven defense orders. The company reported earnings of $3.25 per share, surpassing the Zacks Consensus Estimate of $2.97. Revenues of $798.2 million missed the Zacks Consensus Estimate of $807.8 million by 1.2%. However, revenues increased 8.8% year over year. Carpenter Technology Corporation price-consensus-eps-surprise-chart | Carpenter Technology Corporation Quote CRS Sees Aerospace Bookings Accelerate Chairman and CEO Tony Thene highlighted strengthening commercial aerospace demand, with supply-chain bookings increasing 25% year over year. Bookings in aerospace structural and distribution markets rose 23% sequentially and 49% year over year. Aerospace engine bookings advanced 10% sequentially and 22% annually. Thene emphasized that several customers are ordering below levels needed to support current aircraft production rates. He expects additional orders as manufacturers increase production and distributors replenish declining inventories. Carpenter Expects Continued Pricing Gains Thene described pricing as a significant earnings driver, supported by increasing demand and constrained nickel superalloy capacity. Management completed two significant aerospace long-term agreements during the quarter at higher prices. Additional agreements under negotiation offer further pricing opportunities. Responding to Deutsche Bank, Thene clarified that renewed agreements primarily involve existing customers requesting higher volumes. He indicated that market-share percentages should remain relatively stable, with contractual growth driven by greater material requirements. CRS Maintains Strong Profit Outlook Chief Financial Officer Tim Lain projected second-quarter fiscal 2027 operating income of $192 million to $197 million, representing anticipated year-over-year growth of 24% to 27%. Management maintained its fiscal 2027 operating income outlook of $850 million to $880 million and its fiscal 2029 target of $1.2 billion to $1.3 billion. During JPMorgan's questioning, Thene identified potential upside from volume, productivity and pricing compared with the assumptions underlying the fiscal 2027 guidance. He emphasized that confidence in the company's financial targets had strengthened since the previous quarter. Carpenter Defends Margins Amid Maintenance Carpenter's Specialty Alloys Operations segment recorded an adjusted operating margin excluding surcharge revenue of 37.7%, compared with 32% a year earlier. Segment operating income reached $216.3 million, increasing 27% year over year despite planned preventive maintenance and fewer available production days. Responding to TD Cowen, Thene explained that productivity improvements across multiple manufacturing processes helped offset downtime. Management anticipates additional margin expansion as volumes and pricing improve, although quarterly product mix could create fluctuations. CRS Addresses Defense Orders and Cash Flow Thene acknowledged weaker defense bookings despite substantial underlying material demand. Funding uncertainties have prevented supply-chain customers from placing orders consistent with anticipated military requirements. During discussions with JonesTrading, he explained that greater budget clarity could trigger a significant increase in material orders. Management continues engaging with defense manufacturers preparing for future programs. Lain reported negative quarterly free cash flow of $24.8 million, reflecting capital expenditures and working capital requirements. He maintained the fiscal 2027 free cash flow forecast of $400 million to $430 million, expecting cash generation to strengthen later in the year. Carpenter Prioritizes Capacity and Shareholder Returns Management reiterated its commitment to expanding manufacturing capacity while maintaining shareholder distributions. The brownfield expansion remains on schedule and within budget, with operations expected to begin in early fiscal 2028. Carpenter repurchased $133.9 million of shares during the quarter and continued paying its quarterly dividend. Its new $1 billion repurchase authorization supports additional capital returns. Thene maintained a confident outlook centered on operational execution. Increasing aerospace demand, improved productivity and favorable contract pricing remain central to the company's long-term growth strategy. Zacks Rank and Style Scores Signal Mixed Prospects CRS currently carries a Zacks Rank #2 (Buy), reflecting favorable earnings estimate revision characteristics. Its Growth Score of B indicates attractive growth attributes, while its Value Score of D points to weaker relative valuation characteristics. The Momentum Score of C reflects a more moderate momentum profile. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. The stock's VGM Score of C indicates a middle-range combined assessment of value, growth and momentum. Although its Zacks Rank indicates favorable near-term performance potential, the mixed Style Scores provide a more measured assessment. The Zacks Rank can change as analysts revise earnings estimates following the latest quarterly results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Carpenter Technology Corporation (CRS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Achieved record first-quarter operating income despite planned maintenance outages, driven by disciplined mix management and sustained pricing realization. - Maintained SAO segment margins at 37.7% through productivity gains that offset the impact of fewer operating days and increased preventive maintenance activity. - Identified a significant disconnect in the defense submarket where underlying demand is high, but direct customer ordering is currently constrained by federal funding delays. - Observed that current aerospace supply chain ordering levels do not yet support existing OEM build rates, suggesting a mandatory future increase in booking activity. - Leveraged a widening supply-demand gap in nickel superalloys to maintain elevated pricing power across both long-term agreements (LTAs) and spot business. - Attributed sequential sales declines entirely to planned facility downtime, noting that commercial aerospace sales still reached their second-highest level on record. - Projecting a 20%-plus operating income CAGR through fiscal year 2029, with management actively developing plans to overachieve current targets. - Anticipating a 'rush for material' in the defense sector following the midterm elections once budget clarity enables customers to release pent-up demand. - Scheduled the brownfield capacity expansion project for completion by the start of fiscal year 2028, which will serve as a primary accelerator for volume growth. - Expecting continued margin expansion as higher volumes across fixed assets improve utilization and new, higher-priced LTAs begin to flow through the P&L. - Forecasting fiscal year 2027 free cash flow between $400 million and $430 million, supported by working capital normalization in the second half of the year. - Completed the prior $400 million share repurchase authorization and initiated buying under a new $1 billion program, signaling confidence in intrinsic value. - Noted that the FAA approval of the Boeing 737 MAX 10 serves as a strategic accelerant for the structural and distribution supply chain. - Reported that capital expenditures remain elevated due to the brownfield expansion, though the project remains strictly on budget and on schedule. - Acknowledged negative market sentiment regarding aerospace macro factors but countered with data showing 14% quarter-over-quarter growth in air traffic. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management stated their conviction in long-term targets has strengthened since last quarter due to improved outlooks for demand, pricing, and productivity. - Confirmed that the demand environment for nickel superalloys is accelerating rather than just remaining stable. - Customers are reporting decreasing inventory levels, which correlates with the 23% sequential increase in bookings for these submarkets. - Management expects bookings must continue to rise significantly to align with projected aircraft build rates of 2,100+ units. - Recent LTA renewals have been secured at higher prices; management noted it would be 'illogical' for prices to decline given the capacity constraints. - Volume commitments in new contracts are significantly higher, though market share percentages remain relatively stable among the few major players. - The company is utilizing AI to identify and resolve manufacturing bottlenecks faster and in greater quantity than originally planned. - Productivity gains are essential to maintaining record margins during quarters with high maintenance activity and fewer operating days.

Image source: The Motley Fool. Thu, Oct. 22, 2026 - Vice President, Investor Relations - John Huyette - Chairman and Chief Executive Officer - Tony R. Thene - Senior Vice President and Chief Financial Officer - Timothy Lain Operator: Hello everyone. Thank you for joining us and welcome to the Carpenter Technology's first Quarter Full Year 27 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question. To withdraw your question, press 1 again. I will now hand the conference over to John Huyette, Vice President, Investor Relations. Please go ahead. John Huyette: Thank you, operator. Good morning, everyone, and welcome to the Carpenter Technology Earnings Conference Call. For the fiscal 27 first quarter ended September 30, 2026. This call is also being broadcast over the Internet along with presentation slides. For those of you listening by phone, you may experience a time delay in slide movement. Speakers on the call today are Tony R. Thene, Chairman and Chief Executive Officer and Timothy Lain, Senior Vice President and Chief Financial Officer. Statements made by management during this earnings presentation that are forward looking statements are based on current expectations. Risk factors that could cause actual results to differ materially from these forward looking statements can be found in Carpenter Technology's most recent SEC filings including the company's report on Form 10-K for the year ended 06/30/2026, and the exhibits attached to that filing. Please also note that in the following discussion, unless otherwise noted, when management discuss the sales or revenue, that reference excludes surcharge. When referring to operating margins, that is based on adjusted operating income, excluding special items, and sales, excluding surcharge. I will now turn the call over to Tony. Tony R. Thene: Thank you, John, and good morning to everyone. I will start on Slide 4 with a review of our safety performance. We ended the first quarter with a total case incident rate of 1.7. We continue to invest in programs for employees. With a focus on identifying potential risks and minimizing the severity of injuries. With our focus on leading indicators, we expect to see continued progress on our ultimate goal. a zero-injury workplace. Let's turn to Slide 5 for an overview of our first quarter performance. Our first quarter performance was a solid start to fiscal year 2027. The quarter's primary talking points fit into a tight, simple narrative. 1, record first quarter operating income. up 28% over the first quarter of last year. The record results were driven by productivity improvement disciplined mix management and continued realization of pricing actions. 2, SAO segment adjusted operating margin matched the record from last quarter. at 37.7%. This is an impressive feat with fewer operating days and increased preventive maintenance activity versus last quarter. And to be clear, we do not view this margin level as the peak. As we expect strengthening demand productivity and pricing actions to drive us to higher levels. 3, bookings continue to increase. Specifically, our bookings for customers in the commercial aerospace supply chain were up again sequentially, and up 25% year over year. Importantly, the most talked about aerospace submarkets distribution and structural, were up 23% sequentially and 49% year-over-year. And aerospace engine bookings continue to increase sequentially. it is important to note that we and many others believe the industry is just at the beginning of this super cycle. With even stronger demand anticipated in the coming quarters of fiscal year 2027 and beyond. that is an extra data point. We have numerous customers who have confirmed that they are ordering at a level that does not even support current aerospace OEM build rates. Let alone the projected future build rate increases industry is planning for. This is an important point because it supports the fact that bookings will need to continue to increase significantly in the near future to support demand. 