01—Abstract
Summary
Summary of the 10-Q filed January 29, 2026. Cited figures are marked; the original filing is the authoritative source.
Carpenter Technology Corporation (CRS) reported strong financial results for the quarter and six months ended December 31, 2025.
Net sales increased by 8%a and 5% respectively, driven by robust demand in key end-use markets like Aerospace & Defense and Energy. The company demonstrated significant operational improvements, leading to a substantial increase in operating income and margins, particularly within the Specialty Alloys Operations (SAO) segment, which achieved its best quarter on record. This performance was bolstered by favorable product mix, pricing actions, and enhanced operational efficiencies.
Financially, the company generated strong operating cash flow, up from the prior year, and maintained a healthy adjusted free cash flow. Carpenter Technology also made strategic moves during the period, including refinancing its debt by issuing $700 millionb in Senior Notes and extending its Credit Facility maturity.
The company continues to return value to shareholders through dividends and a share repurchase program, with a significant portion of the repurchase authorization still available. Management expresses confidence in continued long-term growth driven by favorable market dynamics and strategic positioning.
02—Key points
Key Highlights
- Net sales increased by 8% to $728.0 million for the three months ended December 31, 2025, compared to the prior year period.
- Operating income significantly improved to $155.2 million (21.3% margin) for the three months ended December 31, 2025, up from $118.9 million (17.6% margin) in the prior year.
- Specialty Alloys Operations (SAO) segment achieved record performance, with operating income of $174.6 million and an adjusted operating margin of 33.1%.
- Generated $171.4 million in cash from operating activities for the six months ended December 31, 2025, a substantial increase from $108.1 million in the prior year.
- Successfully refinanced debt by issuing $700.0 million in 5.625% Senior Notes due 2034 and extending its revolving credit facility maturity to November 2030.
- Returned $20.1 million to shareholders via dividends and repurchased $81.2 million of common stock during the six months ended December 31, 2025.
- Aerospace & Defense and Energy end-use markets showed strong sales growth, with Aerospace & Defense up 14% and Energy up 17% year-over-year for the three-month period.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Carpenter Technology Corp kept $0.14.
- Revenue$728.0M100.0%
- Cost of revenue−$509.7M70.0%
- Gross profit$218.3M30.0%
- Operating costs−$63.1M8.7%
- Operating income$155.2M21.3%
- Interest, other & tax−$49.9M6.9%
- Net income$105.3M14.5%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed January 29, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $728.00M$676.90M | +7.5% |
| Gross Profit | $218.30M$177.50M | +23.0% |
| SG&A Expenses | $63.10M$58.60M | +7.7% |
| Operating Income | $155.20M$118.90M | +30.5% |
| Net Income | $105.30M$84.10M | +25.2% |
| EPS (Basic) | $2.10$1.68 | +25.0% |
| EPS (Diluted) | $2.09$1.66 | +25.9% |
| Shares Outstanding (Basic) | 50.10M50.20M | −0.2% |
| Shares Outstanding (Diluted) | 50.30M50.70M | −0.8% |
05—Questions
Frequently Asked Questions
What were the key drivers of the revenue growth in the most recent quarter?
Revenue growth was primarily driven by an 8% increase in net sales to $728.0 million. This was fueled by strong performance in key end-use markets, particularly Aerospace and Defense (up 14% year-over-year) and Energy (up 17% year-over-year). The company also benefited from realized price increases, an improved product mix, and the ongoing effectiveness of its raw material surcharge mechanisms.
How did the company manage its debt and capital structure during this period?
Carpenter Technology made significant strategic debt management moves. In November 2025, it issued $700 million of 5.625% Senior Notes due 2034, using the proceeds to repay existing senior notes. Additionally, the company amended and restated its Credit Facility, extending its maturity to November 2030 and maintaining a significant available borrowing capacity of $498.9 million as of December 31, 2025.
What is the outlook for the company's key segments, and what is management's long-term perspective?
Management is optimistic about the company's future, projecting continued growth driven by strong dynamics in its core markets, especially Aerospace & Defense and Energy. The Specialty Alloys Operations (SAO) segment, which has seen sixteen consecutive quarters of increasing adjusted operating margins, is expected to continue its strong performance. The company is investing in growth initiatives, including a brownfield expansion project, and believes it is well-positioned to achieve its long-term goals.
How is the company returning capital to shareholders?
Carpenter Technology is committed to returning capital to shareholders through a balanced approach. This includes consistent dividend payments, with $20.1 million paid during the six months ended December 31, 2025. The company also actively repurchases its common stock under an authorized $400 million program, having spent $81.2 million in the six months ended December 31, 2025, with $216.9 million still available under the program.
06—Continue