10-QPeriod: Q1 FY2026

CARPENTER TECHNOLOGY CORP Quarterly Report for Q1 Ended Sep 30, 2025

Filed October 23, 2025For Securities:CRS

Summary

Carpenter Technology Corporation (CRS) reported a strong fiscal first quarter ended September 29, 2025, with net income of $122.5 million, a significant increase from $84.8 million in the prior year's comparable period. This growth was driven by a 2% increase in net sales to $733.7 million, with a notable 4% increase when excluding surcharge revenue, highlighting improved pricing and product mix. The company's Specialty Alloys Operations (SAO) segment continues its impressive performance, demonstrating the fifteenth consecutive quarter of increasing adjusted operating margins. Key drivers for the quarter included robust demand in the Aerospace and Defense sector, fueled by increased production rates and successful long-term agreements with significant price increases. While the Medical segment experienced a decline, the Energy segment showed modest growth. The company also continued its capital allocation strategy, returning cash to shareholders through dividends and share repurchases, while investing in growth initiatives such as a brownfield capacity expansion. Despite some headwinds like the decrease in the Performance Engineered Products (PEP) segment and increased capital expenditures impacting free cash flow, Carpenter Technology remains optimistic about its long-term outlook, particularly in the Aerospace & Defense and Energy markets.

Financial Highlights

49 data points
Beta

Revenue

$733.70M

29.5% Gross Margin

Net Income

$122.50M

16.7% Net Margin

EPS (Diluted)

$2.43

Total Assets

$3.40B

Cash & Equivalents

$208.00M

Free Cash Flow

$39.20M

Financial Statements
Beta
Revenue$733.70M
Gross Profit$216.40M
SG&A Expenses$63.10M
Operating Income$153.30M
Net Income$122.50M
EPS (Basic)$2.45
EPS (Diluted)$2.43
Shares Outstanding (Basic)50.10M
Shares Outstanding (Diluted)50.40M

Key Highlights

  • 1Net income increased significantly by 44.5% year-over-year to $122.5 million for the quarter ended September 29, 2025.
  • 2Net sales grew 2.0% to $733.7 million, with sales excluding surcharge revenue up 4.0%, indicating strong underlying price and volume improvements.
  • 3The Specialty Alloys Operations (SAO) segment showed strong performance with a 2.0% increase in net sales and a significant improvement in adjusted operating margin to 32.0% (vs. 26.3% YoY), marking 15 consecutive quarters of growth.
  • 4Aerospace and Defense revenue increased 8% (11% excluding surcharges), driven by higher production rates and new long-term agreements with improved pricing.
  • 5The company repurchased $49.1 million of its common stock during the quarter as part of its $400 million share repurchase program.
  • 6Capital expenditures increased to $42.6 million from $26.9 million in the prior year, primarily for growth initiatives like the brownfield capacity expansion.
  • 7Adjusted free cash flow turned negative ($3.4 million) compared to positive $13.3 million in the prior year, largely due to increased capital expenditures.

Frequently Asked Questions

The Specialty Alloys Operations (SAO) segment reported a 2% increase in net sales to $659.6 million, and a 5% increase excluding surcharge revenue, driven by price increases and product mix improvements. In contrast, the Performance Engineered Products (PEP) segment saw a 7% decrease in net sales to $93.6 million (down 6% excluding surcharges), primarily due to lower sales in the Medical and Distribution end-use markets.

Carpenter Technology is optimistic about its long-term outlook, especially in the Aerospace and Defense and Energy markets, which have strong multi-year outlooks. The company noted increasing demand in Aerospace and Defense due to ramping production rates and secured long-term agreements with significant price increases. The Energy market saw growth driven by demand for data center power generation, though offset by decreased activity in the oil and gas sub-market.

The company generated $39.2 million in cash from operating activities. However, adjusted free cash flow was negative $3.4 million due to higher capital expenditures related to growth initiatives like the brownfield expansion. Carpenter Technology maintains a strong liquidity position with $208.0 million in cash and cash equivalents and $348.9 million available under its credit facility, totaling $556.9 million. The company is also returning capital to shareholders through dividends and a $400 million share repurchase program.

The company has adopted ASU 2023-07 for Segment Reporting, which enhances segment disclosures. It is also monitoring ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation Disclosures), which are primarily disclosure requirements and are not expected to materially impact the consolidated financial statements. No other significant new accounting pronouncements adopted in this period are expected to materially affect the financial statements.