4, pricing continues to be a tailwind. Restricting demand and an expanding supply demand gap for nickel superalloys our pricing for both LTA and non LTA business remains elevated and consistently increasing. 5, strong financial targets for fiscal year 2027 and 2029. That we are focused on overachieving. More on that on my closing slide. That is the summary of the quarter's performance and current state of the business. All 5 primary areas of interest for our shareholders are currently flashing green and exhibit clear positive signals. Consistent record operating income performance strong operating margins with levers to expand further, accelerating demand across key end use markets continuing benefit from pricing actions, and an industry leading financial outlook with opportunity to overachieve. Let me turn to Slide 6 and a closer look at first quarter sales and market conditions. The first quarter of fiscal year 2027, our total sales, excluding raw material surcharge, were down 7% sequentially and up 5% year over year. As expected, the sequential sales decline was driven by the planned maintenance outages we discussed on the last earnings call. I will focus my comments today on the aerospace and defense end use market as it accounts for the majority of our sales. Sales in the aerospace and defense end use market were down 5% sequentially. And up 10% year over year. Again, this sequential decline was expected and reflects the impact of our planned maintenance outages. For more submarket sales detail, I will share the following. Aero engine sales sequential change was a bit better than the overall aerospace and defense average. Aerospace fasteners was a bit worse although it was the second highest sales quarter on record. Second only to the previous quarter. Aerospace, structural, and distribution submarkets was roughly flat to a strong previous quarter. And the defense submarket was down sequentially due primarily to lack of clear funding. I will talk more about this a bit later. It is important to note that at a time when the aerospace market is still only in the early stages of a large ramp, And during a quarter where we had significant plant outages, we posted our second highest quarter of commercial aerospace sales on record. And delivered a record first quarter operating income. As we build on this strong quarterly performance, let me provide you with some color on how we see the near term future unfolding how current bookings are taking shape, and what our customers are telling us right now. Some have worried that macro events like the Iran conflict increasing jet fuel prices, and rising ticket prices will dampen travel demand and thus the overall aerospace industry. But to date, the industry has been resilient as airlines are still reporting strong demand and air traffic is up 14% quarter over quarter. MRO activity is expected to continue to grow due to the overall demand environment along with the large number of engines approaching their first shop visits. Airbus and Boeing continue to ramp production. With backlogs now over 16 thousand planes, that is more than 10 years of production. The industry is projecting approximately 1.4 thousand to 1.5 thousand new airplane builds in calendar year 2026. And they want to go higher with target rates above 2.1 thousand. that is a 50% increase above the current year rate. Repeat a 50% increase above the current year rate. So, clearly, we are still in the early stages of this ramp. With significant growth ahead of us. We do not have any customers talking to us about slowing down or about concerns over aerospace market growth in the future. Discussions are only about what pace of growth they will realize. A key development this week was the FAA approving the Boeing 737 MAX 10. This model is strategically important. Since it is the largest 37 variant and roughly 30% of Boeing's backlog. This provides another positive accelerant to the demand signal for the aerospace supply chain as production of this model ramps. Our quarterly bookings or order intake rate is an important indicator of the expanding growth. As I mentioned earlier, the aerospace distribution and structural submarket bookings were up 23% sequentially and 49% year-over-year. Our aerospace distribution customers in general are reporting that their backlogs are growing with incoming bookings exceeding billings. Their confidence is growing, and they see solid double digit growth in calendar year 2027 and even higher growth rates in calendar year 2028. Our aerospace engine bookings continue to increase, up 10% sequentially and 22% year-over-year. Our aerospace engine customers remain very busy and their demand outlooks for calendar years 2027 and 2028 continue to strengthen as OEMs increase ordering activity. In addition, we are receiving emergency orders in this submarket. And we expect those to increase as the supply chain ramps and the need for reliable material supply becomes even more critical. Aerospace faster bookings were down sequentially as it is normal for quarterly bookings to be inconsistent in this submarket. Our aerospace fastener customers continue to tell us that their activity has not yet fully caught up to current aircraft build rates. Supporting further growth as ordering catches up with underlying demand. Turning last to the defense submarket. Where we see a stark contrast between in demand and our direct customer behavior. Bookings were down on a sequential and year over year basis. The disconnect between demand and supply chain activity is driven by funding challenges as our direct customers are not seeing the flow of funds required to place orders aligned with the Department of War needs. Given our position as a critical supplier across multiple defense programs, such as the next generation fixed wing, rotary craft, and missiles and munitions platforms, we have seen a significant uptick in direct engagement from the Department of War and OEMs as customers prepare for future needs. As an example, over the last quarter, the Navy selected Boeing to build its next generation FA XX fighter. We are already engaged with the supply chain on the design of critical elements for this fighter. And Carpenter Technology will support critical applications and have meaningful material content. On this platform. Overall, the message is crystal clear. The defense industry will need significantly more material to support their goals. We, along with the industry, anticipate greater clarity post the midterm elections. Once budgets can be clarified, we anticipate a rush for material with significant emergency orders driving significant growth in this submarket. It is clear from my comments that the key demand indicators including higher bookings, growing customer backlogs and increasing urgency for material. All point toward continued demand acceleration across our highest value end use markets. And in this accelerating demand environment, we remain focused on execution to realize the high margin high growth profit opportunity ahead of us. I will take a closer look at our outlook on the last slide. But first, I will turn it over to Timothy for a review of the financials. Timothy Lain: Tony. Morning, everyone. Starting with the income statement summary, on Slide 8. Net sales excluding surcharge increased 5% year over year and declined 7% sequentially. The sequential decline primarily reflected planned first quarter downtime for preventative maintenance as we discussed last quarter. Improved productivity, products mix optimization efforts, and pricing actions partially offset the impact of reduced operating time. Gross profit was $256.3 million up 18% year over year and down 5% sequentially. Selling, general and administrative, or SG and A expenses, $59.9 million, down $3.2 million year over year and down $2.1 million sequentially. Primarily due to lower variable compensation accruals. SG and A includes corporate costs of $26.1 million compared with $28.5 million in the fourth quarter of fiscal year 26, and $26.6 million in the first quarter of fiscal year 26. We expect second quarter fiscal year 27 corporate costs of approximately $28 million to $29 million Operating income was $196.4 million up 28% year over year and down 5% sequentially. As Tony noted, this was a first quarter record and provides a strong foundation for the rest of fiscal year 27. Our effective tax rate was 15.5%, similar to the first quarter of fiscal 26 reflecting tax benefits associated with the vesting of certain equity awards. For fiscal year 27, we expect the effect effective tax rate will be near the low end of our previously provided range of 20% to 22%. Diluted earnings per share for the first quarter were $3.25 Turning to our segment results, starting with SAO on Slide 9. First quarter net sales excluding surcharge were $573.5 million James increased 7% year over year and declined 6% sequentially. The sequential decline reflected planned preventive maintenance downtime across our facilities partially offset by mix management and pricing benefits. SAO's adjusted operating margin was 37.7%, consistent with the prior quarter's record. This is an impressive result given the lower available operating time that we typically see in our first fiscal quarter as a result of maintenance activities. From a trend perspective, we expect further margin expansion from productivity, mix and pricing. That said, margin may vary quarter by quarter depending on the mix of products that we ship in any given quarter. SEO reported first quarter operating income of $216.3 million For the second quarter of fiscal 27, we expect SAO operating income of $214 million to $218 million in line with the first quarter. Our outlook reflects reduced production time during the holidays. As in prior years, we expect improved productivity and product mix optimization to partially offset the reduction in operating time. Turning to PEP on Slide 10. First quarter fiscal year 27 net sales, excluding surcharge, were $83 million down 5% year over year and 15% sequentially. Operating income was $7.3 million slightly above our guidance compared with $7.1 million in the fourth quarter of fiscal year 26 and $9.4 million a year ago. The year over year decline primarily reflected lower titanium sales into the medical end use market offset by strength in our additive business. We expect second quarter PEP operating income to be similar to the first quarter. Before turning to cash flow, let me summarize our second quarter fiscal year 27 operating income outlook. We expect total operating income $192 million to $197 million which is largely in line with our strong first quarter results and implies growth of 24% to 27% compared to last year's second fiscal quarter. The total operating income estimate is comprised of SAO operating income of $214 million to $218 million, PEP operating income of approximately $7 million and corporate costs of approximately $28 million to $29 million. Turning to Slide 11 and our cash generation and capital allocation priorities. In the first quarter of fiscal year 27, we generated $52.8 million of cash from operations. And spent $77.7 million in capital expenditures that resulted in negative free cash flow for the quarter of $24.8 million Significant cash generation is an important element of our ongoing growth story. We continue to focus our efforts on ensuring cash generation from increasing profitability, as well as focused discipline on working capital management. As expected, capital spending remains elevated as we continue to fund our brownfield capacity expansion project. A brief update on our brownfield project. The expansion project remains on budget and on schedule for completion by the start of fiscal year 28. Site activities are progressing well. Major equipment installation underway. The project team remains focused on safely completing construction and equipment installation while preparing for a successful operational start up. As we move through this year, we continue to anticipate generating between $400 million and $430 million of free cash flow in fiscal year 27, which is an impressive outlook given that includes the elevated capital spending related to our capacity expansion investments. The cash generation enabled our balanced capital allocation approach. That combines investing in attractive accretive growth projects including the brownfield capacity expansion, with returning cash to shareholders. That is demonstrated by $133.9 million of share repurchases during the quarter. As announced in August, these repurchases completed the prior $400 million authorization as well as purchases under the newly authorized additional $1 billion program. We also continued paying our long standing quarterly dividend. Our strong balance sheet and liquidity support our capital allocation priorities. At quarter end, total liquidity was $658.6 million comprised of $159.5 million in cash and $499.1 million in available borrowings under our credit facility. Our credit metrics remain very strong with net debt to EBITDA of 0.6x. And our capital structure is well positioned to allow significant flexibility with no debt maturities until 2034. Again, believe our strong balance sheet solid capital structure and outlook for significant cash generation positions us well to continue to invest in future growth as well as return significant cash to shareholders. With that, I will turn the call back to Tony. Tony R. Thene: Thanks, Timothy. As I mentioned in my earlier comments, the quarterly performance can be summarized into a tight positive narrative. Consistent record operating income performance. Strong operating margins, with levers to expand further, accelerating demand across key end use markets, and continuing benefit from pricing actions. I also noted an industry leading financial outlook. For fiscal year 2027, we communicated strong financial targets just last quarter. But we are clearly focused on overachieving. And are developing action plans to make that a reality. In fiscal year 2028, our brownfield capacity expansion project comes online. Providing an additional accelerator to our earnings growth profile. And by fiscal year 2029, we expect operating income to reach approximately $1.2 billion to $1.3 billion that is a 20%-plus CAGR over 3 years. A rate that we believe exceeds most in the industry. But, again, our goal is to overachieve. And we do not view fiscal year 2029 as the peak of our earnings power. Altogether, we believe Carpenter Technology offers a uniquely long term investment opportunity. We are operating in an accelerating demand environment. Across many of the most attractive end use markets in the world. And not only is demand accelerating, but the platforms that serve that demand airplanes, medical implants, power generation, semiconductor fabrication. None of them can be built without Carpenter Technology. As a result, we have a clear path to significant earnings growth in the years ahead. Our strong and growing margin profile reflects the fact that our portfolio consists of highly specialized solutions. Serving critical applications where performance matters, qualification cycles are long, and the barriers to entry are significant. And our strong balance sheet and growing cash flow generation provide us with the flexibility to maintain a balanced and disciplined approach to capital allocation. Investing in profitable growth opportunities, and returning cash to shareholders. We remain committed to creating a meaningful long term value for shareholders through disciplined execution, continuous improvement, and profitable growth. Thank you for your time and continued confidence in Carpenter Technology. Operator: We will now begin the question and answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the q and a roster. Your first question from Andre Madrid. With US Bancorp BTIG. Your line is now open. Please go ahead. Andre Madrid: Yep. Thanks. Good morning. I appreciate you taking my question. You know, looking at it, I. As you mentioned, maintenance as being maybe 1 of the reasons that Q1 is a little weaker, but it seemed like some of that was already contemplated in your Q1 outlook. So I am just trying to better understand maybe what are some of the other puts and takes I might have driven the, the missed Well, I think there are no other puts and takes. Tony R. Thene: Mean, the result was about 98% to 99% of the guidance that we gave. So you are only talking about a couple million dollars, Andre, and that could come down to 1 customer unable to arrange a truck to be shipped on the last day of the quarter. that is how small this is what you are talking about. So I do not have a long list of items. We effectively came in at our guidance. Operator: Your next question from Gautam Khanna. With TD Cowen. Your mic is now open. Please go ahead. Gautam Khanna: Hey, guys. And I apologize. I missed the front of the call. it is the earnings day. But Tony, I just want. It sounded like nothing has changed in the demand environment. Nothing has changed in the pricing environment. And that your conviction in the 2027 through 2029 outlook is unchanged. Right? I just wanna make sure that was clear. Tony R. Thene: Yeah. Well, good morning, Gautam. Hi. It is changed. I mean, it is stronger. My outlook on demand is stronger than it was a quarter ago. My outlook on pricing is stronger. Than it was a quarter ago, and my confidence in 2027 and 2029 is stronger. Than it was a quarter ago a quarter ago. So it has changed. To the positive. Okay. Gautam Khanna: And can you talk a little bit about productivity and kind of income? I know we do not have the tonnage disclosures, which is fine. I just. I am curious, like, anything directionally on capacity unlock, the ability to drive more throughput? In the first quarter and then as we move through the year. Like what you guys are expecting in terms of the ability to unlock. Because you are you are 27 all out at this point. I am just curious what I am. Tony R. Thene: No. it is a good question. I think it is that is a good question. it is probably 1 of the most important questions. it is across the board, so there is not 1 item. I cannot just work on 1 item. We are working on multiple areas of the plan. And as you well know, when you unlock 1 bottleneck, by definition, that creates another 1. That you go work. Right? And you try to link them all together. So it was across the board. I mean, for SAO, to do 0.1 percentage point less than the record last quarter. With less operating days and significantly more maintenance activity you have to have that increased productivity to be able to maintain that. I mean, that is actually an unbelievable level to be at that 37.7% in a month like we had. So very happy with what is going on out on the shop floor. But not satisfied. Of course, there is there is a next level and a level after that we can get to. And I would just say this. As you look and you get into Q3 and Q4, the demand signals that are out there that is going to be even more tailwinds to push this margin percentage up. You are going to significantly more volume coming across the assets. And the price is going to continue to increase. Quarter over quarter. that is very helpful. Gautam Khanna: Tony, also, just if you could remind us on seasonal maintenance. You guys have been very proactive on doing pulling in maintenance throughout. Mhmm. But obviously, the September quarter has just a heavier load on that front. Is that unique to the quarter? And then just as we move forward, is there any perturbations you can call out now that we should be aware of? Whether it is maintenance or other things? Tony R. Thene: Yeah. Yeah. Thank you. The key is it is nothing special about the first quarter. that is just when we usually set up our maintenance schedules, and it usually got them is not 1 large piece of equipment out for a long period of time. Just cannot afford that in today's demand environment. So what you have are a lot of smaller maintenance projects all hooked together, and that is what you saw in the first quarter. You are gonna continue to see that type of preventive maintenance throughout the year. My guess right now is none of those events will be as large as the 1 you saw in Q1. That makes sense. Gautam Khanna: And just given the stock is acting kind of odd as many aerospace stocks these days. How do you prioritize capital allocation from here? Obviously, you guys have been doing buybacks. Just how do you think the board will respond to those? Tony R. Thene: Well, without being too exact, I agree with you. I think right now, you know, there is a major negative sentiment that is emerged over the last couple months in the aerospace market. I cannot really speak to that, Gautam, because I have not found 1 person that can explain exactly to me what they are negative on. And my guess is you probably would not be able to explain that to me either. But I think my prepared remarks set out a pretty strong near term future, let alone FY 2027 near term positive future. With that said, specifically answer your question, going to continue to fund the brownfield. And certainly at these levels, we are we are. We will remain active in the repurchase program. Thanks a lot, Tony. Appreciate it. Yeah. Thanks, Gautam. Stay well. Operator: Your next question from Scott Deuschle with Deutsche Bank. Your line is now open. Please go ahead. Scott Deuschle: Hi, good morning. Tony, can you provide an update on where the backlog stands today relative to the start of the calendar year? Tony R. Thene: Without giving specific numbers, Scott. It is continuing to increase. Across all of our end use more. Scott Deuschle: And then have you placed much of the brownfield capacity on contract at this point, or are you still waiting contract that out? Tony R. Thene: Well, we do not we do not contract out specific pieces of equipment. So if you look at the demand profile going forward, that volume will be absorbed immediately as it comes online. Okay. And then last question is coming on It will be absorbed by our current-- sorry. It will be absorbed by our current LTAs. Right? All of our LTAs, they will be wanting more material. So that is not a. I do not contract out specific equipment to specific customers. Right. Okay. Scott Deuschle: And then I guess maybe on that point, can you comment on the share position that you have been securing on new aerospace LTAs and how that share position is or is not changing relative to the contracts that they are replacing and renewing? Tony R. Thene: Well, I can tell you this. All of them are higher. Every 1 of the customers that we dealing with, and we just we just completed 2 aerospace significant aerospace LTAs this past quarter, the first quarter. And, every customer to a T wants more material. Scott Deuschle: Is the share percentage higher, or is the volume commitment is higher? Tony R. Thene: Well, I know which 1 comes first. Right? I mean, the volume is higher. Right? there is only a couple players in the market. And, they are gonna need all that material. So I mean, the volume is significantly higher. The shares are probably gonna remain pretty well the same. there is not a share gain battle going on. Okay. Scott Deuschle: Thank you very much. Operator: Your next question from the line of Joshua Sullivan with JonesTrading. Your line is now open. Please go ahead. Joshua Sullivan: Hey. Good morning. Good morning, John. The struck the structural distribution market, what is your sense of their inventory levels? Are there any you can share with us relative to current or projected build rates? Just trying to get a sense of know, as you see this order flow, know, what their restocking know, cycle kind of looks like or from your perspective here. Tony R. Thene: Well, Joshua, I will tell you this, that the majority, if not all of the customers in that submarket are reporting decreasing inventories. And that aligns then very. Now all of them will be at different points in time. Right? I am not suggesting that every customer is the same. But they are for the most part, all reporting decreasing inventories, and that is the direct correlation to seeing the increased bookings. I think the good news is that those bookings are going to have to continue to increase significantly, as I said in my remarks. There is no choice when it comes to that. So I think going forward over the next couple quarters, a very positive outlook when it comes to the. Those 2 submarkets. Joshua Sullivan: Then and then guess in another submarket on the defense market, just given the impetus to restock various inventories. And I think, you know, you had talked a little bit about emergent demand, but what does that more urgent order flow look like near term? Tony R. Thene: Well, I was not being you know. I was not exaggerating. I said that I thought there would be a rush of material orders once there is some type of clarity around the budget. And I say that because of the discussions that we have with the Department of War, whether that be with the Navy, the Air Force, the Army, that demand is significant. The real issue is that the Department of War does not place orders. there is multiple companies in the supply chain that place those orders. And they do not have that funds flow to be able to do it. there is not 1 person in the defense supply chain that does not believe they should be placing orders right now. But the way that the budget works, that is just not possible for them to do right now. Once that clears up, I think saying that there will be a rush on orders will be an understatement. Joshua Sullivan: Got it. Thank you for the time. Tony R. Thene: Thank you, sir. Operator: Your next question from the line of Bennett Moore with JPMorgan. Your line is now open. Please go ahead. Bennett Moore: Good morning, Tony, Timothy. Thank you for taking my question. Wanted to it is great to see the bookings continue to move in the right direction. I appreciate your comment around, you know, incremental confidence in the 2027 guide, but I am just hoping you could frame you know, looking specifically at structural activity and some of the dislocation on the defense side, how do these compare relative to the assumptions you have in that 2027 guide? Tony R. Thene: Yep. Bennett, good morning. I will I will say it this way. Based on that f y 2027 guide, I believe that there is upside in volume productivity, and pricing versus the assumptions that we used when we gave that guidance 3 months ago. Alright. Understood. Bennett Moore: And then a quick housekeeping if I could just on the working capital, the use was a bit bigger than we expected. I see the guide for free cash flow was maintained. So just wondering if this is largely a function of the planned outage or there is anything else we should consider looking ahead? Timothy Lain: Yeah. Bennett, this is Timothy Lain. I think it. it is a more of a function of timing So we did build some inventory in Q1. As we progress through the year, we have got more available days in the back half of the year. it is a it is a historical trend. We will burn that inventory off. So as we progress through the year, we should see cash flow continue to accelerate. CapEx might be a little bit higher in the second half as we ramp up and try to finish the project later this year. But in general, based on the guidance we gave, the cash has to accelerate here. In Q2 and then even more in the second half. Bennett Moore: Great. Thank you both. Operator: Your next question from the line of David Strauss with Wells Fargo. Your line is now open. Please go ahead. David Strauss: Thanks. Good morning. Thanks for taking my question. Tony, any comment on the kind of volume versus price algorithm that came through in Q1 revenue for, kind of in total and more specifically on the aero side? Tony R. Thene: Well, I can tell you that price continues to increase quarter over quarter. The LTAs that we just signed higher price. We have got 1 that sets right now agreement in principle. Higher price. We are working on a couple other major ones as we speak. Both will be higher priced than before. I think it is. David, it is illogical to think that the price would be lower. I mean, demand is accelerating. Not declining. there is no more capacity coming online other than our brownfield, a couple others that. there is no way that we will keep up with that. So the pricing story seems pretty straightforward to me. David Strauss: Okay. Yeah. I mean, I was just looking if you kinda poke the overall, you know, kind of revenue growth ex surcharge. Was it was it 2 thirds volume, 1 third price? Or you know, any. You know, in terms of the upside year over year there, any sort of color there? Tony R. Thene: No. No. I see what you are saying. I mean, obviously Yeah. You know, we stopped giving volume this quarter. So I am not going to then start giving it on the Q and A. But, I mean, you think that you got a Q1 with less operating days. Right? Versus Q4, which is usually your biggest 1. But I do not I do not have a volume problem or a volume challenge. I mean, we are running in many cases, the majority of our equipment as full as we can So I do not have a I do not have a volume problem. Now the issue that you have, David, is that volume is not generic, and it is not a 100% fungible. Right? So there are different products that use different pieces of the of the plant capacity. Having defense be a bit light. Maybe the word a bit light is not the right word. Being light that causes some challenges for us because we have to move some things around. that is some that is that is volume from the defense side that we would have run. Now we are not. Right? So we move some things around. So that can be some give and take. Based on what we what we what we decide to run there. But in totality, the volume is going to be there. it is even gonna be stronger as we get out over the next couple of quarters. David Strauss: Okay. And maybe any comments on medical and energy, you know, those end markets, I think you had talked Last call, it seemed like you were a bit optimistic that we would start to see improvement kind of in those you know, those categories? what is the, you know, kind of what did you see in Q1? And how are you thinking about those 2 end markets from here? Tony R. Thene: Yes. I mean, thanks for the question. Sometimes we forget about that. Medical is going to continue to perform for us. I should say not continue to perform, continue to increase. it is really 1 specific subset inside of medical. that has lagged a bit. Procedures are up. We make products that provide our customers a solution that they cannot get anywhere else. So I think that is we will see that continue to increase over the next couple of I am not overly worried with medical and it is not driving down my overall performance. Energy, interesting. Small piece of my overall revenue, certainly on the IGT side has been very strong. And I would anticipate that to remain strong going forward. We have a very small oil and gas business even, David, that is been relatively weak, I would say, that we see coming back a little bit here now in this quarter and the next couple quarters. So overall, for those 2 markets, in total, again, much smaller than aerospace, but both I would say with some positive tailwinds. All right. Thanks very much. Operator: Analysts are now invited to rejoin the queue and ask additional questions. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. Your next question from the line of Andre Madrid with US Bancorp BTIG. Your line is now open. Please go ahead. Andre Madrid: Yep. Thanks for getting me back in the queue. I do not know what happened there, but guess I want to follow-up on that by maybe asking a bit more about LTA mix. I know it seems like you guys might have resigned some new ones recently. Just should we be expecting the LTA mix to kind of start trending upward again? Locking in some favorable pricing, or how should we be thinking about that? Operator: Let me make sure I understand your question. Tony R. Thene: Do you mean by when you say the LTA trend? LTA train. How much work? Like, the mix of business that is driven through LTAs, do you expect that to continue to grow through the end of the decade? Are you guys like starting to you know, kind of lock in some more favorable pricing, or is it going to kind of stay where it is at for the time being? Yeah. So a couple of questions in there. Of course, the pricing is going to be higher, Andre. As I said earlier, it would be illogical for it not to be in the current environment. But from a total percent of our total portfolio, I would say it is gonna be relatively the same. Right? Volume is increasing, and, you know, the LTAs that we are renewing are primarily with existing customers. The majority of our aerospace business is under LTA now. Andre Madrid: Yeah. Tony R. Thene: Yeah. Andre Madrid: No. that is, that is clear. No. I appreciate that. And then, I guess, if I could just squeeze 1 more in. I mean, looking specifically at the engine aftermarket I know you talked about it already a little bit, but there has been some concern broadly speaking, across commercial aero on the effect of maybe, you know, higher fuel prices. It does not seem like some of your peers and downstream customers have been seeing it affecting demand yet. Seems to be the same case for you. But I guess just what specifically are you seeing in engine aftermarket that might inspire some more confidence that demand will persist? Tony R. Thene: Well, we have never seen a drop-off of it. So I understand some of that negative sentiment out there. We have not seen it, and we have not heard that from any of our customers. Appreciate the color. Thanks, Tony. Thank you, sir. Operator: Your next question from Chuck Minervino with Susquehanna. Your line is now open. Please go ahead. Chuck Minervino: Thanks. Good morning. I was wondering if you could elaborate a little bit on, your comments that you have some actions and projects you are working on that could exceed the operating income targets for fiscal 2027 and 2020. So I was just wondering if you could provide a little bit more detail on some of the levers you could pull there to maybe unlock some of that. Tony R. Thene: Well, welcome, Chuck. Think about the 3 big buckets. Number 1, volume. I think, has the opportunity to be higher than what we thought it would be a quarter ago just because of the ordering patterns We just talked about the pent up demand in defense That is that is a balloon that is ready to bust. Right? I mean, the demand is increasing and increasing in the orders are not there. So I think that is going to be a significant could be a significant tailwind from a volume standpoint. And then across the rest of the aerospace supply chain. We know Customers have told us they are ordering today at a rate that does not even support the current build rates. For Boeing and Airbus. So we know that is gonna have to come back, and we sense that will be in the near term. So I think volume can be an upside. What we have seen with our current work now in LTAs the pricing potentially can be an upside as well. And then on productivity, yes, there is multiple areas that we continue to drive productivity in through our use of AI in many cases, that we have been able to unlock faster and I would say, at a greater quantity than we had originally planned. So all 3 of those buckets Chuck, are going to contribute to us potentially beating that FY 2027 guidance. And remember, I mean, it does not take it does not take a huge percentage increase for example, in price or in volume to you know, to exceed that to exceed that guidance. So it is all it is not easy, but it is all doable. Chuck Minervino: Got it. And if I could just ask 1 more. Could you talk a little bit about your kind of outlook for margins in SAO? Maybe this year, but also kind of beyond this year and where some of the levers may be to expand margins in that segment? Tony R. Thene: Yeah. it is a good question and it is almost. I can give you the same answers I gave to you about how do you increase overachieve on FY 2027. The margins are going to be driven by increased volume, pricing, we believe, is a tailwind and then also productivity. So we will be working all 3 of those. Right? As you are able to run your plant at higher and higher utilization levels, and find more and more output available to you that is a direct uplift to the margin. So you know, we have to be careful. Everybody, you know, obviously, a lot of concern over it going down 0.1 percentage point in SAO. A quarter that they have significant preventive maintenance and less operating days. I will have a hard time understanding that 1. So you will have some of that variability quarter to quarter. But if you look over the long term, certainly the opportunity for us to continue to increase SAO margins is clearly there. Great. Thank you. Operator: This concludes our Q and A session. I will now turn the call back to John Huyette for closing remarks. John Huyette: Thank you, operator, and thank you everyone for joining us today for our fiscal year 27 first quarter conference call. Have a great rest of your day. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Carpenter Technology, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Carpenter Technology wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $350,756!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,363,905!* Now, it's worth noting Stock Advisor's total average return is 922% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 22, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Carpenter Technology. The Motley Fool has a disclosure policy. Carpenter Technology (CRS) Q1 2027 Earnings Call Transcript was originally published by The Motley Fool

Shares of Philadelphia-based specialty metals company Carpenter Technology Corporation (NYSE:CRS) imploded on Thursday, falling 22.2% through 12:50 p.m. ET after reporting mixed earnings this morning. Analysts forecast Carpenter to earn $3.04 per share -- and Carpenter beat that number, reporting a $3.25 per share profit for its fiscal Q1 2027. However, analysts also forecast Carpenter to do $830.8 million in sales, but the most Carpenter could manage was $798.5 million. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Image source: Getty Images. That's actually not a bad number, though: "$798.5 million." In fact, it's 28% more revenue than Carpenter generated in Q1 2026, and it set a new company sales record. (Earnings also set a new record, with net profit per diluted share rising 34%.) CEO Tony Thene highlighted upticks in Carpenter's aerospace structural and distribution sub-markets, where bookings for future shipments increased 49% year over year. That's faster growth than revenue grew in Q1, and implies that revenue growth will only accelerate in future quarters. Thene further pointed out that prices are increasing in tandem with sales, boosting profit margins. If all this is the case, though, then why did investors react so negatively to Carpenter's news? Free cash flow -- or rather the lack of it -- may be one reason. Despite reporting $162.5 million in GAAP net profit, Carpenter actually didn't generate any free cash flow at all. Instead, it burned nearly $25 million on increased capital spending, in particular to expand production at a "brownfield" factory. Valuation could be another concern. Carpenter stock currently trades at 32x trailing earnings, but analysts forecast only 21.5% long-term annual earnings growth. The resulting PEG ratio of 1.5 suggests that Carpenter stock may already be moderately overpriced and due for a pullback. In fact, that pullback may have already begun. Before you buy stock in Carpenter Technology, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Carpenter Technology wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $350,756!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,363,905!* Now, it's worth noting Stock Advisor's total average return is 922% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 22, 2026. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Carpenter Technology. The Motley Fool has a disclosure policy. Why Carpenter Technology Stock Crashed After Earnings was originally published by The Motley Fool

This article first appeared on GuruFocus. - Net Sales (excl. surcharge): Up 5% year over year, down 7% sequentially; sequential decline driven by planned maintenance outages. - Gross Profit: $256.3 million, up 18% year over year, down 5% sequentially. - SG&A Expenses: $59.9 million, down $3.2 million year over year and 2.1% sequentially; includes corporate costs of $26.1 million. - Operating Income: $196.4 million, up 28% year over year, down 5% sequentially; record first-quarter result. - Effective Tax Rate: 15.5%; FY2027 expected near low end of 20%22% range. - Diluted EPS: $3.25 for the first quarter. - SAO Segment Net Sales (excl. surcharge): $573.5 million, up 7% year over year, down 6% sequentially. - SAO Adjusted Operating Margin: 37.7%, matching prior quarter's record; SAO operating income of $216.3 million. - PEP Segment Net Sales (excl. surcharge): $83 million, down 5% year over year, down 15% sequentially; operating income of $7.3 million. - Aerospace & Defense Sales: Down 5% sequentially, up 10% year over year; second-highest quarter of commercial aerospace sales on record. - Aerospace Bookings: Commercial aerospace supply chain bookings up 25% year over year; distribution and structural up 23% sequentially and 49% year over year; engine bookings up 10% sequentially and 22% year over year. - Cash from Operations: $52.8 million. - Capital Expenditures: $77.7 million. - Free Cash Flow: Negative $24.8 million for the quarter; FY2027 outlook of $400 million$430 million. - Share Repurchases: $133.9 million during the quarter. - Total Liquidity: $658.6 million, comprising $159.5 million cash and $499.1 million available borrowings. - Net Debt to EBITDA: 0.6 times; no debt maturities until 2034. - Q2 FY2027 Operating Income Outlook: $192 million$197 million (SAO $214M$218M, PEP ~$7M, corporate $28M$29M). - FY2029 Operating Income Target: Approximately $1.2 billion$1.3 billion, a 20%+ CAGR over three years. - Is CRS fairly valued? Test your thesis with our free DCF calculator. Release Date: October 22, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Record first quarter operating income of $196.4 million, up 28% year over year, driven by productivity, mix management, and pricing actions. - SAO segment adjusted operating margin matched the record 37.7% despite fewer operating days and increased maintenance, with expectations for further expansion. - Aerospace bookings continue to rise, with distribution and structural sub-markets up 23% sequentially and 49% year over year, indicating strong demand. - Pricing remains a tailwind with elevated and increasing prices for both LTA and non-LTA business due to supply-demand gap for nickel superalloys. - Strong financial outlook with FY2027 targets and FY2029 operating income goal of $1.2-$1.3 billion, a 20%+ CAGR, and potential to overachieve. - Total sales excluding surcharge declined 7% sequentially due to planned maintenance outages, impacting overall revenue. - Defense sub-market sales were down sequentially and year over year due to lack of clear funding, creating uncertainty. - Free cash flow was negative $24.8 million in the quarter, impacted by elevated capital expenditures and working capital build. - PEP segment sales declined 5% year over year and 15% sequentially, with lower titanium sales into medical end-use market. - Aerospace fastener bookings were down sequentially, and customers indicate activity has not fully caught up to current build rates. Q: Gautam Khanna of TD Cowen asked whether anything has changed in the demand and pricing environment, and whether management's conviction in the FY2027FY2029 outlook remains intact.A: CEO Tony Thene said the outlook has changed for the better. His view on demand is stronger than a quarter ago, pricing is stronger, and his confidence in the 20272029 targets is stronger, citing accelerating bookings and an expanding supply-demand gap for nickel superalloys. Q: Charles Minervino of Susquehanna asked for detail on the actions and projects that could push results above the FY2027 and FY2029 operating income targets.A: CEO Tony Thene pointed to three levers: volume (pent-up defense demand and aerospace customers ordering below current build rates), pricing (higher-priced LTAs), and productivity (including faster-than-planned gains from AI deployment). He noted it does not take a large percentage increase in price or volume to exceed guidance. Q: Bennett Moore of JPMorgan asked how structural activity and the defense dislocation compare with the assumptions embedded in the FY2027 guidance.A: CEO Tony Thene said he believes there is upside in volume, productivity, and pricing versus the assumptions used when guidance was issued three months earlier. Q: David Strauss of Wells Fargo asked about the volume-versus-price split in Q1 revenue, particularly in aerospace.A: CEO Tony Thene said price continues to increase quarter over quarter, with recently signed LTAs at higher prices and more major agreements in progress. He said pricing lower would be illogical given accelerating demand and limited new capacity. On volume, he said the company has no volume problem most equipment runs as full as possible but product mix is not fully fungible, and lighter defense volume required reshuffling production. Q: Scott Deuschle of Deutsche Bank asked whether brownfield capacity has been placed under contract and how share on new aerospace LTAs compares with the contracts they replace.A: CEO Tony Thene said the company does not contract out specific equipment; the new capacity will be absorbed immediately by existing LTAs, whose customers all want more material. He said every customer wants more volume, two significant aerospace LTAs were completed in Q1, and volumes are significantly higher while share percentages will remain roughly the same. Q: Josh Sullivan of JonesTrading asked about inventory levels at aerospace distribution customers and the outlook for restocking.A: CEO Tony Thene said the majority, if not all, of customers in that sub-market report decreasing inventories, which correlates directly with increased bookings. He expects bookings to keep rising significantly and called the outlook for the distribution and structural sub-markets very positive over the next couple of quarters. Q: Josh Sullivan of JonesTrading also asked what the urgent defense order flow could look like near term.A: CEO Tony Thene said a rush of material orders is likely once budget clarity emerges, based on discussions with the Navy, Air Force, and Army. He explained that the Department of War does not place orders directly supply chain companies do and they lack the funds flow to order now. He said calling the eventual order surge a "rush" would be an understatement. Q: Gautam Khanna of TD Cowen asked about productivity and capacity unlocks, given the plants are running 24/7.A: CEO Tony Thene said improvements are across the board rather than from a single fix, with each bottleneck unlock revealing the next. He called SAO's 37.7% margin essentially matching the record with fewer operating days and heavier maintenance evidence of real productivity gains, and said he is happy but not satisfied, with more volume and pricing tailwinds expected in Q3 and Q4. Q: Gautam Khanna of TD Cowen asked about the heavier Q1 maintenance load and any future disruptions.A: CEO Tony Thene said there is nothing unusual about Q1 it is simply when maintenance is scheduled and the company avoids taking one large piece of equipment offline for long stretches given demand. Q1 consisted of many smaller linked projects, similar preventive maintenance will continue through the year, and no single event should be as large as in Q1. Q: Gautam Khanna of TD Cowen asked how the board prioritizes capital allocation amid negative aerospace sentiment and the stock's odd trading.A: CEO Tony Thene said he agrees major negative sentiment has emerged in aerospace over the past couple of months but has not found anyone who can explain what it is based on. He reiterated that the company will continue funding the brownfield expansion and, at current share price levels, remain active in the repurchase program. Q: Bennett Moore of JPMorgan asked about the larger-than-expected working capital use and whether the free cash flow guide still holds.A: CFO Tim Lain said the working capital build was mainly timing inventory was built in Q1 and will burn off as the year progresses with more available days in the back half. He expects cash flow to accelerate in Q2 and even more in the second half, with CapEx possibly a bit higher later in the year to finish the expansion project, while the FY2027 free cash flow guidance of $400 million to $430 million is maintained. Q: Andre Madrid of BTIG asked whether the LTA mix of business will trend upward and lock in favorable pricing.A: CEO Tony Thene said pricing on renewals will be higher, as that is logical in the current environment, but LTAs will remain relatively the same percentage of the total portfolio. Volumes are increasing, renewals are primarily with existing customers, and the majority of aerospace business is already under LTA. Q: Andre Madrid of BTIG asked what gives confidence that engine aftermarket demand will persist despite concerns over higher fuel prices.A: CEO Tony Thene said the company has never seen a drop-off in engine aftermarket demand and has not heard of one from any customers, pushing back on the negative sentiment. Q: Charles Minervino of Susquehanna asked about the outlook for SAO margins this year and beyond.A: CEO Tony Thene said margin expansion will come from the same three levers higher volume, pricing tailwinds, and productivity with higher plant utilization providing a direct For the complete transcript of the earnings call, please refer to the full earnings call transcript.

- Carpenter Technology shares fell 22% today after first-quarter revenue of $798.2 million came in about 4% below consensus, even though EPS of $3.25 beat. - Operating income set a first-quarter record of $196.4 million, up 28%, and management kept its full-year profit outlook. - The selloff looks bigger than the miss, but Carpenter guided the second quarter flat, so it needs a much stronger back half. - TTM Technologies, Lam Research and Nokia also sank today despite beating estimates, and Forgent Power Solutions fell after announcing its CFO is leaving. Carpenter Technology (CRS:NYSE) just posted record first-quarter operating income, and its stock sank 22% today anyway. CEO Tony Thene said Carpenter "delivered another strong quarter" in its results before the bell. Investors looked at the sales line instead. For the quarter ended Sept. 30: - Revenue of $798.2 million, up 8.8% from a year ago but about 4% below the $830.7 million consensus - EPS of $3.25, ahead of the $3.03 consensus - Operating income of $196.4 million, up 28% Strip out surcharges, which pass raw-material costs on to customers, and sales grew just 5.3%. They also fell $44.9 million from the fourth quarter. Thene said on the call that the quarter was essentially at guidance, and the shortfall might come down to a single shipment that slipped past quarter-end. Operating income also landed near the low end of the $195 million to $200 million Carpenter guided for in July. For the second quarter, it expects $192 million to $197 million. Pricing and a richer mix keep fattening Carpenter's margins… The first quarter came in higher still, at nearly 25%. Wall Street also expects sales growth to speed up… That's about 12% growth this fiscal year, against 8.8% in the first quarter. At Wednesday's close, investors were paying 27x forward earnings for that growth. Today's drop takes it closer to 21x. TIKR tracks 8 analysts on Carpenter Technology. How many say "Buy"? See the full breakdown of Buy, Hold, and Sell ratings on Carpenter Technology, along with Wall Street's revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Carpenter Technology's Analyst Ratings Carpenter had company. TTM Technologies (TTMI:NASDAQ) sank [28%] despite a beat and record revenue, up 60%, because its fourth-quarter outlook only matched estimates. Lam Research (LRCX:NASDAQ) fell [10%] after a record quarter because its December-quarter guide only came in roughly in line. Nokia (NOK) fell [11%] as its revenue beat came with an unchanged full-year outlook and weaker cash flow expectations. And Forgent Power Solutions (FPS:NYSE) dropped [24%] after saying its CFO is stepping down. Carpenter kept its fiscal 2027 operating income outlook of $850 million to $880 million, up 21% to 25%. Thene also told analysts on the call, "My outlook on demand is stronger than it was a quarter ago." My take: a roughly 4% sales miss doesn't justify a [22%] drop when the profit outlook didn't budge. Of course, with the second quarter guided flat, Carpenter needs a much bigger back half to hit that outlook. Its next report, early next year, is the first check. TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR's valuation model and see what Carpenter Technology could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It's free to use. Value Carpenter Technology for free

Carpenter Technology (CRS) came out with quarterly earnings of $3.25 per share, beating the Zacks Consensus Estimate of $2.97 per share. This compares to earnings of $2.43 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +9.43%. A quarter ago, it was expected that this maker of stainless steels and special alloys would post earnings of $3.03 per share when it actually produced earnings of $3.23, delivering a surprise of +6.6%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Carpenter, which belongs to the Zacks Steel - Speciality industry, posted revenues of $798.2 million for the quarter ended September 2026, missing the Zacks Consensus Estimate by 1.18%. This compares to year-ago revenues of $733.7 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Carpenter shares have added about 16.9% since the beginning of the year versus the S&P 500's gain of 13.3%. While Carpenter has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Carpenter was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $3.05 on $809.24 million in revenues for the coming quarter and $13.30 on $3.41 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Steel - Speciality is currently in the top 13% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Metallus (MTUS), another stock in the same industry, has yet to report results for the quarter ended September 2026. The results are expected to be released on November 2. This maker of steel large bars and seamless mechanical tubing is expected to post quarterly earnings of $0.29 per share in its upcoming report, which represents a year-over-year change of +3.6%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Metallus' revenues are expected to be $345.5 million, up 13% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Carpenter Technology Corporation (CRS) : Free Stock Analysis Report Metallus Inc. (MTUS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Delivered Record First Quarter Operating Income, Up 28 Percent Year-Over-Year Strong Results Reflect Productivity Improvements, Mix Optimization and Benefits from Pricing Actions Realized Adjusted Operating Margin in Specialty Alloys Operations Segment of 37.7 Percent Demand Accelerating in Commercial Aerospace Supply Chain, Resulting in Increased Bookings PHILADELPHIA, Oct. 22, 2026 (GLOBE NEWSWIRE) -- Carpenter Technology Corporation (NYSE: CRS) (the "Company") today announced financial results for the fiscal first quarter ended September 30, 2026. For the quarter, the Company reported operating income of $196.4 million and earnings per diluted share of $3.25. First Quarter Fiscal Year 2027 Highlights - Delivered $196.4 million of operating income, up 28 percent year-over-year and down 5 percent sequentially - Sequential performance reflects productivity improvements, mix management and benefits from pricing actions, offset by planned downtime for preventive maintenance activities - Generated Specialty Alloys Operations ("SAO") segment operating income of $216.3 million, up 27 percent year-over-year and down 6 percent sequentially - Delivered adjusted operating margin of 37.7 percent in the SAO segment, up from 32.0 percent in the prior year first quarter and in line with 37.8 percent in the fourth quarter of fiscal year 2026 - Strong bookings for Commercial Aerospace, led by aerospace structural and distribution sub-markets which saw bookings increase 23 percent sequentially and 49 percent year-over-year - Executed $133.9 million in share repurchases against repurchase programs; announced additional $1.0 billion share repurchase program in August 2026 - Realized earnings per diluted share of $3.25 in the quarter - Generated $52.8 million of cash from operating activities Outlook - For the second quarter of fiscal year 2027, anticipate between $192 million to $197 million in operating income - Maintain fiscal year 2027 operating income outlook in the range of $850 million to $880 million, representing a 21 percent to 25 percent increase over fiscal year 2026 operating income - Well positioned for continued growth beyond fiscal year 2027 with strong market demand for our broad portfolio of specialized solutions, ongoing productivity improvements, product mix optimization, and realization of pricing actions "Carpenter Technology delivered another strong quarter, generating $196.4 million of operating income in the first quarter of fiscal year 2027," said Tony R. Thene, Chairman, President and CEO of Carpenter Technology. "This was the most profitable first quarter in the Company's history, up 28 percent over the first quarter of fiscal year 2026, establishing a strong foundation for the rest of the fiscal year. The results, driven by productivity improvements, mix management and the benefits of pricing actions, were impressive for a quarter with increased preventive maintenance activities. Specifically, the SAO segment delivered $216.3 million of operating income and adjusted operating margin of 37.7 percent in the quarter, both significant increases over the previous year first quarter." "Notably, in the current quarter we saw a step up in demand, especially in the commercial aerospace supply chain. Customers in the aerospace structural and distribution sub-markets have increasing confidence in the industry's ability to ramp and our engine customers are increasing activity to support new builds and elevated MRO activity. As a result, we saw increased sequential bookings across the commercial aerospace sub-markets, with the aerospace structural and distribution sub-markets leading the way. Further, in the strong demand environment, pricing continues to strengthen across our business." "We maintain our recently communicated fiscal year 2027 operating income outlook of $850 million to $880 million and our fiscal year 2029 operating income target of $1.2 billion to $1.3 billion which reflects the accelerating demand environment, continued benefits of pricing actions and the expected contribution from our brownfield capacity expansion project." "In addition, we are currently working on specific actions and projects to exceed our operating income targets for fiscal year 2027 and fiscal year 2029. With macro trends so strong and accelerating, we see additional upside to demand, pricing opportunity and productivity improvement that could drive our operating income even higher." "Altogether, we believe we have a compelling value creation story. We are delivering record results today with strong operating margins and levers to expand margins further, we see accelerating demand across our key end-use markets, and we continue to benefit from pricing actions. As a result, we have a clear path to significant earnings growth over the next several years, and we are positioned to create substantial long-term value for our shareholders." Financial Highlights | | Q1 | | Q4 | | Q1 ($ in millions, except per share amounts) | | FY2027 | | FY2026 | | FY2026 Net sales | | $ | 798.2 | | | $ | 851.0 | | $ | 733.7 | Net sales excluding surcharge (a) | | $ | 634.8 | | | $ | 679.7 | | $ | 603.1 | Operating income | | $ | 196.4 | | | $ | 206.9 | | $ | 153.3 | Net income | | $ | 162.5 | | | $ | 162.4 | | $ | 122.5 | Earnings per diluted share | | $ | 3.25 | | | $ | 3.23 | | $ | 2.43 | Net cash provided from operating activities | | $ | 52.8 | | | $ | 240.1 | | $ | 39.2 | Free cash flow (a) | | $ | (24.8 | ) | | $ | 155.0 | | $ | (3.4 | ) | | | | | | (a) Non-GAAP financial measures explained in the attached tables Net sales for the first quarter of fiscal year 2027 were $798.2 million, compared with $733.7 million in the first quarter of fiscal year 2026, an increase of $64.5 million (or 9 percent). Net sales excluding surcharge were $634.8 million for the current quarter, an increase of $31.7 million (or 5 percent) from the same period a year ago. Operating income for the first quarter of fiscal year 2027 was $196.4 million compared to operating income of $153.3 million in the prior year period. Earnings per diluted share for the first quarter of fiscal year 2027 was $3.25 compared to earnings of $2.43 per diluted share in the prior year first quarter. Cash provided from operating activities in the first quarter of fiscal year 2027 was $52.8 million, compared to $39.2 million in the same quarter last year. Free cash flow in the first quarter of fiscal year 2027 was negative $24.8 million, compared to negative $3.4 million in the same quarter last year. The increase in operating cash flow in the first quarter of fiscal year 2027 reflects higher earnings partially offset by changes in working capital, primarily inventory, compared to the same quarter last year. The unfavorable change in free cash flow reflects increased capital expenditures compared to the prior year period, namely from the brownfield expansion. Capital expenditures were $77.7 million in the first quarter of fiscal year 2027 compared to $42.6 million in the same quarter last year. During the quarter ended September 30, 2026, the Company purchased 241,924 shares of its common stock on the open market for an aggregate of $133.9 million. As of September 30, 2026, $985.0 million remains available for future purchases under the $1.0 billion share repurchase program authorized in August 2026. Total liquidity, including cash and available revolver balance, was $658.6 million at the end of the first quarter of fiscal year 2027. This consisted of $159.5 million of cash and $499.1 million of available borrowings under the Company's Credit Facility. Conference Call and Webcast Presentation Carpenter Technology will host a conference call and webcast presentation today, October 22, 2026, at 10:00 a.m. ET, to discuss the financial results of operations for the first quarter of fiscal year 2027. Please dial +1 (833) 461-5787 for access to the live conference call. Access to the live webcast will be available at Carpenter Technology's website (https://www.carpentertechnology.com), and a replay will soon be made available at https://www.carpentertechnology.com. Presentation materials used during this conference call will be available for viewing and download at https://www.carpentertechnology.com. Non-GAAP Financial Measures This press release includes discussions of financial measures that have not been determined in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). A reconciliation of the non-GAAP financial measures to their most directly comparable financial measures prepared in accordance with GAAP, accompanied by reasons why the Company believes the non-GAAP measures are important, are included in the attached schedules. About Carpenter Technology Carpenter Technology Corporation is a recognized leader in high-performance specialty alloy materials and process solutions for critical applications in the aerospace and defense, medical, energy, transportation, and industrial and consumer markets. Founded in 1889, Carpenter Technology has evolved to become a pioneer in premium specialty alloys including nickel, cobalt, and titanium and material process capabilities that solve our customers' current and future material challenges. More information about Carpenter Technology can be found at https://www.carpentertechnology.com. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, among other things, statements regarding guidance, outlook, targets, objectives, future operating performance, cash generation, capital allocation, market conditions and strategic initiatives. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected, anticipated, expected or implied. The most significant of these uncertainties are described in Carpenter Technology's filings with the Securities and Exchange Commission, including its report on Form 10-K for the fiscal year ended June 30, 2026, and the exhibits attached to that filing. They include but are not limited to: (1) the cyclical nature of the specialty materials business and certain end-use markets, including aerospace, defense, medical, energy, transportation, industrial and consumer, or other influences on Carpenter Technology's business such as new competitors, the consolidation of competitors, customers, and suppliers or the transfer of manufacturing capacity from the United States to foreign countries; (2) the ability of Carpenter Technology to achieve cash generation, growth, earnings, profitability, operating income, cost savings and reductions, qualifications, productivity improvements or process changes; (3) the ability to recoup increases in the cost of energy, raw materials, freight or other factors; (4) domestic and foreign excess manufacturing capacity for certain metals; (5) fluctuations in currency exchange and interest rates; (6) the effect of government trade actions, including tariffs; (7) the valuation of the assets and liabilities in Carpenter Technology's pension trusts and the accounting for pension plans; (8) possible labor disputes or work stoppages; (9) the potential that our customers may substitute alternate materials or adopt different manufacturing practices that replace or limit the suitability of our products; (10) the ability to successfully acquire and integrate acquisitions; (11) the availability of credit facilities to Carpenter Technology, its customers or other members of the supply chain; (12) the ability to obtain energy or raw materials, especially from suppliers located in countries that may be subject to unstable political or economic conditions; (13) Carpenter Technology's manufacturing processes are dependent upon highly specialized equipment located primarily in facilities in Reading and Latrobe, Pennsylvania and Athens, Alabama for which there may be limited alternatives if there are significant equipment failures or a catastrophic event; (14) the ability to hire and retain a qualified workforce and key personnel, including members of the executive management team, management, metallurgists and other skilled personnel; (15) fluctuations in oil and gas prices and production; (16) the impact of potential cybersecurity incidents, ransomware attacks, malicious AI usage, operational technology disruptions, information technology failures, data security breaches and failures of third-party technology service providers; (17) the ability of suppliers, logistics providers and other supply-chain participants to meet obligations due to capacity constraints, transportation disruptions, energy shortages, geopolitical events, labor shortages or other factors; (18) the ability to meet increased demand, production targets or commitments; (19) the ability to manage the impacts of natural disasters, climate change, pandemics and outbreaks of contagious diseases and other adverse public health developments; (20) geopolitical, economic, regulatory and security risks relating to our global business, including international conflicts, military actions, diplomatic tensions, trade restrictions, sanctions, disruptions to transportation corridors and shipping routes and changes in U.S. and foreign trade, tax and regulatory requirements; (21) challenges affecting the commercial aviation industry or key participants; (22) the consequences of the announcement, maintenance or use of Carpenter Technology's share repurchase program; and (23) the ability to successfully execute major capital projects and brownfield expansion initiatives, including achieving expected costs, schedules, capacity additions, productivity improvements and returns on investment. Any of these factors could have an adverse and/or fluctuating effect on Carpenter Technology's results of operations. The forward-looking statements in this document are intended to be subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. We caution you not to place undue reliance on forward-looking statements, which speak only as of the date of this press release or as of the dates otherwise indicated in such forward-looking statements. Carpenter Technology undertakes no obligation to update or revise any forward-looking statements. PRELIMINARY CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) (Unaudited) | | | | Three Months Ended | | September 30, | | | 2026 | | | | 2025 | NET SALES | | $ | 798.2 | | | $ | 733.7 | Cost of sales | | | 541.9 | | | | 517.3 | Gross profit | | | 256.3 | | | | 216.4 | | | | | Selling, general and administrative expenses | | | 59.9 | | | | 63.1 | Operating income | | | 196.4 | | | | 153.3 | | | | | Interest expense, net | | | 7.1 | | | | 11.5 | Other income, net | | | (3.1 | ) | | | (3.0 | ) | | | | Income before income taxes | | | 192.4 | | | | 144.8 | Income tax expense | | | 29.9 | | | | 22.3 | | | | | NET INCOME | | $ | 162.5 | | | $ | 122.5 | | | | | EARNINGS PER COMMON SHARE: | | | | Basic | | $ | 3.26 | | | $ | 2.45 | Diluted | | $ | 3.25 | | | $ | 2.43 | | | | | WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | | | | Basic | | | 49.8 | | | | 50.1 | Diluted | | | 50.0 | | | | 50.4 | | | | | Cash dividends per common share | | $ | 0.20 | | | $ | 0.20 | | | | | PRELIMINARY CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (Unaudited) | | | | Three Months Ended | | September 30, | | | 2026 | | | | 2025 | OPERATING ACTIVITIES | | | | Net income | | $ | 162.5 | | | $ | 122.5 | Adjustments to reconcile net income to net cash provided from operating activities: | | | | Depreciation and amortization | | | 36.6 | | | | 36.0 | Deferred income taxes | | | 11.6 | | | | 5.8 | Net pension expense | | | 1.5 | | | | 3.6 | Share-based compensation expense | | | 6.4 | | | | 5.6 | Net loss on disposals of property, plant and equipment | | | 0.3 | | | | 0.3 | Changes in working capital and other: | | | | Accounts receivable | | | (18.7 | ) | | | (36.2 | ) Inventories | | | (61.6 | ) | | | 15.6 | Other current assets | | | (13.3 | ) | | | 7.7 | Accounts payable | | | 24.1 | | | | (27.0 | ) Accrued liabilities | | | (88.5 | ) | | | (85.9 | ) Pension plan contributions | | | (8.6 | ) | | | (5.9 | ) Other postretirement plan contributions | | | (0.7 | ) | | | (0.9 | ) Other, net | | | 1.2 | | | | (2.0 | ) Net cash provided from operating activities | | | 52.8 | | | | 39.2 | INVESTING ACTIVITIES | | | | Purchases of property, plant, equipment and software | | | (77.7 | ) | | | (42.6 | ) Proceeds from disposals of property, plant and equipment | | | 0.1 | | | | — | Net cash used for investing activities | | | (77.6 | ) | | | (42.6 | ) FINANCING ACTIVITIES | | | | Dividends paid | | | (9.9 | ) | | | (10.1 | ) Purchases of treasury stock | | | (133.9 | ) | | | (49.1 | ) Proceeds from stock options exercised | | | 0.4 | | | | 0.5 | Withholding tax payments on share-based compensation awards | | | (65.2 | ) | | | (45.5 | ) Net cash used for financing activities | | | (208.6 | ) | | | (104.2 | ) Effect of exchange rate changes on cash and cash equivalents | | | (0.4 | ) | | | 0.1 | DECREASE IN CASH AND CASH EQUIVALENTS | | | (233.8 | ) | | | (107.5 | ) Cash and cash equivalents at beginning of year | | | 393.3 | | | | 315.5 | Cash and cash equivalents at end of period | | $ | 159.5 | | | $ | 208.0 | | | | | PRELIMINARY CONSOLIDATED BALANCE SHEETS (in millions) (Unaudited) | | | | | | September 30, | | June 30, | | | 2026 | | | | 2026 | ASSETS | | | | Current assets: | | | | Cash and cash equivalents | | $ | 159.5 | | | $ | 393.3 | Accounts receivable, net | | | 722.2 | | | | 701.9 | Inventories | | | 884.4 | | | | 822.9 | Other current assets | | | 76.0 | | | | 63.1 | Total current assets | | | 1,842.1 | | | | 1,981.2 | Property, plant, equipment and software, net | | | 1,538.0 | | | | 1,487.9 | Goodwill | | | 227.3 | | | | 227.3 | Other intangibles, net | | | 2.4 | | | | 3.9 | Deferred income taxes | | | 5.5 | | | | 5.5 | Other assets | | | 129.4 | | | | 132.5 | Total assets | | $ | 3,744.7 | | | $ | 3,838.3 | | | | | LIABILITIES | | | | Current liabilities: | | | | Accounts payable | | $ | 345.3 | | | $ | 313.4 | Accrued liabilities | | | 122.2 | | | | 206.6 | Total current liabilities | | | 467.5 | | | | 520.0 | | | | | Long-term debt | | | 691.0 | | | | 690.7 | Accrued pension liabilities | | | 82.4 | | | | 89.6 | Accrued postretirement benefits | | | 21.7 | | | | 22.2 | Deferred income taxes | | | 207.4 | | | | 196.9 | Other liabilities | | | 91.9 | | | | 91.3 | Total liabilities | | | 1,561.9 | | | | 1,610.7 | | | | | STOCKHOLDERS' EQUITY | | | | Common stock | | | 286.8 | | | | 286.8 | Capital in excess of par value | | | 341.8 | | | | 357.1 | Reinvested earnings | | | 2,352.3 | | | | 2,199.7 | Common stock in treasury, at cost | | | (772.5 | ) | | | (595.6 | ) Accumulated other comprehensive loss | | | (25.6 | ) | | | (20.4 | ) Total stockholders' equity | | | 2,182.8 | | | | 2,227.6 | Total liabilities and stockholders' equity | | $ | 3,744.7 | | | $ | 3,838.3 | | | | | PRELIMINARY SEGMENT FINANCIAL DATA (in millions) (Unaudited) | | | | Three Months Ended | | September 30, | | | 2026 | | | | 2025 | Net sales: | | | | Specialty Alloys Operations | | | | Net sales excluding surcharge | | $ | 573.5 | | | $ | 533.9 | Surcharge | | | 156.9 | | | | 125.7 | Specialty Alloys Operations net sales | | | 730.4 | | | | 659.6 | | | | | Performance Engineered Products | | | | Net sales excluding surcharge | | | 83.0 | | | | 87.2 | Surcharge | | | 8.1 | | | | 6.4 | Performance Engineered Products net sales | | | 91.1 | | | | 93.6 | | | | | Intersegment | | | | Net sales excluding surcharge | | | (21.7 | ) | | | (18.0 | ) Surcharge | | | (1.6 | ) | | | (1.5 | ) Intersegment net sales | | | (23.3 | ) | | | (19.5 | ) | | | | Consolidated net sales | | $ | 798.2 | | | $ | 733.7 | | | | | Operating income (loss): | | | | Specialty Alloys Operations | | $ | 216.3 | | | $ | 170.7 | Performance Engineered Products | | | 7.3 | | | | 9.4 | Corporate | | | (26.1 | ) | | | (26.6 | ) Intersegment | | | (1.1 | ) | | | (0.2 | ) Consolidated operating income | | $ | 196.4 | | | $ | 153.3 | | | | | The Company has two reportable segments, Specialty Alloys Operations ("SAO") and Performance Engineered Products ("PEP"). The SAO segment is comprised of Carpenter's major premium alloy and stainless steel manufacturing operations. This includes operations performed at mills primarily in Reading and Latrobe, Pennsylvania and surrounding areas as well as South Carolina and Alabama. The PEP segment is comprised of the Company's differentiated operations. This segment includes the Dynamet titanium business, the Carpenter Additive business and the Latrobe and Mexico distribution businesses. The businesses in the PEP segment are managed with an entrepreneurial structure to promote flexibility and agility to quickly respond to market dynamics. It is our belief this model will ultimately drive overall revenue and profit growth. Corporate costs are comprised of executive and director compensation, and other corporate facilities and administrative expenses not allocated to the segments. Also included are items that management considers not representative of ongoing operations and other specifically-identified income or expense items. The service cost component of net pension expense, which represents the estimated cost of future pension liabilities earned associated with active employees, is included in the operating results of the business segments. The residual net pension expense is included in other income, net, and is comprised of the expected return on plan assets, interest costs on the projected benefit obligations of the plans, amortization of actuarial gains and losses and prior service costs. PRELIMINARY NON-GAAP FINANCIAL MEASURES (in millions, except per share data) (Unaudited) | | ADJUSTED OPERATING MARGIN EXCLUDING SURCHARGE REVENUE | | Three Months Ended | September 30, | | 2026 | | | | 2025 | Net sales | | $ | 798.2 | | | $ | 733.7 | Less: surcharge revenue | | | 163.4 | | | | 130.6 | Net sales excluding surcharge revenue | | $ | 634.8 | | | $ | 603.1 | | | | | Operating income | | $ | 196.4 | | | $ | 153.3 | | | | | Operating margin | | | 24.6 | % | | | 20.9 | % | | | | Adjusted operating margin excluding surcharge revenue | | | 30.9 | % | | | 25.4 | % ADJUSTED SEGMENT OPERATING MARGIN EXCLUDING SURCHARGE REVENUE | | Three Months Ended | September 30, | | 2026 | | | | 2025 | Specialty Alloys Operations | | | | Net sales | | $ | 730.4 | | | $ | 659.6 | Less: surcharge revenue | | | 156.9 | | | | 125.7 | Net sales excluding surcharge revenue | | $ | 573.5 | | | $ | 533.9 | | | | | Operating income | | $ | 216.3 | | | $ | 170.7 | | | | | Operating margin | | | 29.6 | % | | | 25.9 | % | | | | Adjusted operating margin excluding surcharge revenue | | | 37.7 | % | | | 32.0 | % ADJUSTED SEGMENT OPERATING MARGIN EXCLUDING SURCHARGE REVENUE | | Three Months Ended | September 30, | | 2026 | | | | 2025 | Performance Engineered Products | | | | Net sales | | $ | 91.1 | | | $ | 93.6 | Less: surcharge revenue | | | 8.1 | | | | 6.4 | Net sales excluding surcharge revenue | | $ | 83.0 | | | $ | 87.2 | | | | | Operating income | | $ | 7.3 | | | $ | 9.4 | | | | | Operating margin | | | 8.0 | % | | | 10.0 | % | | | | Adjusted operating margin excluding surcharge revenue | | | 8.8 | % | | | 10.8 | % | | | | | | | | Management believes that removing the impact of raw material surcharge from operating margin provides a more consistent basis for comparing results of operations from period to period, thereby permitting management to evaluate performance and investors to make decisions based on the ongoing operations of the Company. Management uses its results excluding this amount to evaluate its operating performance and to discuss its business with investment institutions, the Company's board of directors and others. | | Three Months Ended | | September 30, FREE CASH FLOW | | | 2026 | | | | 2025 | Net cash provided from operating activities | | $ | 52.8 | | | $ | 39.2 | Purchases of property, plant, equipment and software | | | (77.7 | ) | | | (42.6 | ) Proceeds from disposals of property, plant and equipment | | | 0.1 | | | | — | Free cash flow | | $ | (24.8 | ) | | $ | (3.4 | ) | | | | Management believes that the presentation of free cash flow provides useful information to investors regarding our financial condition because it is a measure of cash generated which management evaluates for alternative uses. It is management's current intention to use excess cash to fund investments in capital equipment, acquisition opportunities and consistent dividend payments. Additionally, we will discretionarily use excess cash for a share repurchase program up to $1.0 billion of our outstanding common stock. Free cash flow is not a U.S. GAAP financial measure and should not be considered in isolation of, or as a substitute for, cash flows calculated in accordance with U.S. GAAP. PRELIMINARY SUPPLEMENTAL SCHEDULE (in millions) (Unaudited) | | | | Three Months Ended | | September 30, NET SALES BY END-USE MARKET | | 2026 | | 2025 End-Use Market Excluding Surcharge Revenue: | | | | Aerospace and Defense | | $ | 425.4 | | $ | 388.3 Medical | | | 51.7 | | | 61.6 Energy | | | 32.9 | | | 42.5 Transportation | | | 19.8 | | | 17.9 Industrial and Consumer | | | 83.2 | | | 75.0 Distribution | | | 21.8 | | | 17.8 Total net sales excluding surcharge revenue | | | 634.8 | | | 603.1 Surcharge revenue | | | 163.4 | | | 130.6 Total net sales | | $ | 798.2 | | $ | 733.7 | | | | Investor Inquiries: | | Media Inquiries: John Huyette | | Heather Beardsley +1 610-208-2061 | | +1 610-208-2278 [email protected] | | [email protected]